Mobile banking is taking off. Or is it?  The buzz around mobile banking is matched by a recent flurry of product launches. In the US, nine banks rolled out a mobile banking platform to their customers this year. And they’re already late to the game. In Africa, Asia and elsewhere, banks and mobile phone companies have offered mobile payment and banking services for several years. Vodafone’s M-Pesa service has a half million users in just 6 months in Kenya, in a country with just over 3 million people with bank accounts.

Clients might sign up, but will they use mobile banking? Business projections, and a few careers, are likely to live and die on the answer. CGAP’s research in South Africa suggests low-income customers won’t understand the value until they use the service. Once they do, clients can become active users.

But a blizzard of studies in developed markets is clouding the picture with different answers, which has to be somewhat unsatisfying for senior bank and mobile manager deciding on whether to invest in mobile as a channel. Earlier this year, Celent argued 35 percent of online banking households will be using mobile banking by 2010, with new functionalities making mobile banking distinct from other channels.  Meanwhile, a more pessimistic Jupiter Research touts survey results showing only 8% of cell phone users who use online banking services are interested in mobile banking.  The debate in the US frames the same questions managers are asking in emerging markets. So which is it? Consumers will love it, or hate it?

But asking clients whether they’ll like a brand new product they’ve never seen or used is unlikely to generate answers beyond “I don’t know”. The research seems to bear this out. A Compete, Inc. study of US consumers found presumably discouraging results, similar to Jupiter: just 11 percent told Compete they would definitely try mobile banking. But the vast majority (70%) said they need more info before they decide.  

That’s not a repudiation of mobile banking, it’s a whole lot of potential consumers waiting to swing one way or the other. Getting a shot at using mobile banking may be what they need in order to decide. CGAP surveyed low-income clients and nonclients of WIZZIT, a mobile banking service aimed at South Africa’s 16 million low-income, unbanked people. We found clients need to experience mobile banking in order to understand its value. This makes sense, with a new service, and helps explain why Jupiter found few people already primed to jump on mobile banking.

Like US consumers, WIZZIT’s low-income nonclients see lots of question marks. Two-thirds had questions about whether mobile banking would be as safe as other ways to bank. Most saw it as hard to use. When asked what a mobile banking banking transaction would cost, nonclients guessed an average of US$ 1.74, although WIZZIT actually charges much less – between US$ 0.13 and US$ 0.66 per transaction. In short, the market has lots of questions about the new product.

But low-income WIZZIT users love the service. Three out of four said mobile banking was closest to their ideal way of doing banking, compared to bank branches and ATMs. Mobile banking is viewed as “more affordable”, “convenient”, and “safer”. Over 90 percent say its good value, considering the cost versus the benefits.

At least among WIZZIT’s users, experiencing the product seems to make all the difference. Nonclients struggle to understand what this thing called mobile banking can do for them. Clients know. And it translates into intensive usage. On average, WIZZIT clients conduct more than 10 transactions a month, a healthy usage on which WIZZIT earns fee-based revenue.

This is just one study, and many questions remain. How durable is this positive response? Will mobile banking users in other markets have the same feeling? Does this translate into intensive usage which can bolster the bottom line? CGAP is investigating the question of customer adoption with our project partners to better understand whether mobile banking will lead to quality access to finance for the unbanked poor.