Regional CFOs yet to bank on mobile technology

Mobile corporate banking is rising in popularity, say service providers, but many CFOs and treasurers remain unconvinced.
Red Gillen, senior analyst, Celent
Red Gillen, senior analyst, Celent

Treasury functions are increasingly being conducted via handheld devices in Asia, claim service providers. Whether through virtual commercial and processing cards (whereby a single-user account is dedicated for a specific transaction and then delivered to a mobile device), or through funds transfer approval, payroll release, or monitoring settlements of incoming accounts, busy treasurers and CFOs are now carrying out their duties on the run.

Deutsche Bank reports positive take-up of its mobile authorisation solution since its launch in 2008, with 500 companies in Asia-Pacific having signed on to the service. The bank boasts an average 20% monthly take-up rate. “We see strong interest from corporates, and clearly from the current take up rate we expect more corporates to sign up for this. Mobile banking is another channel through which a client can communicate on corporate/banking activities. We do not see this as a replacement for any of the existing channels but more of a complementary channel,” said Niranjan Perera, Deutsche Bank’s regional head of cash and liquidity client access.

But even though the idea of mobile banking is catching on in the corporate world, and despite the very real advantages that treasurers can derive from the technology, usage rates are still well behind those in the retail sector. Red Gillen, a senior analyst in the banking group of consultancy firm Celent, said concerns about security, especially with regards to large payments, have been allayed and mobile technology is now regarded as being as secure as on-line banking. Instead, he reckons the biggest impediment to growth is a general lack of corporate mobile services offered by banks.

“Development is being held back by the lack of corporate mobile banking offerings. Most banks are geared to developing consumer mobile banking, but this will change with time,” said Gillen. “In tight economic times, banks' development resources are limited. As such, mobile budgets are allocated to areas of greatest impact.” This is in contrast to consumer mobile banking, which requires little customisation and can be offered to a bank’s entire retail customer base. Corporate mobile banking, on the other hand, typically requires a relatively high degree of customisation to support specific feature sets, and can only be used by a small segment of a bank's customer base.

In many ways, corporate mobile banking is best suited to small and medium-size companies where executives typically cover a series of functions, but without a large team to support them. Multinationals, by contrast, with their economies of scale, dedicated staff and greater resources, are better able to afford the significant costs for the technology, but may derive less value from them, said Gillen.

One CFO that FinanceAsia spoke to for this story said that he saw no great need for mobile services to carry out his functions which could be comfortably performed from the office and, importantly for him, from a large screen. Cost and security concerns were an obstacle to the adoption of the technology, he said.

J.P. Morgan’s client survey in the first half of 2010 also highlights this lack of enthusiasm in the corporate sector. The survey notes that while J.P. Morgan’s mobile banking platform in the US has recorded a 300% increase in registered users over the last 12 months, the pace of up-take by corporates in Asia is considerably slower. The survey also shows that while demand for mobile corporate banking solutions is increasing, fully 80% of the bank’s corporate clients surveyed indicated that they did not even have a mobile strategy.

“The challenges in Asia-Pacific revolve mainly around security, audit and risk concerns, and a lot of the time it also comes down to the client’s internal company policies around mobile banking,” said Mark Wuscher, segment head for corporates at J.P. Morgan treasury services. “Clients are, however, more open to the use of mobile banking to facilitate information delivery, such as alerts on specific credit/debit activities, to take exceptional actions, account balances and transaction history information.”

Given the number of potential retail customers still to convert to mobile banking in Asia, some market commentators believe that the mass retail segment will continue to dominate the resources of the service providers.

Though, not everyone agrees with this assertion. “Mobile payments in the retail revolution tend to get the headlines, but we think the value that can be unlocked in the corporate space is materially higher,” said Sandip Patil, regional head of payables and receivables at Citi global transaction services. “But both are important: banks know this and our clients know this. That is why we continue to invest and ensure our leadership in both spaces is strengthened.”

Patil said the most significant obstacle to the wider adoption of the technology is finding common ground. “The main challenge is that for this new mode of transacting to be successful, all parties must agree on a common standard and a common goal. This is a bigger challenge than the perceived security concerns with mobile transactions,” he said, noting that complex corporate work-flow mapping, corporate security and adoption standards, and integrating with back-office ERP systems all pose problems. “Such challenges, however, are rapidly being resolved in line with more widespread internet adoption,” he added.

Share our publication on social media
Share our publication on social media