In the past, the banking and telecommunications industries were powerful forces that had to be taken into account. Each company has had a wide customer base and has been offering more and more life-changing, money-saving, and money-making products. They all meet the basic needs for universal communication and easy access to financial services.
Banks, on the other hand, didn’t seem to be able to keep up with the demand for financial services as quickly as they should have. People in South-East Asia, Africa, and a lot of other developing countries were affected by the issue to a large extent. Many people live in remote areas and can’t get traditional banking services in full.
Communications companies have grown quickly over the years so they can reach the farthest parts of the world. Their revenue from voice calls had hit a saturation point. They also had a new strong competitor in the form of OTT services, which are quickly becoming more popular. Telcos found themselves in a very unique situation. Over 80% of their business was now selling video traffic from streaming services like Netflix and YouTube.
All of that made telecommunications companies, as well as banks, look for new, unconventional ways to make money and make their service portfolios bigger and more diverse. For both financial services and mobile payments as a telecom value-added service, it was a big surprise that this could be the next big thing for them.
The Partnership: Fintech + Telecos
Telcos have one big advantage over banks: they can be reached anywhere, even in rural and remote areas. According to reliable sources, GSM coverage around the world will be as high as 95 percent in 2020, and LTE will be even better with 83 percent. With so many ways to get in touch with everyone, it was only natural for telcos to use this competitive advantage for things other than just communication.
It opens up a lot of possibilities for both businesses and people who use the telecommunications network. It has been very important for people who don’t have a lot of time or money to go to a bank or who don’t want to deal with complicated banking procedures to be able to use a regular feature phone as a telecom mobile wallet.
They can use this model of mobile payments to make money from processing fees, currency conversions, and geo-targeted ads because they can see where people are and what they do. To make money for telcos, they might use other types of financial instruments, like deposits of mobile money backed by real-money collaterals in a partner bank.
If the two industries were to merge together, merge individual companies, or form hybrid organisations, there would be a lot of benefits for both of them.
Banks would love:
- Telcos’ digital wallet integration with their wide range of products and services
- It gives them access to a huge source of valuable big data and analytics that could help them grow their customer base with more retention and less churn.
Telcos would be given:
- Wider use of their communications networks access to a wide range of financial tools and products from the banking industry.
- This enables more money from bundled offers and promotional campaigns that can be used right from the telcos’ mobile wallet apps
As a result of cross-industry mergers, operators and banks should expect a lot of good things. How do customers benefit?
The Value of Mobile Payments
In the past, both banks and telcos have been offering customers a variety of ways to pay with their phones. Apple launched the Apple Card in 2019 with the help of Goldman Sachs and Mastercard. This is on the high-end side. This card can be used with Apple Pay, and it gives you 2% cash back on all general purchases and 3% cash back on Apple purchases. It also has fast and easy P2P money transfers and a lot of other great things.
To fight back, T-Mobile and BankMobile came up with a service called T-Mobile Money, which is a mobile checking account service that doesn’t charge fees and can earn up to 4% interest on deposits of up to $3,000. T-Mobile Money is a service that comes with no fees.
French telecom company Orange launched a completely new online banking platform called Orange Bank in 2018. The goal is to get at least 2 million customers and be a big change in the market, so it’s called Orange Bank. I think they’re going to meet their goal of having 1 million people who use the service by the summer of 2020!
This isn’t the only thing that has happened in the world. More and more traditional financial institutions are giving birth to completely digital spin-offs or teaming up with the best telcos to keep up with market trends and meet customers’ needs.
Most of these new banking and telecom platforms are built to be scalable and extensible, which means that powerful and functional APIs are being made available to OTT partners and
third-party developers who want to use them. If more people use different kinds of software, they’ll end up with more payment integrations and financial tools.
To answer the question in the title of the article, yes, banks and telcos should work together. This is what you should do. In fact, they have no other choice and the process is already well under way. In a world where there are a lot of diseases, having all of your favourite financial tools at your fingertips is more important than ever.
In the years to come, we’ll see more and more hybrid telecommunications companies that offer a wide range of banking services and a lot of different ways to interact with them. It doesn’t matter where you live: In five years, you might not remember what it was like to go to a bank at all. That might be a good thing, after all.
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