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Emerging role of Smartphones in retail banking 

Most leading banks have spent the last decade focused on building internet capability and have only started to re-focus their efforts onto mobile banking in recent years, reflecting the ever-growing need to be mobile-ready.

Banks have taken a "wait and see" approach before investing heavily in mobile capability. However, it is clear that mobile banking will be the channel of choice in the future. Smartphones are proving the key enabler of mobile banking. The ease of use and functionality they offer has led to a rapid take-up, with sales now significantly outstripping those of standard mobiles. Sales of tablets which were new to the UK market in July 2010, are growing even faster with their customer share more than doubling in the last 6 months.

Smartphone and tablet innovation is set to continue at pace as Apple, Google and Microsoft vie for supremacy. As the adoption of smartphones continues and speed of access improves, customers across every age group are becoming increasingly comfortable with conducting more and increasingly complex transactions through their mobile phones. By 2013, PayPal expects its mobile payment volumes to total US$7.5bn.

With mobile set to become the dominant channel in digital banking, customer demand is placing growing pressure on banks to deliver advanced and engaging services through mobile platforms. Royal Bank of Scotland is one of the most recent movers, having launched two free BlackBerry apps and a new iPad app in September, giving RBS and NatWest bank customers extended mobile services which allow them to check their balances, transfer money and locate cashpoints.

As KPMG's recent report 'Monetizing Mobile' made clear, enormous benefits will accrue to those banks that seize the initiative. A clearly formulated strategy and an agile delivery model which is responsive to rapidly changing innovations are imperative to unlocking the potential mobile banking offers.

What is that potential exactly? Japan's Jibun Bank is a case in point. It was created in 2008 as a joint venture between the country's largest bank, BTMU and KDDI, a telecommunications operator. Designed from the outset as a mobile-only bank without a branch network, within two years it had more than one million accounts and US$1.7bn in deposits.

Banks that most effectively capture the opportunities presented by mobile banking could realise similar benefits.

By Yvonne Byrne, Executive Advisor in the UK

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