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Mobile Payments: Opportunity for banks to create true value

There is a lot of activity in the mobile payments space, with companies of all sizes, including Google, PayPal, Visa, MasterCard (with their recent investment in mFoundry), American Express, retail banks and start-ups all vying to win over consumers and retailers.

Providing issues around convenience and security can be overcome, consumers and retailers are poised to embrace mobile devices as a strong alternative to payment cards.

As the economic crisis continues into 2012, and consumers ‘feel the pinch’ they will become increasingly demanding of their banks, asking for improved access to services that help them to understand and manage their spending.  Wherever possible they’ll be looking for this information in real-time across a range of mobile devices. For retail banks looking to win a share of this market, this means bringing to consumers a trusted and enhanced mobile experience. Trust, as Martha Rogers from Peppers & Rogers  puts it, is built “when customers are protected, even when they don’t pay attention”.  Mobile payments services that build trust between consumers and their retail banks could include:

  • Storing virtual receipts, so customers can easily keep track of everything they spend, including when, where and how much
  • Usable reports on past expenses as well as analysis of customers’ own expenses and the expenses of their families
  • Alerts on spending or credit balances if a customer or family member breaches a threshold
  • Use of agents on the net to find the best promotions based on specific criteria (product type, budget, brand, deadline)
  • Newsletters or offers carefully targeted based on previously indicated preferences

Similarly, retail banks can use mobile payments as an opportunity to provide services such as direct marketing to retailers. Services could include:

  • Turning promotions into treasure hunts, with details of store locations, in order to drive traffic to retailers’ stores
  • Delivering best offers and coupons to selected customers, (not just everyone), in order to increase customer footfall with optimised marketing budget
  • Collecting mobile data in order to increase knowledge of customers and improve profiling
  • Delivering customised mobile rewards to customers in real-time, providing a more memorable customer experience during payment
  • Delivering cross-channel and cross-retailers promotions that help drive customer retention

To keep up with the pace of change, banks will need to invest in the mobile payments channel so they can offer services that deliver true value beyond convenience and security, and ultimately build customer and retailer satisfaction.

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Comments: (2)

John Dring
John Dring - Intel Network Services - Swindon 06 December, 2011, 14:51Be the first to give this comment the thumbs up 0 likes

To me, Mobile Payments is paying with your mobile and the charge being placed on phone bill.

What you mean here though is the charge being applied to the bank account.  This is where NFC is taking Banks - the NFC ID being the way to register and subsequently 'identify' a person, so that when they present their NFC enabled mobile or plain ol NFC card to a POS NFC reader, the transaction can be authorised.  Above a certain value you may need to provide a PIN to validate further.

This in itself is not that much more convenient than Chip and PIN, but one of the nice things with proper NFC integration on a smart device is the abilility for the POS to feedback information to the device, like points accrused for the txn or special offers and coupons for next time.  These can then be carried and automatically redeemed with the next NFC txn.

A Bank App on the same device can use the same identity to offer the other services you described.

A Mobile Operator could offer all the same, except that for Retail Payments they do not have access to the POS and network, and hence only online transactions (=remote) make sense, where the merchant can be sure that the phone number (MSISDN) is correct with linkage to the phone operator (Direct Carrier Billing).  No NFC or special phones required.

Pierre Boces
Pierre Boces - Welcome Real-time - Aix-en-Provence 07 December, 2011, 08:26Be the first to give this comment the thumbs up 0 likes

Hello John,

Thanks for providing details on the various technologies enabling mobile remote payments or mobile proximity payments (including but not limited to NFC).

As you point out, various capabilities are owned or pushed by various players. For example, Google, with its Google Wallet brings from Internet (online) to the real world (offline) its business model of capturing marketing and promotional budget from advertisers, brands and retailers.

Meanwhile, hundreds of thousands of small and medium retailers who can’t afford to develop a mobile app are looking for a solution to help them develop direct marketing services. Is Google Wallet the only solution for those retailers?

I am suggesting that retail banks have an opportunity to also provide such solution that enables the services described in the post above. Without jumping too quickly into its full description, that solution would most probably consist of a mobile app integrated with NFC and enabling direct marketing services for several small and medium retailers at once.