United States Lags Behind In Mobile Banking, Mobile Banking Done Right In Afghanistan

While western countries are leading the world in the development of technology, developing markets like those in Africa and Asia seem to be the ones taking advances of the opportunities created by these technological advances, mainly mobile banking.

China is leading the world in the adoption of mobile banking, with 77% of consumers using their phones to conduct financial transactions according to a global survey conducted by KPMG. This study found that the convenience of mobile banking supersedes consumer concerns over privacy and security and is growing exponential in the Chinese markets. These are some of the results of KPMG's fourth annual Global Consumers and Convergence survey.  Compared with only 18 months ago, the global percentage of respondents who have used their mobile device for banking has more than doubled from 19% to 46%, while the percentage that have used it to buy goods and services has almost tripled from 10% to 28%. In countries with rapidly growing economies a new and growing middle class is experiencing an increase in purchasing power and access to Internet markets and banking via their mobile devices is leading to a growth in commerce and commercial uses of mobiles.

This exponential growth is occurring in the world's fastest-developing economies such as China and India. In China, 77% of respondents say they have used their mobiles for banking and 44% for retail transactions, while in India 38% are using them to shop, and 43% for financial business.

Asia-Pacific consumers are much more likely to be heavy users of mobile online services than those in Western Europe and the US, says KPMG.  Only 19% of US consumers have conducted banking transactions on a mobile device. This is more than double the numbers counted 18 months ago but still ranks relatively low when compared with other nations.

So why is the United States lagging behind in the M-banking revolution?

Of the people who had reported that they had not used mobile services, 52 percent cited security and privacy as the primary reason. Publicized cases of identity theft and hacking scandals like the crash of the PlayStation network this year during which hackers gained access to thousands of credit card accounts, have made many reluctant to conduct any kind of online and mobile banking. Lower technological literacy in older generations has also caused many to shy away from mobile banking, opting instead for the traditional paper and face to face banking styles.

Lack of availability may also be a contributor to the low percentages. Nearly, three-quarters of US respondents said that their current bank either does not offer banking through a mobile device or that they did not know if their bank offered this service. American banks have been slow to adapt to the mobile banking revolution. Where as banks in some Asian and European countries are working towards developing an app for mobiles that would allow them to be used to purchase goods in a store by scanning the phone, American banks have just began to introduce mobile banking apps and run info-commercials about m-banking.

In under developed countries such as South East Asia, the Middle East, and Africa mobile banking is the first established system of banking. Versions of mobile banking have existed in countries like Afghanistan for almost a decade. In these countries mobile banking does not have to compete with the established system of banking many Americans are reluctant to leave. Many in developing countries do not have the luxury of going to the ATM or wiring money at the bank making mobile banking the only viable option.

The United States could learn a lot about how mobile banking should be done from its pseudo-protectorate Afghanistan. Even in the poverty stricken country of Afghanistan were 36% people live below the poverty level mobile phones still have penetration rates up to 40% with 12 million of 30 million people subscribing to mobile services. In this country necessity has become the mother of innovation. According to an article in the Telegraph, since 2009 the Afghanistan Nation Police has been paying salaries through mobiles, rather than in cash. Immediately following this innovation, police officers saw a 10% to 30% increase in their salaries, reveling that corrupt middlemen were stealing the difference for themselves. Some commentators believe mobile payments to the police has prevented defections to the Taliban who were previously able to pay higher salaries.The mobile banking system by which policemen are now paid is a version of the M-Pesa service that has existed in Afghanistan for years and become highly successful in countries like Kenya. To over come language and literacy barriers the system uses interactive voice recognition.It is predicted that this payment system will be extended other branches of the Afghan Army and government in an attempt to weed out corruption.

While the United States has a moderately successful online banking model, the Afghan mobile banking model is more interesting than the US where banks are beginning to learn that the occasional commercial and being able to check balances on mobiles is not innovative enough for a supposedly technologically advance country.

While the United States does lag behind in mobile banking, the American banking system is not necessarily to blame.  Like the Afghan necessity-is-the-mother-of-invention mobile banking model shows, mobile banking is developing to fulfill different needs in different parts of the world.

For example, in Africa, mobile banking is enabling people to pay their utility bills, meaning they do not need to spend a whole day once a month traveling to the city to pay their utility bills. Mobile banking is also helping get resources to people who need it most, for example the local government can send hardship payments directly to the people in need via SMS.

In Germany, mobile payments is being used to make Internet shopping safer and with a lower-than-average adoption of credit cards in Germany it enables online shopping using just your bank account and your mobile phone.

In parts of Asia, migrant workers are now able to send money safely and securely home.

And finally in America, mobile banking is being used so that people can keep better tack of their finances and pay bills via their mobile.