Who Will Benefit From Mobile Banking?

Mobile banking is set to grow exponentially and there will be a number of companies that benefit from this. Most notable among them may be those companies facilitating this trend; those making the 'picks and shovels' that enable 'm-banking'.

According to research by Berg Insight, the worldwide number of users of mobile banking and related services is forecast to grow from 55 million users in 2009 to 894 million users in 2015.
While we may quibble over the exact figures, it is clear that in our increasingly pressurised lives the convenience of mobile banking will lead to its increasing use by a time poor populace.

Here are the sectors that I think may well benefit from this trend, with players named where I feel confident that have a realistic chance of coming out on top.

Banks

Of course, banks should benefit from both lower costs and (even more) opportunities to cross sell their products. It's hard to see one particular bank being much more successful than the others though.

Mobile operators

As we spend more time online, mobile telecom operators such as Vodafone (LSE: VOD) should obviously reap some benefits. Indeed, unlike Internet banking, where the carrier is merely a conduit, using smartphones will enable them to provide authentication. This essentially means carriers should get a slice of the mobile banking pie. How big? I'm not sure.

On the down side, there are a host of competitors in this space and the pace of development is such that you'd need to have a crystal ball to be sure of picking a long term winner. Yet, in the short term, Vodafone is well placed to benefit in the UK.

Mobile internet device manufacturers

Smartphones and other mobile internet devices are already starting to integrate banking services with mobile apps. At the moment Apple with its iPhone and Google with Nexus One Android seem to be getting most of the press. As with banks, it's pretty difficult to pick a winner here.

Software vendors

Companies providing software that ensures secure and customer-friendly online banking stand to benefit from the growth in m-banking as banks and building societies develop their offerings. However, the difficulty, as ever, is in finding companies that stand a realistic chance of benefitting in the long term.

I'm particularly wary of companies that are only now jumping into this space, with no track record of providing front end banking software.

However, a couple of AIM-quoted companies do stand out. They are relatively risky plays so anyone thinking of investing should conduct plenty more research and only invest what they can afford to lose.

Payments

In the area of mobile payments, Monitise (LSE: MONI) is an interesting play. It enables customers to bank and make payment transactions directly from their mobile handset.
It already has around two million customers and Visa owns 13.6% of the company. The share price has already risen six-fold in the past year, valuing the company at just over £100m, despite the fact that it has still to make a profit

It has an enviable list of clients, which include: HSBC (LSE: HSBA), First Direct, Alliance & Leicester, Royal Bank of Scotland (LSE: RBS), Natwest and Ulster Bank.

Account management

Another AIM-listed company that is set to benefit from mobile banking is Intelligent Environments (LSE: IEN). Its mobile banking software platform, based on its successful web-based banking software, has already been sold to one retail bank and is due to be launched as an iPhone app in May by the same (unnamed) bank in conjunction with a 'major retailer'.

Intelligent Environments claims the functionality of its iPhone app is richer than any competitor, due to its ability to interrogate a bank's back office systems. Hence, it can provide an identical level of functionality to that offered by a bank's own web site. This will allow bank customers to securely access their accounts to view statements, interrogate transactions, make payments and take advantage of special marketing offers.

It's early days, but the company has a track record of providing software to facilitate online banking and is already profitable. It's currently valued at £16m.