Make the most of mobile banking
Mobile banking is poised to become a crucial tool to help corporate treasurers make financial decisions and access a range of services. Carlo R.W. De Meijer and Jonathan Bye, Market Engagement at RBS, explain.
It promises greater flexibility, improved efficiency across operational and financial supply chains and a better use of cash and working capital. More effective cash flow forecasting and supply chain management lead to an improved risk profile and, potentially, make it easier to find external financing. The way corporates transact and view banking activity is being transformed by the explosion in smart phone and tablet technology. For example, they can improve productivity and reduce operational costs by using it to manage payments and workflow in real time and, where necessary, on the move.
The benefits for corporates include:
1. Real-time decision making:
Pro-active and user configurable alerts could help with decision making, risk reduction and faster transactions. Treasurers will be able to make decisions much faster because they will have up-to-date information and be able to approve and initiate payments on the go.
2. Operational supply chain efficiencies:
Real-time, mobile-enabled sales, purchasing, distribution and logistics functions could lead to better processing and improved supply chain insight.
3. Efficient cash deployment:
Mobile banking could reduce or even remove cash handling from the transaction process. The more parties in a supply chain who adopt this payment method, the higher the operational efficiency.
4. Simpler cash management:
Mobile banking can help provide more accurate cash positions, projected balances and excess funds estimates.
The rich functionality of online banking can now be extended to the mobile space – including the initiation of payments and creation of new payees, partly thanks to the rise of tablets. A raft of new mobile services in core treasury processes will come to market over the next two years. They will include tools to enhance the treasury’s reporting functions, automating the capture, formatting and distribution of critical financial data directly to the treasurer’s mobile device.
Banks must recognise that online banking, tablet banking and mobile banking require a common framework. About 40 per cent of treasurers use more than one channel to access their bank.
Corporates recognise the efficiency improvements and convenience that can be gained from leveraging multiple channels to manage all aspects of banking activity.
Different channels need to be integrated to ensure payment and treasury functions are streamlined across all forms of mobile and online banking. Corporates want a snapshot of their cash positions via mobile banking tools to help them manage their liquidity more efficiently.
Many of the innovations around payments and other mobile banking services are coming from non-bank players, ranging from Google to a host of less well known technology firms. They also include mobile network operators and non-bank financial institutions. These companies are increasingly looking to attract traditional banking customers with innovative products and applications in areas such as treasury and cash management. Their banks will have to work more closely with these players to encourage adoption of corporate mobile banking and integration with existing service lines.
Challenges include the negative perception of channel and device security, the proliferation of mobile devices and related lack of standards and interoperability, and uncertainty over the regulatory environment. One of the main concerns is security and the lack of confidence in data protection. Fears over issues such as fraud and identity, data and device theft are much higher than in consumer mobile banking. Banks are actively addressing these issues.
A European Commission Green Paper will propose new rules to dictate what kind of information may be shared digitally, or what security measures should be taken by corporate mobile banking providers.
The diversity and number of mobile devices and their operating systems present another clear challenge. Banks and their partners need to offer solutions across a wide range of devices and software platforms. What is missing at the moment are standards that enable interoperability between them all.
To succeed in this new world, corporates need banks which understand their customers’ complex financial supply chains. Factors they need to keep in mind include the seniority level of treasury users involved, users’ operation in multiple time zones and travel frequency. This should help determine scenarios where mobile corporate banking delivers real business value.
Corporates should also expect mobile banking tailored to their needs and further services fine tuned to the specific roles of various users. Banks should study corporate customer preferences in terms of the mobile devices they use. Many banks currently offer a high number of mobile services for smart phones but not for tablets, although this is expected to change.
Mobile banking is still at an immature stage. It is, however, going to play a bigger role for corporates and is expected to become a mainstream channel in the near future.
We will therefore see a swathe of new mobile services in core treasury processes coming to the market and banks that are first-movers in this area will have an advantage.
A number of studies show the potential for corporate mobile banking – especially among treasurers. According to a recent AIT E survey amongs more than 300 treasury executives worldwide:
About 25 per cent of US corporates will use mobile banking by the end of 2013 and 40 per cent by the end of 2015, with an even greater demand from European corporatesTwo-thirds of businesses are at least somewhat likely’ to use mobile corporate;
Two-thirds of businesses are at least ‘somewhat likely’ to use mobile corporate banking solutions to perform basic transactions such as checking balances or transferring funds;
More than half the respondents would be interested in more advanced corporate mobile banking functions including payments transaction approval and initiation.
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