Why the mobile bank in US is less popular than Japan?

With the development of the technology, the Mobile bank is one of the most potential functions in the commercial bank system now. However, as the article “mobilebankerscan” argued, many drawbacks of the Mobile Bank need to be improved, and the core one is the security of the mobile bank. But does it really the security problem of the mobile bank made both the consumers and the banks reluctant to use and develop its potential to full as the article “mobile banker scan”mentioned and keep the mobile bank less popular than the Japan or India? In my view the sink cost of the American banks had invested in, difference in culture, and lacking a global vision result in such an awkward situation of the American mobile bank system
First thing first, as the author of the article “Mobile Insecurity: Reality or Just hype?” said, two mainly threats, hacker and stolen of the cell phone, lift their hand against the Scalability & Reliability of the mobile bank. Not only him, had some experts also said that “Technical hurdles, security concerns and lack of merchant acceptance may keep mobile payment from mainstream consumer acceptance.” [1] Does this really make sense? In my view, the technology to steal the information of the mobile bank customer is more complicated than that of steal the information of the Internet bank customer, even more hard than to steal the information of the tradition credit card. (The cost of tradition credit card fraud is high; in the UK in 2004 it was over £500 million [2]). If so, the chance of mobile bank fraud should no larger than that of Internet bank fraud. Or why this security problem does not stop the popularization of mobile bank in Japan?
I think the mainly reasons are that unlike Japan, US has already developed such a completed widespread and convenient retail bank system which satisfied the consumer most. As a well-developed market, the cost of the tradition payment methods, debit and credit, has been accumulated with the building up of the numerous Auto Teller Machine, the transaction machine and the branches in different areas. Moreover, the payment method of Mobile bank is quite different from other E-bank method, Internet Bank, because the Internet Bank could never take the place of the tradition credit/debit card as a useful tool of daily consumption. The larger the sink cost is, the more reluctant the bank wants to change. Moreover, the transaction system is connected, so if any one of the bank want to change the payment methods, all the bank need to adopt a new kind of machine to adopt this method, which quite a large project is to reached an agreement among all the banks. So the first-mover of adopting a large scale of mobile payment methods was impeded by the huge sink cost of tradition payment methods. However, if all the banks reach an agreement to adopt the newly methods, the pattern of every bank’ market share would not change because the consumer could do the same things with their original bank. Moreover, unlike the Japanese and Indian, the American likes to spend money in the future but not save money. The payment methods of different banks need to become a system so it can attract the consumers. But in Japan, the people there like to save money, the interest rate of Japanese bank always negative in the last 10 years. And also, draw from an article “Generally, credit cards in Japan are used for a smaller share of transactions, with a higher average amount, and with less borrowing per transaction.” (Credit Cards and Debit Cards in the United States and Japan; Ronald J. Mann ; Vanderbit Law Review, Vol. 55, p. 1055, 2002). So the Scalability & Reliability would never be so developed as American here. And according a report, the sense of responsibility the Japanese companies hold are much stronger than companies in American. Always a Japanese company more focus on service the whole society but not how many profit the company earn.
The reasons above led to less-motive of American Bank willing to change the pattern of the market. However, as far as I am concerned, even though the mobile banking could hardly lift revenue of the American Banks up to a new stage, it could serve as a useful tool for the company to seeking global opportunities. When the commercial bank is about to enter a foreign market, one of its disadvantage is that it is impossible to build the same numbers of branches in that country as the local commercial bank did. But if the commercial bank hold a sane security and have a good reputation in its own market, these two things will make the globalization real. What the company needs to do is work with local telecom serve to build an advanced transaction system. Anyway, the cost of building such a system is far less than that of hiring clerk and renting office. Moreover, when the new payment method changes the local customer’s behavior, the bank could set up a “first-move” advantage and force the local competitors follow his standard.

[1] http://www.americanbanker.com/mobilebankerscan.htm
[2] http://en.wikipedia.org/wiki/Credit_card

Posted by FengGuo
Article:
"Mobile Insecurity: Reality or Just hype?"
http:http://www.americanbanker.com/btn_article.html?id=20081028BX7G0X2H
"mobilebankerscan"
http://www.americanbanker.com/mobilebankerscan.html