IDG News Service — The mobile phone is turning into the platform of choice for banking in emerging markets. In developed markets, however, the phone has struggled to compete with existing payment methods, and the challenges aren't going away in 2010.

Mobile banking services gained momentum in 2009 with roll-outs in dozens of countries in emerging markets, including Brazil, Cambodia and Malaysia, and the pace will continue this year, according to Sandy Shen, research director at Gartner's Mobile Devices and Consumer Services group.

"[The roll-out of services] will help the unbanked people of the world to get access to financial services and help improve their quality of living," said Shen.

For people in emerging markets the mobile phone is many cases their only means of access to financial services, according to Shen. Developed markets, on the other hand, have well-established banking and payment infrastructures. So the advantage of using the phone isn't that obvious, she said.

Still, mobile banking services are being rolled out in developed markets as well. For example, mobile phone retailer The Carphone Warehouse and Monitise, which has developed a platform for mobile banking services, have joined forces to launch the Mobile Money Network in the U.K. in the first half of the year. The network will then be rolled out in Europe and the U.S., according to Monitise.

Any retailer that wants to offer mobile services can connect to the network instead of developing their own infrastructure, including having to connect to each bank and operator individually, said Richard Johnson, chief strategy officer at Monitise.

Carphone Warehouse will use the network to let consumers send money to friends and family, top up their prepaid mobile phones and use text messages to buy goods, Johnson said.

In developed countries, where the banking infrastructure is well developed, mobile payment services are all about making the purchase of goods more convenient, according to Johnson.

However, for mobile phones to take off as a means of making in-store payments, a technology called NFC (Near Field Communications) is needed, Johnson and Shen agree. It allows users to pay by waving an NFC-enabled handset in front of a contactless reader.

Trials of NFC-enabled phones have been conducted for a number of years, but so far there are very few commercial services. Proponents of the technology face two major challenges: no proven business model and only a handful of phones, according to Shen.

Nokia is so far the only phone vendor that has launched NFC-enabled handsets, but the Finnish phone manufacturer is in it for the long haul. Launching new financial services takes time. ATMs and credit cards didn't become popular overnight, according to Gerhard Romen, director for alliances at Nokia Mobile Financial Services, whose message to other phone manufacturers is to get going.

Continue Reading