Value Creation in Mobile Banking Achraf Ayadi Business Administration Department – MINT Lab. GET/Institut National des Telecommunications E-mail: [email protected] Abstract [11]. The traditional income of telecom operators -initially based on The convergence of the Internet and relatively constant subscription mobile networks creates new fees- will yield more place to opportunities and applications. economic models based on Mobile Treating mobile business as simply an Internet. Then, new incomes could emerge from subscriptions to services extension to the traditional web like data and contents, mCommerce1, could result in missing out unique advertising and advanced networks differentiated qualities for new services like Virtual Private value-added possibilities. Mobile Networks (VPN) and Quality of Service Banking is considered to be one of (QoS) guarantees. This modification the most value-added and important of competition basis in the mobile mobile service available. The current market is accentuated by deep changes research examined technological in consumer’s behaviour: Internet changes in mobile networks and caused a quick evolution of needs innovative attributes of Mobile moving from social communication to Internet. It has advanced the electronic commerce. So, convergence theoretical framework of innovation of mobile communications and Internet in service to develop a customer requires a new analysis on the centric analysis of mBanking value current model of value creation. proposition. The article goes on to Mobile Banking (mBanking) is discuss critical factors in the considered as one of the most diffusion of mBanking and explores important emerging services implying reasons of failure and further actors from different economic prospects of success. sectors in the mCommerce value chain [13][7][1]. “mBanking” consists in 1. Introduction managing a bank account through a wireless Internet-enabled device. The mobile communications market is On the basis of the innovation changing dramatically and the next diffusion theory in service sectors, generation of customers will require we study the technological tendencies more than vocal services. The in the Mobile Internet. Then, we technological and commercial analyze the development factors of convergence of mobile networks and mobile services in the banking Internet puts the telecom operators industry and their impact on the in front of new challenges and value chain. Finally, we conclude in enormous opportunities [6]. Thus, in term of strategic perspectives of spite of the growth of user’s number Mobile Banking and its future and the growing traffic on mobile evolutions. networks, the rise of competition led to a strong fall in prices and margins. Differentiating products will be realized less on vocal 1 “mCommerce” is defined as any transaction communications than data exchanges with monetary value that is conducted via a mobile network [8] 2. Technological changes in narrow niches customers. For example, mobile French operator “SFR” offers mobile networks only one tariff formula: 349 euros for acquiring a wireless PC access Mobile technologies are shared card and a subscription of 75 euros between many standards. Indeed, the per month for a 10 hours connection first generation of mobile networks limited to a maximum of 500 Mo of (1G) was based on voice exchange via data exchange volume. analogic radio frequencies. The second generation (2G) is fragmented Figure 1. Evolution of data between IS-54 and IS-95 US’ standards exchange capabilities in mobile and GSM (Global System for Mobile) networks (in bps) which is the most expanded standard (50% of market share in the world [11]). However, the 2G standards in 2500 general suffer from low capacities in data transmission. Thus, they were 2000 quickly supplanted by standards known as 2.5G (HSCSD, GPRS and EDGE) which 1500 improve data transfer significantly. This step was accompanied by two 1000 forms of Mobile Internet: WAP and I- mode. The WAP (Wireless Application Protocol) is a protocol without 500 licence which was very quickly 0 adopted by telecom operators and 1G 1G 2G 2G IS- 2G IS- 2.5G 2.5G 2.5G 3G 1G DCS equipment industry of mobile phones AMPS CDPD GSM 54 95 HSCSD GPRS EDGE UMTS as the access bridge to Web pages 4,8 19,2 9,6 14,4 9,6 14,4 57,6 115 384 2000 throughout a mobile telephone. I-mode was launched in February 1999 by NTT DoCoMo which counts more than 36.7 Admittedly, the tests carried out million subscribers in Japan [2]. Its appear satisfactory including popularity is due to the similarity connection quality, but such offers between development language I-mode, are limited by a fundamental aspect: the C-HTML (Compact Hypertext Markup the difficulty to convince the broad Language), and Internet’s HTML. This market of millions of individual resemblance makes possible for users by 3G services in a context subscribers to have an easy access to where the compatible apparatuses with Internet services and facilitates use UMTS standard are rare and expensive. of e-mail and access to thousands of This technological context in Web pages. Today, NTT DoCoMo has transition affects the development of several participations in mobile trade via mobile networks, delays operators in Germany, in the United access to rich multimedia contents Kingdom and in France to settle in and accentuates the interrogations Europe where I-mode is emerging as a around "the value proposition" to benchmarking standard. This offer via Mobile Internet. intermediate stage of 2.5G standards allowed to the operators and various 3. Innovation and value other actors in content creation to come near a dubious prospects market. creation in Mobile Internet The heavy investment in 3G licences services for Universal Mobile Telecommunication System (UMTS) 3.1. Innovation in services standard was then a brake for a Mobile Internet growth (Figure 1). In the literature, we identify UMTS networks boost data exchange three principal processes in carrying flow to comparable levels known in out innovation projects: decision traditional PC Internet connection. process (innovation strategies), Also, the services considered as executing process (organizing pioneers are expensive and focus on innovation) and diffusion process (confronting innovation and important determinant of success in market)[14]. Rogers’s innovation the adoption of Mobile Internet theory presented diffusion as a [5][7][11]. However, uncertainties process of progressive communication about the prospective growth of between members of a social system mobile services in general, [18]. Referring to an epidemiologic customer’s response and time needed model, the propagation of an by 3G networks to replace 2G and 2.5G innovation depends on the number of networks are very important [21]. adopters and the importance of their These uncertainties are strongly communication with the rest of the related to technologies life cycle population. The perception of costs replacement and breaking technologies and advantages of the innovations by [14]. In fact, a performing potential adopters determines this technology can fail to replace process of diffusion [14]. Thus, another because of long time-to- Rogers showed that this perception is market processes or the existence of closely related to intrinsic a largely diffused and established characteristics of innovation on the old technology [20]. This failure can basis of which the product will be be related to cultural facts. Large appreciated. Some authors define differences are observed in the innovation by the existence of penetration rates of Mobile Internet "creative attributes of value" [9]. in the world (72.3% in Japan, 59.1% In service innovation literature, in Korea against 16.5% in Finland and innovation is considered as a 5.6% in France [4]). The success of customer-oriented value creation I-mode in Japan, for example, is process. Then, concepts like related to particular socio-cultural “innovation” and “value proposition” factors which affect the are dependent, interrelated and interpersonal communication [12]. inseparable in analysing and prospecting success factors in Table 1. Value proposition and introducing a new product [9]. applications in mCommerce Su g g e s te d v a lu e A p p lic a tio n s 3.2. Value creation in Mobile U b iq u ity A v a ila b le N e w s , s p o rts Internet p ro d u c ts e v e ry s c o re s , s to c k w h e re , e v e ry p ric e s , tra v e l & “Value propositions define the tim e w e a th e r in fo relationship between supplier C o n v e n ie n c e E lim in a tin g P C E n te rta in m e n t, offerings and consumer purchases by c o n n e c tio n g a m in g , identifying how the supplier fulfills c o n s tra in ts re ta ilin g , the customer’s needs across different b a n k in g , customer roles” [8]. Thus, a p a y m e n ts purchasing behaviour via Mobile L o c a liz a tio n O ffe r p ro d u c t & D is p a tc h , Internet is different from that via s e rv ic e s s c h e d u lin g , PC because the customer doesn’t will d e p e n d in g o n d is c o u n tin g , to carry out a long navigation to g e o g ra p h ic e m e rg e n c y lo c a liz a tio n s e rv ic e s , s u p p ly search for a product or service. In c h a in mCommerce, customer is waiting for a m a n a g e m e n t personalized offer, targeted on P e rs o n a liz a tio n M o b ile p h o n e s A d v e rtis in g , products in immediate vicinity and a re in d iv id u a l d a ta b a s e accessible services beyond time and d e v ic e s d e v e lo p m e n t, space.