Mobile banking to match Internet banking in Brazil in 5-7 years

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Boosted by the growth of smartphone use, mobile banking is on track to become as common as Internet banking in Brazil during the next five to seven years, industry analysts say. From 2010 to 2011, current mobile banking accounts grew by 49% to reach 3.3 million. Smartphone sales hit 9 million in 2011.

These numbers were presented by the Brazilian Bank Federation (FEBRABAN), which gathered press members April 25. The institution has conducted usage surveys every year for the past 20 years. Separately, industry analysts at the International Data Corporation (IDC) estimated some 15 million phones will be sold in Brazil in 2012.

According to the FEBRABAN survey, both the number of mobile banking users and Internet banking users will continue to grow. It predicted the two platforms will be so integrated by 2018 that it will be difficult to identify Internet users from mobile users. Today, Internet banking is generally accessed via a web browser and mobile banking is accessed using an application. In the future, these two categories will become mixed, especially due to the proliferation of tablets and will become more popular than ATMs or agencies.

In 2011, Internet banking accounted for 24% of the 66.4 billion banking transactions in Brazil, an increase of 20% from 2010. In 2007, Internet banking represented 13.9% of all banking transactions. Current accounts using Internet banking jumped 11% from 2011 to 2010, reaching 42 million accounts (46% of the total). This puts Brazil on par with mature markets. For example, in the United States, 54% of account users access Internet banking. Germany and England are similar at  50% and 56%, respectively.

M-payment growth slower
Although mobile banking is rapidly growing, mobile payments are not. Analysts in part blame a lack of agreement on standards among telecom operators, banks, and payment processors such as Visa and MasterCard for inhibiting growth.

“We’ve been discussing m-payments,” said Luis Antonio Rodrigues, FEBRABAN’s director for technology. “It is not just carriers, banks, and processors. There are regulation aspects that are concerned, too.”

Mobile payments are also a matter of culture.

“Convenience is a big deal,”  said Gustavo Roxo, vice president at Booz & Company, FEBRABAN’s survey partner. “If you do not provide a payment method as efficient and convenient as credits and debits cards, which are largely used in the country, it will not be adopted.”

A similar effect is in play with near field communications (NFC) technology, according to Roxo. “Investments in NFC have not had a payback yet because there is not a dominant technology,” he said.

Last January, during the GSMA’s Mobile NFC event, Mustafa Almansur, NFC program leader for the Brazilian market at GSMA said NFC is on its way to being launched in Brazil and could become a reality by the end of this year. However, there have been few initiatives.

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ICT investments
FEBRABAN’s survey also shows that total investments in information and communications technology (ICT) grew to US$10 billion in 2011, which is 11% higher compared to 2010. Expenditures on hardware represent the lion share of these investments, followed by telecommunications and outsourced software. Indeed, software development outsourcing represented the largest percentage growth from 2010 to 2011, showing that banks are migrating in-house development to third parties.

By 2015, Brazilian banks will increase their expenditures and investments in ICT by 42%, according to the FEBRABAN survey. This is 2.5 times more than the global average rate of 18%. “CRM and tools to address big data are among the main focus,” said Rodrigues at FEBRABAN’s press conference. Banks aim to add intelligence to their system in order to better understand their client’s demands, he said.

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