M-Banking Ready To Take Off
Claro Colombia has signed an agreement with Citibank and Grupo Aval to launch mobile banking services at the beginning of 2013, behind most of its rivals. The service will be called 'Transfer' and will allow customers to carry out money transfers, make deposits, top up mobile accounts and pay bills directly from mobile phones. Mobile banking has been available in Colombia since 2007 but has not yet taken off. This is likely to change in the near future as BMI believes that it represents a large opportunity in Latin American markets such as Colombia.
The major operators in Colombia - Claro, Movistar, Tigo and Uff! - have all announced or implemented some form of m-banking services for their network but have not gone far enough with their services. Colombia has a high penetration rate of mobile subscribers, at 100.9%, and a rapidly increasing GDP per capita, US$7,067 in 2011, from US$4,681 in 2007. The latest financial inclusion data from the World Bank indicate that this increase in earning power has not been matched by a growth in the number of Colombians opening bank accounts. Only 30% of adults over 15 years old own an account at a formal institution, 23% of which have a debit card, and only 10% have a credit card. As wages rise and Colombians have more disposal income, the demand for bank accounts should increase. There are only 8.57 branches per 100,000 inhabitants in Colombia according to GSMA Wireless, which is average for the region, but well behind developed countries. Financial institutions and mobile operators that can take advantage of the high penetration rate of mobile phones and low numbers of bank branches can be extremely successful over the long term.
|Colombia Banking Data|
|Colombia Vs Region Financial Inclusion Data, 2011|
The un-banked population represents a significant proportion and offering more services targeted to them might be more effective, for example, e-wallet facilities using a prepaid account balance. Claro is behind its competition in this respect, as Movistar and Mastercard's joint venture 'Wanda' and the partnership between Uff! and Bancolombia are particularly focused on the un-banked population across Latin America. Tigo's re-launched m-banking service, Giros Tigo, is similar to Claro's, and BMI believes that companies need to go further in providing these services. Latin America has been slower to roll out these services than other regions, and has been reluctant to provide figures indicating the success. In part, this might be due to the fact that little revenue is derived from mobile banking in the short term. As Millicom International Cellular, which owns Tigo, said on the subject, 'Initially we are more penetration and transaction focused than revenue focused. That's typically how they build revenue and new products in the service category.'
For Claro, building service loyalty is especially important given the new regulations that are targeting their dominant market lead. Rolling out mobile banking services should help to retain and attract consumers but being the last operator to do so in Colombia means their efforts need to be increased. BMI is optimistic about the long-term opportunities for mobile banking, so Claro should ensure it does not miss out.