Mobile banking—check. Mobile check deposit—check. Mobile payments—?
You’ve already invested to ensure mobile is another channel your customers can use to access your bank and deposit their checks, but what about mobile payments? How can your bank best seize the opportunity that mobile affords within the payment space? This post will offer recommendations and reference documents to help you develop the best strategy for your bank.
As mobile devices have become ubiquitous in consumers’ daily lives, they offer opportunity to reshape the payments landscape. This makes it imperative for banks to create a strategy and plan to effectively participate in this coming opportunity.
There is an almost limitless amount of mobile payments guidance offered by consultants. We believe there are four key business imperatives driving banks to invest in mobile payments solutions:
- Generate increased revenue while reducing operational costs
– Banks can participate in mobile payments transactions—and gain transaction fees—while reducing the costs involved in handling cash and processing checks.
- Reach new market segments
– Particularly younger demographics and unbanked customers at low cost.
- Deepen existing customer relationships
– Maintain touch and service when customers are not carrying plastic cards.
- Ensure value chain participation to avoid losing influence and/or customers
– Telcos and/or others may bypass banks and established card networks.
Banks are well-positioned for mobile payments success due to the trust earned from their customers. In fact, studies have shown that consumers in multiple countries prefer their primary bank—primarily due to trust—to be their mobile payment services provider. As John F. Kennedy once said, “There are risks and costs to action. But they are far less than the long range risks of comfortable inaction.”
To that end, we recommend you develop a strategy and take actions to develop a mobile payment solution prioritizing the following considerations:
- Approval by central bank and compliance with all regulations
- Ability to leverage existing POS infrastructure
- Ease of technology integration into your core banking systems
- Cloud-based approach to enable scalability, reliability, and availability
- Ability to reach everyone with a mobile phone number (i.e., any type of mobile phone or service)
- Need to offer attractive economics for all value chain participants
- And, most importantly, offer a simple, convenient and valuable value proposition for consumers
There are risks and costs for your bank to become an innovator in mobile payments, but time will show that the potential gains are well worth the effort forward-thinking banks make today.