Mobile apps, key tools for Latin American banks

What? Latin American banks are increasingly embracing mobility by means of feature-rich mobile apps, while also updating their product offerings online.
Why is it important: Leading financial institutions all over Latin America are launching mobile apps, due to security considerations, the general lack of viable USSD alternatives, constant increase in SMS messaging costs, and also as a means to cross-sell new products. This opens the door for mobile app developers in the region, who along with banks’ marketing teams may focus on creating integral banking solutions on the go.

In an entry posted last August in his blog, Matthew Talbot, senior VP at SAP, resorts to World Bank’s data to say that Latin America has surpassed 100% mobile phone penetration. (World Bank estimates that, on average, there are 107 mobile phones per 100 people across the region.) However, actually about 30% of the population still doesn’t have a phone –the number is inflated due to city dwellers that own more than one device. Still, Talbot says, “adoption is strong and growing”.

Due to active marketing and advertising campaigns, along with competitive monthly plans, iOS and Android devices are becoming more popular each day. Thus, leading financial institutions region-wide have spurred full-on development of mobile banking apps, their priority ranking over the goal of reaching the unbanked and underbanked.

However, this doesn’t mean that Latin American banks are scorning those outside the traditional banking system. As Talbot says, considering that the vast majority of the population still relies on feature phones with limited data capabilities, “rural banks and most microfinance institutions continue to offer rudimentary banking services via SMS.”

Some of the main reasons that drive such a wide interest towards mobile banking apps are security, constant cost increases of SMS messages, and regulators’ insistence, in some countries, on the use of a second authentication mechanism for SMS banking transactions –in some cases involving IVR callback. Also, cardless ATM cash-out is another service with a growing popularity, because it enables consumers who receive funds via P2P transfers, but who are not existing bank customers, to get their funds via ATM networks. In this regard, as Talbot says, “banks with significant physical presence are looking to reinforce that differentiation through seamless integration with their mobile offerings.”

Hand in hand with mobile development, “banks are reexamining their Internet banking, aware that advanced mobile solutions could highlight deficiencies in their online offerings. While the majority of initiatives had the consumer in mind, Latin American banks are increasingly targeting corporate customers with enhanced, integrated Internet banking and app-driven mobile solutions.”