Banks Fight Back
"Banks themselves see they can compete with these types of third-party services," Barker adds. "Banks are launching their own mobile wallet products to compete with these other services out there. I don't believe the mobile carriers have figured out the best way to play with this. They have been offering things like direct billing, but they don't typically provide all the range of services a bank would."
For this reason, Barker says, more of a partnership on mobile money ventures between banks and telecom companies is likely going forward. "[Telecom companies] realize if they don't have a bank-friendly approach, it is bad for them," he asserts. "They are opening themselves up to embracing banks."
Hannes van Rensburg, CEO of Fundamo, acknowledges banks' role in providing financial services, but he adds that telecom companies can help banks by offering access to their massive networks to reach unbanked consumers. "Mobile operators bring service into every part of emerging countries, but they don't have the expertise that banks have in financial services," van Rensburg says. "It's a win-win for banks -- they can increase transactions and deposits and offer other services. I don't think it's disintermediation at all; it's a great opportunity for banks and for mobile operators."
Van Rensburg argues that mobile banking also is more secure than other channels, and thus more trustworthy -- and attractive -- to the unbanked. "It is more secure than the traditional methods. It has been designed from the ground up for security, everything is encrypted," he contends. "It's a very cost-effective and natural way to deliver financial services."
Crossing the Cultural Divide
Perhaps the biggest obstacle to building long-lasting relationships with the unbanked is cultural, suggests CSC's Barker. "Many may have an inherent distrust of banks, perhaps because they come out of an environment or a country where banks are not always seen as trustworthy," he says.
As with First National Bank's Van Wyk, Barker notes that many of the unbanked have a cash-only mentality. Banks must educate these consumers about the financial impact that approach has on their lives, Barker says. "We found that, at least in the U.S., the unbanked aren't really looking at the whole picture to understand what they are spending on financial services, such as check cashers and payday lenders," he says.
"They're getting charged significant fees for these services," Barker continues. "A banking product with a reasonable monthly fee, even if it's $10 a month, still lets them come out well ahead using the banking product versus what they're currently doing."
Ultimately, adds Barker, banks will have to learn to serve the unbanked and underbanked, because it's an ever-growing market segment. "There's a huge untapped market of unbanked folks out there," he says.