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Unlock your mobile for payments

The financial services industry has not faced so many difficulties since The Great Depression in the 1930s. The combined pressures of government legislation, regulation and low levels of customer trust are putting a spotlight on banks’ reputation and profitability.

A wave of start-ups is looking to capitalise on this ‘anti-bank’ sentiment, with the knowhow and freedom to enter markets with untarnished reputations. As a result, banks have to fight back with industry-shifting innovation and one example of such innovation is mobile payments.

Given the lack of trust in traditional banking providers, it’s no surprise to see new entrants attempting to grab a share of the lucrative potential market. On the face of it, mobile payments appear set to be the preferred form of payment amongst consumers of the future, yet there are still barriers that are stopping it from gaining popularity today, regardless of many players efforts.

What’s blocking mobile?

Being in the early stages of adoption, one barrier to entry is that many current apps require a lengthy online registration process. Anything that complicates the use of a new service generally encourages people to give up and go back to existing, familiar methods such as cash.

Secondly, there are persistent concerns about security.  This isn’t unique to mobile payments: distrust towards the contactless point-of-sale terminal is evident as users don’t understand how there can be any security around the fact that PINs are usually not required. For mobile payments to become ubiquitous, the service has to be delivered on an infrastructure that is secure and also perceived to be secure. 

Finally there is the hardest challenge of them all: changing engrained consumer behaviour. A universal service that consumers, businesses and banks can all subscribe to will enable banks to educate customers that mobile payments really are easier for them to use. At the same time retailers need to adopt mobile payments en masse to encourage its popularity and use.   At the heart of all of this is reach: if you can’t make a transfer to your friend, or buy goods from a merchant using your mobile because the other party to the transactions isn’t part of the service, then interest in the proposition will fade and die. 

All for mobile, mobile for all

Mobile payments are an exciting proposition and there is genuine industry support behind making it the ubiquitous way to pay.  However in order for it to be really embraced, the financial services industry needs to embrace a common approach at the heart of the system and differentiate with offers and rewards. Whilst the start-ups can bring different innovations to market, and deliver an anti-bank message, the power of mobile payments will not be unlocked until all high street banks begin promoting the service universally, bringing on board the rest of society and business at the same time.

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This post is from a series of posts in the group:

Payments strategies 2015-2020-2030

Payments systems visions, strategies, trends, pilots, forecasting, and planning for the short-, medium-, and far-term.


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