Banking & Telco : Co-opetition

Porter Competitive Model is used to undertand and evaluate the structure of an industry 's business environment and the threats of competition to a specific company. The competition in an industry is based on five forces, e.g Intraindustry Rivalry, The bargaining of Buyers, The bargaining of suppliers, The treat of new entrants and the Threat of Substitute Products or Services.

Banking and Telco are actually two different industries, so evaluating Banking Industry using Porter Competitive Model I hardly think of Telco able to be as the treat of new entrants and providing a substitue products or services. However, telco companies have entered Banking Teritory and provide alternative products in the area of digital money or sometimes it is called eletronic money (e-money). This e-money mostly is used for micropayment.

In the 90's, banks in US has tried this with products such as MondEx, VisaCash, GeldKarte, however now telco also can provide similar functions. In Indonesia, telco provider such as Indosat has launched mobile commerce as well as Telkomsel with its T-cash. Banks like BCA also promote its e-purse which is called BCA Flazz, with similar purpose other businesses such as cinema and gas station also developed their own e-money.

A data that was quoted from Warta Ekonomi, telling that e-Money that is launched by Telco has increased quickly. In 2008, there are less than 1 million card, by the end of 2009 there are 2.9 million cards. Average transaction amount in Desember 2009 is about USD 3 / transaction. Overall Telco company has a customer almost 100 million, meaning that it is a huge potential market.

Phillipine is a another sample of which e-Money is very much developed. Mobile Banking with the with the helped of telco has become a huge succes in Phillipine. The services is also very rich including remittance services. So, at this stage Telco and Banks can be coexistence in providing this e-money services to customers.

eBanking and Mobile Banking Covergence

Another type of mobile banking is to do online banking through mobile browser (thin client). This becomes popular as mobile handset resolution, screen size and connection speed have much improved in the last few years. Now it becomes feasible to do online banking through your mobile. The provision of browser mobile banking will take off quickly as it removes the troublesome of Rich Client installation.

The browser mobile banking actually is not more than the ebanking itself. Bank doesn't have to do anything to provide this service. The convergence of the two world of internet and mobile has come to a stage where it becomes very usefull.

The introduction of thin client is actually also has its own challenge. Customer experience of using ebanking in desktop is not optimal. eBanking is designed for a bigger screen size and resolution so customer has to scroll the screen in every way to do online banking in mobile. It is lucky that vendor such as Infosys understand this challenge. Infosys has a product call mConnect which is part of its mobile banking solution.

mConnect is an intelligent application which will render the screen according to mobile resolution and size. Having this capability, banks can provide eBanking services with much more better experience as the layout, font size, colour and picture resolution will be optimised to be read in mobile browser. This will help customer to navigate the screen easier and quick.

Having this solution, then mobile banking has never been easier and Banks can launch this service once they have ebanking services.

Mobile Banking Evolution 2

Rich Client is designed to provide a more secure solution which SMS Banking can't provide. It looks quite promising as this application is able to a better user experience by having a meaningful user interface and screen flow that is easy to understand.

Rich client or thick client or Midlet is called because it is basically a program that is installed in your mobile. It can be called a Midlet if this is a program that is developed for java environment and use in Java Enable Phone with MIDP (Mobile Information Device Provile), however rich client is a more universal terminology which basically now iPhone, Android phone comes with a different standard as well.

Always there is a price if you want to be more secured, in this case Customers have to install the rich client in its handset. This is a new challenge to the bank as application installation in mobile is not as easy as it looks. Different mobile will install the application in different directory, and it looks there is no definite guideline. While SMS is a straight forward services which will be available once you activate the number, rich clients need data plan in your number. Customers must be aware of this data plan in order for them to access the services through GPRS connection.

This creates various support issues either through the call centre and/or customer services at branch. Bank must assures that support for this cases. In recent years, application installation already can be given through OTA (Over the Air) mechanism and data plan installation is activated immediately during SIM card activation. These improvement will increase customer acceptance to use this Rich Client model for Mobile Banking.

Later we will discuss about the convergence of ebanking and mobile banking.