I was recently asked to elaborate on my statement in a previous blog that USSD is a cul-de-sac. (Read the blog here.)At the outset, I need to emphasise that I do believe that USSD is an excellent channel to deploy mobile banking solutions. It should always be considered in designing mobile banking solutions and is best suited for deployments where the mobile operator is involved in setting up the solution, but is not prepared to allow banking applications on their SIM cards. It is also well-suited for countries where a culture of "short-code" based solutions are entrenched. I have previously blogged on some of the mis-conceptions of USSD. (See here)
My statement about a "cul-de-sac" was based on my view of where different consumer access channels will evolve to over the next few years. In other words to what extend USSD applications and architectures will be suited for new generation platforms and user-interfaces. I believe that USSD mobile banking applications will not easily evolve to benefit from improved user-interfaces that will become more entrenched in new-generation handsets/phones. I also cannot see how USSD applications can evolve to benefit from the expected advances in improved security paradigms that will more and more be based on certificate and encryption paradigms. Also, the inherent architecture of USSD applications (predominantly based on sessions and grabbing hold of an array of network resources in order to complete a transaction), will not be able to benefit from improvements in network architecture and particularly 3G designs. As data-connections reduce in cost and increase in accessibility, USSD applications will slowly get replaced by applications based on GPRS and IP-protocol.
In summary, I do not believe that USSD designs are positioning mobile banking providers well from a strategic perspective. I would urge banks and mobile operators to work with suppliers that provide USSD applications in such a way that mobile banking can evolve as new technologies become available. These new technologies (3G, new handsets, new security paradigms) are less likely to enhance investments in USSD.