Mobile Banking: Challenges and Opportunities for the Financial Sector

Mobile Banking: Challenges and Opportunities for the Financial Sector

Raquel Arguedas (National University of Distance Education (UNED), Spain), Inmaculada Pra (National University of Distance Education (UNED), Spain) and María Dolores Reina (National University of Distance Education (UNED), Spain)
Copyright: © 2014 |Pages: 22
DOI: 10.4018/978-1-4666-5190-6.ch010
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For over a decade, financial institutions, driven by advances in Information and Communication Technology (ICT), have been shifting to a new business model that prioritizes new channels for managing customer relationships. These new channels, which are based on the Internet and mobile devices, offer major business and growth opportunities. This chapter looks at the current status of online and mobile banking in Spain from the perspective of both financial institutions and users and compares it to the situation in Europe at large. Following an analysis, it draws a number of conclusions regarding the future prospects of these channels and the areas offering the greatest potential for growth and profitability.
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The global banking sector is currently undergoing a major transformation as a result of the financial crisis that began in the summer of 2007 and was exacerbated in September 2008. To address the consequences of this crisis, and with the additional goal of strengthening the domestic banking system for the future, Spanish commercial and savings banks have embarked on a process of consolidation, restructuring, and transformation.

In this context, they are prioritizing areas such as cost reduction, risk management, distribution channel management, and customer relationship management.

In particular, increasing importance is being given to alternative distribution channels based on new technologies and intended to supplement traditional branch networks. Telephone banking, online banking, and mobile banking are the most representative examples. The latter option—banking via mobile telephone systems—is the area in which most Spanish commercial and savings banks see the greatest business and growth opportunities.

At the same time, we are witnessing a shift in the European banking business model toward relationship banking or customer segmentation, which emphasizes personalized services for customers and process automation.

This chapter aims to examine the impact of information and communication technology (ICT) on banking channels and to identify the resulting new challenges and opportunities. The first section, which provides background on the issue, looks at banks’ involvement in the ICT sector in terms of their investments in ICT to date and the outcomes thereof. The second section examines the adoption of the Internet as a new banking channel (online banking) and its evolution in Europe and Spain from a twofold perspective: that of financial institutions and that of the new channel’s users. The third and fourth sections focus on mobile banking, analyzing the evolution and impact of the mobile revolution on the financial sector and delving deeper into the key role that this tool (mobile devices) plays in two emerging business trends that will give rise to new challenges and opportunities for the financial sector.

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