Financial institutions, overcoming some initial trepidation about privacy, are increasingly gauging consumers’ creditworthiness by using phone-company data on mobile calling patterns and locations.
The practice is tantalizing for lenders because it could help them reach some of the 2 billion people who don’t have bank accounts. On the other hand, some of the phone data could open up the risk of being used to discriminate against potential borrowers.
Phone carriers and banks have gained confidence in using mobile data for lending after seeing startups show preliminary success with the method in the past few years. Selling such data could become a more than $1 billion-a-year business for U.S. phone companies over the next decade, according to Crone Consulting LLC.
Fair Isaac Corp., whose FICO scores are the world’s most-used credit ratings, partnered up last month with startups Lenddo and EFL Global Ltd. to use mobile-phone information to help facilitate loans for small businesses and individuals in India and Russia. Last week, startup Juvo announced it’s working with Liberty Global Plc’s Cable & Wireless Communications to help with credit scoring using cellphone data in 15 Caribbean markets.
And Equifax Inc., the credit-score company, has started using utility and telecommunications data in Latin America over the past two years. The number of calls and text messages a potential borrower in Latin America receives can help predict a consumer’s credit risk, said Robin Moriarty, chief marketing officer at Equifax Latin America.
“It turns out, the more economically active you are, the more people want to call you,” Moriarty said. “That level of activity, that level of usage is what’s really most predictive.”
The new credit-assessment methods could allow more people in areas without bank branches to open accounts online. They could also make credit cards and loans more accessible and prevalent in some parts of the world. In the past, lenders mainly relied on bank information, such as savings and past loan repayments, to judge whether to let someone borrow.
NAB says customers will have more control over how, when and where they use their cards, thanks to NAB’s new Mobile Banking App to be launched later this year.
The new App will include world-leading card transaction controls, making it easier for customers to conveniently and instantly self-manage their personal Visa debit and credit cards through their mobile device.
And, in an Australian first, NAB customers will be able to instantly use newly approved personal Visa credit cards, with an innovative digital contract feature in the new App not seen anywhere else in the world.
This means customers will be able to instantly use their new credit card through NAB Pay for contactless transactions less than $100, without having to wait for their physical card to arrive in the mail.
“This is a whole new platform for a new era of NAB mobile banking,” NAB Executive General Manager of Consumer Lending, Angus Gilfillan, said.
“Our new App will be fast and seamless, and has been designed to make banking as convenient and easy as possible for our customers.”
“We want to give our customers more control over their everyday banking, and our new App will help them to do this with the tap of a button.”
NAB announced a strategic partnership with Visa in November last year, which was designed to accelerate the delivery of payments innovation and product development for customers. Through this partnership, and utilising the capabilities Visa made available through its Visa Developer platform, NAB was able to enhance the card transaction control features in its new Mobile Banking App.
“We’re really pleased to have been able to open up our capabilities which is delivering speed to market and innovation,” Global Head of Visa Developer, Mark Jamison, said.
“By directly connecting Visa and NAB developers through the Visa Developer program, the NAB team was able to save around six months of development time.”
These card transaction control features will enable customers to select and modify when and how their Visa debit and credit cards can be used.
“Customers will be able to control what type of payments can be made through the App; for example, if you’ve provided a secondary card to a family member, you can choose “Don’t Allow” for online purchases on that card,” Mr Gilfillan said.
NAB’s new mobile banking experience will include a range of other features, including the ability for customers to place a temporary block on any card that may have been lost or stolen.
“NAB is absolutely focussed on improving the customer experience, and our new App will give customers more control of their cards so it better suits their individual needs,” Mr Gilfillan said.
The new App will also see improvements to existing features and functions in NAB’s current Mobile Banking App, and, with a new look and feel, it will be easier for customers to login, view account balances, and search past transactions.
An open pilot of the new App will commence soon for compatible Android devices, providing thousands of customers the opportunity to provide feedback. Customers who would like to participate in the pilot will be able to visit the Google Play Store and download the new App. Customers with iOS devices will also be piloting the App over coming weeks.
“Our customers have been and will continue to be extensively involved in the development of our new App because we are absolutely committed to delivering our customers the experience they want,” Mr Gilfillan said.
During the pilot and after the App is launched in full later this year, features on the App will be released in stages.
NAB will also this week launch its new NAB PayTag to customers, a sticker which can be attached to mobile devices to enable contactless payments linked to a customer’s Visa debit card.
“We’re always looking for opportunities to provide our customers with innovative products and services, features and functions, to help them do their banking easier and take control of their finances,” Mr Gilfillan said.
We recently released the latest 2016 edition of our banking channel report ‘The Quiet Revolution”, which is available on request. Our April Video Blog summarises the main findings.
The Quiet Revolution highlights that existing players need to be thinking about how they will deploy appropriate services through digital channels, as their customers are rapidly migrating there. We see this migration to digital more advanced among higher income households but momentum continues to spread. So players which are slow to catch the wave will be left with potentially less valuable customers longer term. Players need to adapt more quickly to the digital world. We are way past an omni-channel (let them choose a channel) strategy. We need to adopt a “mobile-first” strategy. Such digital migration needs to become central strategy because the winners will be those with the technical capability, customer sense and flexibility to reinvent banking in the digital age. The bank branch has limited life expectancy. Banks should be planning accordingly.
Facebook has said it does not have intentions to be a financial services organisation, however, the social media giant wants to partner with Australian banks to assist their transition to mobile.
Speaking at the Australian Financial Review (AFR) Banking and Wealth Summit in Sydney yesterday, Facebook’s head of financial services Australia, Paul McCrory said banks can leverage Facebook’s “vast scale” to innovate mobile banking.
He says the social media giant has “built these huge mobile platforms” that Australian banks should use to build a better mobile experience in financial services.
“Banks are mobile businesses as well, except that they have this legacy that sits behind them. So where we’re operating now is how do we help partner with this vast scale we’ve got to help a bank, for example, drive digital adoption,” McCrory said.
“How do we help the banks actually drive more and more people to use mobile services of some description, rather than having to go to a branch… and then over time create the best possible mobile branch experience…”
McCrory says bank branches “in their current form” are “inefficient” for today’s consumers.
“We’re not going to build a financial services organisation. What we’re here trying to do is help these organisations pivot to these more modern mobile type services.”
Whilst McCrory says Facebook has no intention to compete with the banks, the tech platform has dabbled in providing a financial service itself. Last year, Facebook announced a new payments feature for Facebook Messenger users in the United States, allowing users to make person-to-person payments by adding their debit card details on the Messenger service.
Mobile banking use continued to rise last year as smartphone adoption grew and consumers were increasingly drawn to the convenience of mobile financial services, according to a US Federal Reserve Board report, Consumers and Mobile Financial Services 2016, released on Wednesday.
The report documents consumers’ use of mobile phones–Internet-enabled smartphones as well as more basic phones with limited features–as they bank and carry out financial activities. It is the Board’s fifth annual look at how consumers use mobile phones to access banking services (“mobile banking”), make payments, transfer money, or pay for goods and services (“mobile payments”), and inform financial decisions, as well as their reasons for using these services.
As of November 2015, 43 percent of adults with mobile phones and bank accounts reported using mobile banking–an increase of 4 percentage points from the prior year’s survey. The most common way that consumers use mobile banking is checking their account balances or recent transactions, followed by transferring money between accounts. More than half of mobile banking users received an alert from their financial institution through a text message, push notification, or e-mail–making this the third most common use of mobile banking.
For those who have adopted mobile banking, use of a mobile phone appears to complement their use of other banking channels. Among mobile banking users with smartphones, 54 percent cited the mobile channel as one of the three most important ways they interact with their bank. This share is below those that cited online (65 percent) and ATM (62 percent) as most important, but slightly above the share that cited a teller at a branch (51 percent).
Use of mobile payments continues to be less common than use of mobile banking. Twenty-four percent of all mobile phone users, and 28 percent of smartphone users, made a mobile payment in the 12 months prior to the survey. For smartphone owners who reported making payments with their phones, the most common types of mobile payments were paying bills, purchasing a physical item or digital content remotely, and paying for something in a store.
Use of mobile financial services varies across demographic groups. For particular groups of respondents to the 2015 survey–such as younger adults, Hispanics and non-Hispanic blacks–the shares who reported using mobile banking and mobile payments were higher than the overall survey averages. Smartphone ownership among those with mobile phones is higher for Hispanics than for non-Hispanic whites in this survey.
Consistent with findings from prior years, a majority of consumers using mobile banking and mobile payments cite convenience or getting a smartphone as their main reason for adoption. The main impediments to the adoption of mobile financial services continue to be a stated preference for other methods of banking and making payments, as well as concerns about security.
Concerns about the security and privacy of personal information continue to be expressed by mobile phone users, and the majority of smartphone users reported taking actions that can reduce harm in case of a security incident. The most common actions were installing updates, password-protecting the phone, and customizing privacy settings.
The survey was conducted on behalf of the Board by GfK, an online consumer research firm. The 2015 survey was conducted from November 4-23, 2015. More than 2,500 respondents completed the survey.
Previous surveys have informed the Federal Reserve and other parts of the government on consumer banking and payment behavior and have supported basic research and public discussion.
As outlined in Juniper’s recently published research report, Mobile Financial Services: Developing Markets 2015-2020, the mobile device is becoming the core enabler for the world’s poor to seek financial inclusion, with users of such services set to grow to 283 million by 2020.
Enabling the World’s Poorest
The unbanked populace in developing regions are being introduced to financial services through the use of mobile money platforms. This extends from simply sending remittances, to being able to receive life-saving services and provisions through sophisticated mobile money transactions, which include such offerings as loans, savings, and insurance.
Barriers to Financial Inclusion in Emerging Markets
The mobile device has proven a game-changer in financial development for poorer nations due to a number of reasons.
Firstly, the fact that consumers can register with their mobile device through widely available outlets and branches in local stores, means that people are no longer required to travel long distances. Thus avoiding the use of poor transport systems, and travel over long distances, to reach major cities to register with a bank.
Additionally, Microfinance providers themselves face a hurdle with regard to the initial start-up costs associated with their services. In many developing nations profit is not feasible by traditional methods and, as a result, MFIs (Mobile Financial Institutions) have been reluctant to set up shop. The mobile form of finance delivery offers cheaper start-up costs, and far reaching services.
Juniper’s Mobile Financial Services research discusses the further implications that mobile banking poses for developing nations, as well as the current trends and key services on offer in this sector. For an overview of the microfinance industry download the white paper Microfinance with Macro Potential.
ING DIRECT has introduced true ‘one swipe’ banking, allowing customers using Apple devices to easily check their transaction account, savings, mortgage and superannuation balances with just one swipe.
The ‘Widget’ feature makes use of the Apple iOS 8 Notification Centre, meaning if customers choose, they no longer have to unlock their mobile device or even open their ING DIRECT app to check their balances, they can simply swipe down on their home screen and their ING DIRECT account balances will be available.
ING was one of the first Australian banks to provide the pre-login balance feature, which is used by more than 98 per cent of their mobile banking customers and which displays account balances by simply tapping the ING DIRECT app icon.
ING DIRECT on Apple Watch
ING DIRECT has also launched an app for the Apple Watch which can be configured to display a range of account balances, while the mobile banking app has recently been updated with a security feature allowing customers to place a ‘hold’ on their Visa debit card, preventing it’s use until the customer choose to release the ‘hold’.
More than 70 per cent of ING DIRECT’s mobile interactions are by customers using Apple devices. The ‘one swipe’ banking feature is not activated by default and is only made available to customers who chose to configure it through their iOS 8 Notification Centre.
Westpac. St George and CBA, as well as Optus also have plans for banking/payments on the watch.
