By Kim Tong-hyung
Staff Reporter
South Koreans have already demanded their mobile phones to be televisions and Internet devices. Now, they have their digital ``Swiss army knives'' pulling off another trick ― turning into mobile wallets.
Chung Kyung-suk, who runs a coffee shop Hyehwa-dong, Seoul, said his life is better for it.
``It's really convenient that I can sit in my shop and pay my credit card bills through my mobile phone. Forgetting the payment deadline is much less of a concern for me now as I am not running to the bank anymore,'' said the 41-year-old, who uses Hana Bank's mobile banking services provided through KTF, the country's second-largest wireless operator.
``And it's really neat that I can use my handset to withdraw cash from ATMs, leaving my plastic cards at home.''
Reading the latest figures provided by the Bank of Korea, it seems that Koreans are becoming less hesitant about banking with their handsets.
Local banks have provided mobile banking services since 2003, when there were just over 189,000 users. However, the mobile banking population exceeded the five million mark in 2007 and jumped to 8.47 million at the end of last year, representing nearly 70 percent growth year-on-year, BOK said, with daily transactions averaging more than 150.7 billion won (about $111 million).
Industry watchers believe mobile banking will continue to grow at a steep rate this year and the next, with more people switching to data-enabled handsets. And increasing security worries surrounding conventional Internet banking services may also accelerate the migration toward mobiles, which, at the moment, provide tighter defense.
According to BOK, electronic banking, which includes Internet, mobile telephone transactions and also ATM transfers, accounted for more than 82 percent of all banking transactions last year, up from 74 percent in 2005 and 58 percent in 2001.
Internet and mobile banking combined for about 29 percent of transactions, which is more than the transfers made with bank tellers, which accounted for just over 17 percent.
``It seems that mobile banking services are more popular among young customers in their 20s and 30s, as they come from a generation that grew accustomed to credit cards and other financial services provided via handsets,'' said Jung Eun-kyo, an employee of Shinhan Bank.
``Mobile banking is also popular among the self-employed, as they prefer moving money on the go rather than waiting in long lines at banks.''
Mobile banking is accessible through handsets enabled with mobile Internet connectivity and offers the comfort of a bank and automated teller machine (ATM).
Convenience is clearly the key, but mobile banking also appears to be a safer solution than computer-based Internet banking, which is becoming increasingly exposed to security breaches.
Since mobile banking applications rely on closed data-networks used for wireless communications, rather than the Internet, transactions are better protected.
``The country has yet to see its first hacking incident for mobile banking,'' Jung said.
All of the country's three mobile-phone carriers ― SK Telecom, KTF and LG Telecom ― support mobile banking services provided by local banks.
Subscribing to mobile banking services has become easy compared to the days when users had to buy and insert integrated circuit (IC) chips containing their banking information into their handsets.
Now, users can subscribe to mobile banking services on banks' Web pages and downloaded the programs. The banks then provide users with personal identification numbers and passwords for accessing mobile and Internet banking services.
With the mobile banking population growing, the competition between banks is becoming fierce as they race to rollout new services to get a bigger slice of the emerging market.
Shinhan Bank last year introduced a ``Bank Off Bank'' service, which allows users to make small money transactions even without an existing bank account at the bank.
Woori Bank recently strengthened its mobile banking service and now enables users to make stock transactions, withdraw cash from ATMs and pay electricity, water and phone bills via their handsets.
SC First Bank is planning to provide English menus on its mobile banking service for the convenience of foreign users.