Retail banks can expand their businesses and hold off new competition through cross border money transfer services (MTSs) supported by mobile phones, according to analyst firm Gartner.
By submitting your personal information, you agree that TechTarget and its partners may contact you regarding relevant content, products and special offers.
The banks, working in partnership with mobile operators, can build new revenue streams and develop relationships with migrant workers in the UK, through mobile phone based international payment services. This was a finding in Gartner's Mobile Phone Money Transfer Services: Compliance is a Bank's Best Friend report.
A system where an international money transfer is initiated from a mobile with recipients receiving details of the payment and relevant information to access it by phone could make small regular payments cost effective. People could send smaller amounts at various times convenient to recipients.
Gartner said the cross boarder money transfer market currently eludes banks and is dominated by companies such as Western Union, which has about 17% share of the market.
But mobile payments could change this and banks have an advantage in setting up cross boarder mobile payments because they have a good understanding of international regulations regarding money transfers, according to Christophe Uzureau, analyst at Gartner.
"A mobile phone money transfer service is about creating a supportive channel, not a new payment system. Mobile telephones can be used to leverage existing payments systems and enhance information systems," said Uzureau.
He said banks should use their experience and compliance with anti-money laundering and counter financial terrorism regulations to get a head start or attract mobile operators as partners.
"Banks have an understanding of compliance which mobile operators do not have," said Uzureau.
If banks offered this they could develop relationships with new customers, collect more information about customer habits and bring millions of pounds worth of unregulated payments into the system, which are currently being processed via informal channels.
Uzureau said banks must launch these services now because the mobile industry is lobbying for a relaxation of the regulations around international transfers, which is an advantage of the banks.