Thought Leaders in Mobile and Social: Diarmuid Mallon, Head of Product Marketing for Sybase, an SAP Company, on Mobile Banking (Part 1)

People can use their mobile phones to do just about anything these days, including personal banking. Founded in Berkeley, California, in 1984 by Mark Hoffman and Bob Epstein, Sybase started out as a company that provided enterprise infrastructure and mobile software until it acquired Mobile 365, Inc. in 2006.  The acquisition of Mobile 365 introduced Sybase to the world of SMS. Acquired for $5.8 billion by business software provider SAP in May 2010, by the end of September 2010, the company’s Sybase 365 had delivered more than one trillion messages. That’s equal to about 32,000 messages a second for one year. Although the company continues to provide services in other areas, Sybase continues to thrive in the mobile space.

Sramana Mitra: Hi, Diarmuid. Let’s start with some background about you and the group in Sybase that you work with.

Diarmuid Mallon: I’ve been working in mobile since 1996, back in the days when SMS was a feature that very few mobile networks had. I started off my career as part of the teams that were going around the world trying to convince mobile operators to install SMS because it might one day generate one or two messages a month per customer. We were slightly underestimating just how popular it might be. But don’t forget, in those days, you could only receive SMS, and even when you could send SMS, you couldn’t send to people on other networks. It was basically being used for voice mail notifications. The world has changed greatly.

I started off on the infrastructure side, the vendors of SMSCs, that sort of stuff, but always with a look toward consumer-focused services. I’ve been at what was Mobile 365 and then Sybase 365 for the past six years. Most recently, I’ve been heading up marketing for all of the 365 divisions. At Sybase, we have three basic lines of business. We do Interconnect for the operators/carriers. Part of where we came from was enabling people to send SMSs across networks. That’s where we started off. That’s still an important part of our business, but what we also do MMS and data roaming. We have an IPX, and we even do LT roaming. It’s Interconnect but for everything now. We also do enterprise services. We enable companies to engage with their customers through mobile devices. That can be from something as straightforward as an SMS or push notification to doing customer engagement services in loyalty or marketing. Finally, we have our mobile commerce line of business. That’s where we’ve been working with banks and telcos around the world to enable them to use mobile as a way to enable their customers to interact with them, from checking bank balances to paying for real-world goods and services through mobile phones.

SM: Within that context, talk to me about some of the major trends you’re seeing in mobile from your vantage point.

DM: We do see a number of different trends, but to make this focused on the mobile commerce space, there have been two big trends. The first one is the concept of convergence. If you look back to 2006 or so, you had banks starting to grasp the concept of mobile banking. It’s been around since the mid-90s, but it took a good 10 years for it to get any sort of momentum. For some time, we were seeing operators and others starting to look at mobile payments. You were also starting to see more and more enterprises looking to use mobile as a way to market to their customers, people trying to use vouchers and coupons, and so on. Again, that sort of technology had been around for a while, but it was about 2006 that all of that started to get any sort of real momentum.

At that time, if you were being simplistic, banks did banking, telcos did payments, and enterprises would be doing marketing. If you look at the market now, there’s a convergence toward people doing all of those. In the U.K., there is Tesco, which is the largest supermarket in the U.K., has a banking license and has launched a bank and will be doing mobile banking soon. They’ve been using mobile as a marketing tool, but they’ll actually be seen doing mobile banking.

You’re seeing banks getting into mobile payments. Now, people are no longer sticking to those strict definitions. People do a little bit of every part of mobile commerce, from customer engagement to banking and payments. It’s more like a spectrum of services, and people do certain bits of it. There’s a lot of clear logic to that. If I’m marketing for a mobile channel, I’m promoting a product, the ideal situation is that the person transacts and purchases that [product]. So, you would like him to purchase through the mobile channel. Marketing migrates towards a purchase. If I’m going to have a mobile payment service, I need people to use it, so I need to market it and drive transactions. Both of them are a virtuous circle. That’s one we’re seeing where these absolute definitions of banking, payments and marketing are blurring and people need to do a bit of everything to be successful.

The second trend, which is more recent, is that mobile has an enormous ability to reach new customer segments, particularly in terms of financial inclusion. A great example is a customer of ours in Bangladesh. In Bangladesh, 80% of the people are unbanked. Those people are across the entire country. For any bank to reach and enable those people to be included in the formal financial system, with all the benefits it brings, is a real challenge. The traditional way that banks work is that they’re based around a branch network. But building a branch network is expensive. You’re looking at more than $500,00 per branch to build those out, let alone your running costs. That’s an enormous investment. You could try building out your ATM network. That’s OK for people who are withdrawing cash and paying in cash, but you can’t capture new customers through an ATM network. So, how do you reach them?

What people are now using is mobile. It’s not about using mobile to enable someone to access their bank accounts. It’s about enabling people to open bank accounts through their mobile devices. So, it’s a mobile-centric account, not a banking-centric account. That is a game changer. In Southeast Asia and South Africa, we’re already seeing a number of banks having success with this and bringing financial products to people who could never have accessed them before, enabling people to save money for the first time, and once they’ve saved money and have a financial record, they have access to micro loans, full loans, mortgages, and so on. There are life-changing benefits to those things.

This segment is part 1 in the series : Thought Leaders in Mobile and Social: Diarmuid Mallon, Head of Product Marketing for Sybase, an SAP Company, on Mobile Banking
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