Banks to monetize mobile payments space


Faced with growing competitive threats from
non-traditional sources, such as alternative payment providers, banks around
the world have aggressively swung their attention to emerging mobile platforms
to defend their payments revenues, according to KPMG International.  


According to a KPMG survey titled Monetizing Mobile: How
Banks Are Preserving Their Place in the Payment Value Chain, 84 percent of
banking and financial services executives said mobile payments will have
significant importance to their business within the next one to four years.
Furthermore, 73 percent suggested that mobile payments would be
mainstream within the next four years.


“Leading banks are working feverishly to stay ahead
of their peers and the new players in this space by developing mobile payments
solutions, getting actively involved with standards setting, and partnering
with other players in the mobile payments value chain such as merchants and
mobile network operators,” said Carl Carande, national account leader of
KPMG LLP’s Banking and Finance practice.  


report cited the potential of mobile network operators working with
device manufacturers to develop a system independent of the traditional payment
infrastructure. Others, however, foretold of an even more serious threat in the
form of new market entrants, such as specialist online payment players and
online service provider giants.


Nevertheless, banks are still perceived to have an edge,
according to executives from the technology, telecommunications and retail
sectors who also participated in the survey. These executives
overwhelmingly agreed that banks will likely continue to play an important role
in the evolving mobile payments value chain.


According to the KPMG survey, respondents highlighted a
number of significant and evolving challenges that are hampering the adoption
of mobile payments. More than 70 percent of banking and FS executives cited
security concerns as their biggest challenge, an issue that has only been
accentuated by a spate of recent high-profile online security breaches.


“We believe that if banks can roll out a safe, easy
to use and ubiquitously accepted system, consumers will very quickly adopt
mobile payment solutions as they have other mobile services,” said Mitch
Siegel, a KPMG LLP Financial Services practice principal focused on payment
advisory services and co-author of the report.  


The survey also revealed that a lack of technology
standards and infrastructure are also posing major barriers to the wide-spread
roll-out of mobile payments. And while very few respondents to the survey were
willing to categorically endorse any single payment technology, most pointed to
the emergence of Near Field Communication (NFC) as the technology with the most
promise and ease-of-use for customers.


According to the KPMG report,
commercial banks also are showing a growing interest in utilizing 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. Mobile payment solutions can help these clients by
speeding up and automating authorization procedures related to reviewing and
approving payments.


By Team
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