opinion


Key talking points at the Mobile Financial Services conference

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Informa Telecoms & Media held its annual Mobile Financial Services conference on March 9-10 in London. The conference presented a good opportunity to hear views from leading industry experts on the status of the mobile banking and payments industry.

It was interesting listening to the discussions and opinions of the speakers and attendees on how they feel the industry evolved in the last year, what has changed, the success stories, failures, key issues and concerns, and what’s needed to drive the growth of mobile financial services over the coming years.

The following issues were raised by many at the conference as being the key concerns and barriers to the growth of mobile banking and payments:

  • Ensuring security of transactions.
  • Having to work with multiple partners and vendors to deploy services.
  • Massive barrier to NFC at retailers’ level.
  • Lack of a pan-European agreement.
  • Long wait for ROI.

Also, here are some key talking points from the various presentations and panel discussions on the first day of the conference.

There was general consensus that the NFC buzz has subsided in the last 12 months. We have seen so many NFC trials but not really seen successful commercial deployments anywhere in Europe, in fact not really anywhere outside of Japan and South Korea. NFC is considered to be the key driver for the growth of mobile local payments but operators and other ecosystem players have yet to find a clear business case with NFC.

Saadi Hussain, Head of Commercial Propositions at BT mentioned in his presentation that there is massive barrier to NFC at retailers’ level. For example, Sainsbury’s and Tesco in the UK are interested in the benefits NFC can offer, but lose interest the moment they hear deploying it would require them to spend millions to upgrade their POS terminals.

Christian Sere Annichini, Head of New Business Development at SFR talked about the benefits of digital certificates that can be used as mobile signatures, and OTP (one time password) SMS and how the use of these can address some of the security concerns as well as improve user experience of services and drive the remote mobile payments market. SFR is investing to provide its customers with mobile signature services.

Commercial mobile signature services already exist in some markets. In Turkey, both Turkcell and Avea offer this service that provide users with a “qualifed electronic certificate” which they can use as their secure identification while carrying out transactions in an electronic environment. A mobile signature is “signed” using a GSM SIM card that supports electronic signatures as defined by law and electronic signatures conforming to this standard are as legally binding as signatures signed on paper.

It is believed that Turkcell has so far issued mobile signatures to around 100,000 registered users. The key issue that needs to be addressed here is that the registration process for mobile signatures is expensive. SFR is trying to address this issue by using terminals with touch-screen and document scanning capabilities that can eliminate all paperwork and issue customers with mobile signatures in quick time.

Another example, Christian mentioned to support the business case of mobile signatures was by highlighting the trend in South Korea which is considered as a successful market for NFC. He mentioned that around one third of the POS terminal base in South Korea is NFC enabled but still only a few thousand users do credit card payments using NFC. In contrast, a mobile signature service introduced in South Korea more recently already has around a million users.

It was interesting to speak to Areehan Abdullah, GM Product Marketing at Celcom Malaysia who was keen to find out if there was an attractive business case for operators to deploy mobile banking services. He was keen to know if mobile operators can have quick ROI and earn good revenues by offering mobile banking services or is it just going to be about benefitting from greater data traffic and reducing churn. Celcom already offers a range of mobile financial services branded as Celcom AirCash which was launched in June 2009.

Broadly speaking, the mobile banking services deployed can be bank-led, operator-led or third party led models. In the last two years, the majority of deployments that have taken place are bank-led models. This is because banks can see a clear business case and benefits of deploying a mobile banking solution. It reduces the work load at their branches and results in significant cost savings because mobile banking transactions are cheaper than both branch banking as well as Internet banking transactions. In Turkey, for example, IsBank offers a Java based mobile banking service IsCep and it is believed that the cost for the bank of processing a transaction through the IsCep mobile application is just 30% of the cost of processing an internet banking transaction.

The list of stakeholders and players in the mobile financial services industry has grown in the last 12 months. The ecosystem now includes a long list of companies including the operators, banks, handset vendors, regulators, payment service providers, technology/platform vendors, MFIs, TSMs, messaging vendors, and developers.

In addition to mobile banking, domestic money transfer services and payments for airtime top-up and utility bills have been the main focus for companies over the last year. Also, services seeing good uptake are mostly the low value/high volume services in emerging markets where banking penetration is significantly lower than mobile penetration. In terms of the bearer and technology for the service, the attention has been on using SMS, USSD and WAP and to deploy handset agnostic services for mass market mobile subscribers.


One comment

  1. Elija 16/03/2010 @ 1:52 pm

    The problem with mobile banking is the deployment and recovery of expenses from the POS (point of sale) devices a la visa et al. The mobile industry has natural barriers as they’re ruled by telecoms and banks are ruled by banks. Two sumos wrestling (greedy) for revenue. Also – the SI trying to implement these systems is only focused on selling boxes. To truly resolve these and similar business models – business development must first analyze the entire business eco-structure to include both primary and secondary sources of revenue, and THEN develop strategies that can push the ROI cycles on these systems back to either on or before launch or 1-5 years, depending on how innovative and experienced they are in this field. Telecom lifecycles are typically 12 years, so the ROI cycle has to be quick so stakeholders can see good long term returns. I have yet to see ANYONE in telecom or the mobile banking business over the last 10 years provide a viable (bankable and financeable) business model that can truly turn mobile banking into the legendary killer app.

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