Mobile banking is a budding service in Latin America and is expected to catch on in countries such as Chile, Brazil, and Argentina, where the economic and political condition is relatively stable. Success in the mobile banking market will help mobile operators shore up their average revenue per user (ARPU) even when the mobile voice traffic slows down.

Currently the main channel of connection is SMS and is likely to remain so since mobile banking through messaging will be less expensive for the user and will not require a sophisticated handset. But, even though the most important connection channel with the highest rates of adoption is messaging, accessing mobile banking with a special WAP application will represent a considerable increase in mobile data use, and carriers will be most interested in working together with financial institutions to promote this value added service.

"The increasing usage of mobile devices over the last three years in Latin America has created a more suitable market for advanced applications and features such as mobile banking," says Frost & Sullivan Consulting Analyst Andres Sciarrotta. "By 2008, most major banks in the region had provided some kind of mobile banking service; however, the level of adoption continues to be low."

The slow uptake can mainly be attributed to mobile subscribers' inadequate awareness of the benefits of mobile banking. Mobile banking is often viewed as lacking in security and users labor under the misconception that their personal information will be divulged to third parties.

To assuage these security concerns, banks offer special codes and passwords for different transactions. They have also launched educational marketing campaigns and hired more instructive personnel to let the clients know that the service is completely safe and secure. Their education programs are aimed at encouraging end users to learn and understand the numerous benefits of mobile banking.

"Familiarity with online banking capabilities promotes the adoption of mobile banking services," notes Sciarrotta. "The similarity between both services and the fact that mobile banking is an extension of online banking increase the possibility of enlarging the subscriber base."

Banks and mobile operators are hoping to rope in more subscribers by partnering and improving mobile banking services. Some banks are considering the provision of payment services since most banks currently offer the option of recharging the mobile phone but not the possibility of paying by cheque or credit card.

Mobile operators must go the extra mile to attract not only end users to mobile banking but also financial institutions.

"Solution providers greatly facilitate the process of entrance of financial institutions since they offer packages that contain operator guidelines, network protocols, the security regulations needed, and all the information required by the bank," observes Sciarrotta. "Operators also help financial institutions understand the market better and drive participation."