The Evolution to Mobile Banking

Money is anything that is accepted in a given society as a payment of goods and services and a repayment of debts.

Fiat money like paper bills or cheques which is declared as legal tender is issued by the state or governing body responsible for the monetary region in question, and is accepted within the jurisdiction of the issuing government with an applicable exchange rate.

Since money can take any form, digital technology through digital currencies offers an attractive alternative for the payment of goods and services and the repayment of debts; in other words, an attractive medium for monetary transactions. Today most digital currencies take the form of fiat across a digital medium, but new technologies and concepts through cyberspace money will transcend geographical and commercial boundaries and jurisdictions and will facilitate global commerce. 

Banks play a critical role in creating money, and ensuring the availability and credibility of the money supply. Banks can create money at will by creating deposits and are also responsible along with the central bank for taking the necessary steps to assure the credibility and stability of the money supply in the short, medium and long term. The public usually accesses the available money supply through points of contact such as automatic teller machines (ATMs) and retail bank outlets and branches. 

The evolution to mobile banking envisages a fully functional digital wallet, via a mobile communication terminal, thus offering an attractive and secure alternative to today’s physical wallets. This evolved digital wallet will include all forms of payment capabilities such as credit and debit functions at the point of transaction, identification and tracking capabilities linking the wallet application to the applicable responsible(s), and deposit capabilities where money will be directly deposited and deducted from the mobile wallet without the need of ATMs and bank branches.

Unauthorized access, loss, theft and other security breaches will be immediately addressable through a one stop point of contact to the service provider by the authorizing body, the owner/subscriber, or a relevant third party such as the Internal Revenue Service.

 

The high Kenyan crime rate led to an innovative electronic wallet application, where all payments are executed through the mobile telecom network via mobile phones. Today, over 50% of Kenyans use mobile payment services to send money to relatives in rural areas where no internet or bank access exist; and also pay for shopping, utilities, salaries, entertainment and a variety of other services including taxis and general transportation services. Customers register with a designated point of access such as a retail outlet or gas station, load money onto the mobile phone, and dispatch payments to other mobile subscribers through SMS. The recipient then converts the SMS into cash at the nearest point of access. The ubiquitousness of the mobile network increases transaction efficiency and fluidity as well as security since muggings are scarce where there is limited cash availability.

Greece is currently under IMF supervision with a black economy that reaches as high as 30% of GDP. One way to curb this situation is to limit the availability of national cash and rely on mobile wallet applications for all internal monetary transactions. This would allow the Hellenic government to put a tighter control on the availability of the money supply, trace all rogue and inexplicable sources of income, fully digitize and automate interactions between the public and the revenue department, and guarantee the issuance of receipts where applicable. All international transactions will still use the Euro, which is the established fiat within the Eurozone.

 

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