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Mobile Payments - Revolution through Digitization

While Payment industry is seeing a major consolidation at the Banking middleware and Back Office (payment processing, clearing and settlements) processes, I see a great degree of disruption in the Payments origination & instrumentation processes led by mobile devices.

This generates equal opportunity to the end-customers, banks, merchants, merchant acquirer and IT service providers and be a part of an exciting future.

Here is my view on potential evolution of mobile payments, driven largely by Technology and consumer behaviour, if we are able to enforce user adoption through proper products, services, governance (Privacy and regulatory issues):-

Level-1 - Ability to use banking services over mobile - Transaction history, fund transfer, treading, cheque deposit, chat, click to call, e-statements etc.

It has a high degree of adoption in developed and rapidly developing economy, also  critical user base for sustainability and maturity of services can be seen.

A mature web, mobile platform with Portal, collaboration, ECM, middleware integration(API), capabilities could help achieve this stage.

Level-2 - Ability to do commerce & services using mobile services - Pay for services (Gym subscription, or pay movie tickets etc) or goods purchased (m-Commerce) etc.

Ability to upsell and cross sell based on history of purchase for specific brand, potentially if Banks are ready to participate in promotional activities then cross brand sales and services are also possible.

It has high degree of adoption in developed and rapidly developing economy, also  critical user base for sustainability and maturity of services.

A mature web, mobile platform with e-commerce platform, digital marketing (targeting, web Analytics, optimization, Social, content management), guided search, ECM, BPM and middleware integration (API) capabilities should help to achieve this stage.

Level-3 - Ability to use location and payment information to provide value added services - Ability to assist in planning based on funding objectives. This needs to be driven by Digital wallet (NFC) strategy (paypal, Square, google wallet, ApplePay or even Banks own digital wallet etc).

Banks can drive adoption of financial tracker against defined saving goals and measure savings objectives (Standard Chartered Breeze Wishlist), if we extend this further, banks can offer financial negotiation services where banks can negotiate a deal with hotels and airlines for a possible holiday package, even drive co-financing or co-development of product and services.

Also, banks could drive Reward and loyalty through merchants or card issuer and align it to customer preference. (Visa Signature, JPMorgan Chase acquired Bloomspot to deliver discounts for restaurants, Barclaycard has custom-made Offers website, Foursquare is working with Visa and MasterCard to provide location-based reward solution).

It has seen low to moderate adoption across the world. Still not driving main stream revenues, critical user base is yet to come for sustainability and maturity of services. This needs wider collaboration between Merchants, acquirer and issuer and networks to drive the ecosystem to wide customer adoption. But, once it is a part of main stream it will drive the next phase of maturity.

A mature web, mobile platform with marketing, sales and servicing platform, digital marketing (targeting, web Analytics, optimization, Social, content management), biometric security, Big data driven insights & predictive analytics, intelligent BPM and middleware integration (API) capabilities should help achieve this stage.

Level-4 - Ability to use mobile as payment advisor - Dynamically advise consumers on the most appropriate payment solution for any particular transaction. It knows the user's payment and loyalty cards, the balances on each account, and the payment history associated with each. It also understands the physical location of the user (including the retail location in which the user may be standing). It could even supplement its recommendation engine based on its lifestyle (social, travel, sports, sleeping) and habits.

Once this stage of maturity is achieved we are moving into the realm of  hyper-personalization and it is done by either the digital wallet owners or the device owner or even to some extent the Banks. It needs to be unbiased and truly trusted advising.

Merchants or acquirer or even banks tend to have a partial view of your financial & personal habits which prevents them from becoming a true advisor. Whoever controls your Digital wallet is your true advisor as it will have full context of your financial behaviour, habits, location, lifestyle etc.

Adoption among consumers is not yet there. started to do some parts of it, but in my view it's just the beginning. There needs  a wider collaboration between Merchants, acquirer and issuer and networks to drive this ecosystem. But, once it is part of main stream a true self service & customer service capabilities will be achieved.

The technology to achieve the basic capabilities is more or less there, It will be a combination of advanced middleware integration(API);biometric security; big-data (Hadoop) driven advanced real time backend or in-mobile analytics for insights, predictions and recommendation; Voice recognition and cognitive intelligence to create a truly virtual agent who is able to interact with you and advise you on payments (for example a very advanced version of Siri).

Level-5 - Enabler for alternate payments business models - Once mobile helps to achieve a payment advisor status, Analysing a segment of society and understanding the gap in product and services will be easy. Which in turn will drive disruptive business models to address the gaps. Starting from, how to help drive digital banking for the unbanks or create an alternate infrastructure to P2P lending & payments or crowd-sourced lending or m-pesa (Kenya) type services, P2P foreign exchange, Crypto currency based services or even Interplanetary payment services if we decide to colonise Mars!!

Whatever be the future, its going to be exciting and I am looking forward it!!


Comments: (3)

A Finextra member
A Finextra member 02 January, 2015, 21:36Be the first to give this comment the thumbs up 0 likes

Very comprehensive Abhishek! One thing I would add is the use of mobile as identifier especially in emerging markets. Also it is handy for strong authentication.



Abhishek Chatterjee
Abhishek Chatterjee - Gartner Inc. - London 02 January, 2015, 21:46Be the first to give this comment the thumbs up 0 likes

Thanks Charmaine.. I suppose, you are referring to Apple Pay type Biometric authentication.. 

A Finextra member
A Finextra member 03 January, 2015, 06:40Be the first to give this comment the thumbs up 0 likes

Yes, in our research in many emerging markets such as India, Indonesia, Pakistan, Bangladesh, Zimbabwe and more we saw that for the first time millions of people can participate in the non-cash economy and start to derive benefits - so it is so much more than just mobile payments, but the mobile identity is at the heart of it.

Across Europe we saw initiatives such as Buyster emerge back in 2011 to allow a bank card to be linked to the cell phone and pay online.

But the real power of making payments more secure as well as convenient has been demonstrated by the seamless Apple Pay experience. Over 2104 the combination of biometrics and tokenisation, along with the HCE standards has brought a whole new level of possibilities that have the potential of creating new business models and changing the centricity of payment systems.

Abhishek Chatterjee

Abhishek Chatterjee

Managing Partner

Gartner Inc.

Member since

16 Dec 2014



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