When it comes to banking services especially mobile banking and mobile payments, nowadays we don’t see the banks’ role in this field as we did decades ago. We see the huge competition to grab the customers between the bank independent third party service providers and banks. In fact, in this unavoidable competition there is a huge role of the changes in technology and regulatory environment and new customer expectations. All these changes are not necessarily for the favor of banks.
In the technology booming period it is difficult to foresee the future market. If you think that mobile banking will be in a similar development path as Internet banking, then you are wrong: the mobile banking development lifecycle looks very different to the “traditional” online banking. The major difference between the mobile and the desktop channels is the mobile’s personalization capabilities. Banks always tried to make their online banking personalized – somehow it did not work out very well. However, in fact our mobile is a very personal device. And the personalization is mainly defined by the apps we download and use. Therefore, it would be a good idea from a bank to offer several different apps for different target groups and life situations. From the variety, then, the user will decide which apps to download (see Caixa’s app store as a good example). This fragmentation of the user base creates a great opportunity for the market niche players who want to target a particular segment with special solution and let the mobile channel develop more rapidly.
However, the biggest challenge for banks is mobile payments. We can see efforts by banks to combine mobile payments and mobile banking, which is a reasonable strategy if they want to keep their users active. However, banks lack on integration capabilities when it comes to cross banks payment transactions. This is why today usually MNOs have more information about mobile payments than banks and this is, for sure, unpleasant news for banks.
What MNOs cannot foresee is which technology will be victorious in the mobile channel. NFC? QR code? Or something else? We do not know it yet, but one thing is clear – not the technology but the user experience will decide. The user experience is not only decided by how secure and seamless the payment transaction is, but also by the value added to the user – besides the easy and secure payments. Most providers are on the search for this added value now, which will result in a skyrocketing usage of mobile payments.
There is another factor which plays a key role here – regulatory environment. The change of regulatory environment let the emergence of more and more independent third parties like PayPal, Holvi etc. As a result banks “back office” role is becoming limited to new services, instead third parties like mobile payment platforms, e-money issuers, and independent nonbank financial service providers start covering the bank services and earning its customers. However, the European Payment Services Directive defining the future of this market as it wants to facilitate the customer bank change.