As channel innovation continues to be a strategic priority for progressive banks, mobile payments and mobile banking have come of age. Banks have realised that they can no longer afford to put off the adoption of this hugely important channel, yet despite this, banks still have a number of obstacles they need to take into account if they are to successfully tap into the mobile banking market. Infosys Financial Services looks at the important factors banks need to consider before rolling out mobile banking facilities to their customers.
Legality and regulation
Launching mobile payments involves entities in several different industries currently supervised by different agencies. Financial regulators do not currently distinguish between risks from payments initiated via a mobile phone vis-a-vis other payment methods, and these regulatory bodies need to be first brought to confidence and be aligned by closing any gaps or issues raised.
Interoperability and multiple technology standards
Many proprietary solutions compete with each other in various markets affecting adoption and causing market fragmentation. Interoperable standards-based solutions that support various types of payments and currencies must be implemented. For example, in India, the mobile payments infrastructure is based on IMPS (Interbank Mobile Payments Service) spearheaded by the government body, NPCI. In the UK, a similar initiative exists known as Faster Payment Service (FPS). The suitability of various wireless technologies like Bluetooth, Infrared, RFID and NFC in providing the required features in mobile payments is yet to be conclusively proven. From a user perspective, this may mean having a unified view/access to accounts and cards for mobile payments instead of numerous applications.
Software upgrades
Software upgrades are another issue that can be anticipated. It would be prudent of banks and other financial institutions that intend to adopt the mobile technology to come up with software that will be able to check for available updates and update itself automatically. Otherwise, many users will end up being denied the full mobile banking experience as a result of out-of-date software and might not be able to make mobile payments.
Service uptime
As a result of the large number of people owning a mobile device and given that mobile banking services will be running for 24 hours a day 7 days a week, the number of clients is set to increase exponentially. Banks and other institutions should implement the necessary measures to cope with this increase in customer numbers accessing their networks.
Customer centricity
While banks continually need to provision innovative, interactive services that help engage the customer on a new level and increase customer loyalty, the customer’s user experience is a key factor in improving the adoption of mobile banking and payments services. Though the main benefit of mobile payments is in eliminating the need to carry cash or cards, the “time-to-pay” factor and universal acceptance of payment services will be an important influencer of adoption and stickiness of usage.
Security
Security is a real barrier to adoption. In a recent report conducted by Javelin, it found that the rate of adoption of mobile banking stalled between 2010 and 2011, despite aggressive promotion; and similarly rates of mobile purchasing also stayed the same. The reason for this is that Smartphone owners see mobile banking as less secure. In response to this, banks need to address consumers’ needs around security and communicate their commitment to creating a safe and trusted mobile banking channel.
Building a strong and sustainable ecosystem
Since several entities are involved in the realisation of mobile payments such as aggregators, merchants, card issuers and service providers it is in the interest of these entities to join hands in forging a successful partnership. Revenue generating business models (B2C, B2B, C2C, P2P) has to be worked out in cooperation with all stakeholders with due importance to pricing the service in accordance with the customer’s willingness to pay per transaction.
The demand for mobile payments can only be achieved if there are many useful and innovative services available to consumers, thus creating a “viral effect”. Mobile banking and the ability to process mobile payments are key areas for many customers as they seek to enhance consumer relationships and provide better access to their accounts. Infosys have been working closely with customers worldwide who have successfully implemented mobile banking technology to create and identify opportunities through the mobile channel, which has helped them build, foster and sustain lasting relationships with existing customers and emerging consumer segments.
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