Global financial institutions have identified emerging mobile platforms as a major revenue growth opportunity as they fight to counter threats from non-traditional sources.
According to a new US study, 84 per cent of banking and financial services (FS) executives believe mobile payments will become a significant revenue source in the next one to four years, while 73 per cent expect them to be mainstream within four years.
The KPMG LLP research report, Monetising Mobile: How Banks Are Preserving Their Place in the Payment Value Chain, focuses on the potential of mobile network operators working with device manufacturers to develop a system independent of traditional payment infrastructure.
As new market entrants, such as specialist online payment players and online service provider giants start to threaten their traditional revenue sources, banks have become increasingly proactive in developing mobile payments solutions, getting actively involved in standards setting and partnering with other players in the mobile payments value chain such as merchants and mobile network operators.
According to executives from the technology, telecommunications and retail sectors, who also participated in the survey, banks still have an edge in the evolving mobile payments value chain. However, they face a number of significant challenges that are hampering adoption. Indeed, 70 per cent of banking and FS executives cited security concerns as their biggest challenge – something exacerbated by a spate of recent online security breaches. The survey reveals lack of technology standards and infrastructure are also major barriers to the widespread rollout of mobile payments.
“We believe that if banks can come up with a safe, easy to use and ubiquitously accepted system, consumers will very quickly adopt mobile payment solutions, as they have other mobile services,” said KPMG LLP Financial Services principal, Mitch Siegel. “But adoption will be driven by demand as consumers increasingly look to use their mobile devices to accomplish everyday tasks such as buying lunch or paying for a taxi.”
Although few survey respondents were willing to fully endorse any single payment technology, most cited the emergence of Near Field Communication (NFC) as the technology with the most promise and ease-of-use for customers.
Commercial banks are also showing growing interest in using mobile platforms as a key differentiator and potential revenue generator.
“Many innovative banks are finding that they can actually drive revenues from their mobile offerings by bundling enhanced corporate services, such as cash management tools and key back-office functionality for their corporate clients,” Siegel said. “Mobile payment solutions can help these clients by speeding up and automating authorisation procedures related to reviewing and approving payments.”
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