The mobile banking resolution that can’t be avoided

Financial services firms are beginning to enable real transactions on consumer devices, but the move will raise some questions that may prove difficult to answer

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You have to go where your customers are — and your customers are on smartphones and tablets.

While they’re using mobile devices to check their account balance or find the nearest ATM, mobile banking is evolving into something much more complex (and game-changing): mobile transactions and payments.

We’re seeing the movement of traditional banking services on a mobile platform to entirely new services made possible because of mobility.

Take ING’s Cheque-In feature, which allows you to take a photo of a cheque with your smartphone or tablet to deposit it instantly in your account (whether you’re using iOS, Android, BlackBerry and Windows) — no ATM required.

Or RBC’s person-to-person electronic money transfers over Facebook, where you can send an Interac e-Transfer to your Facebook Messenger contacts from within the RBC Canada app (without sharing any personal or financial information, which will be key to driving consumer acceptance).

The issue isn’t whether you should be investing in mobility — it’s whether to build or buy (or, more likely, both).

“We have the scale that we end up building quite a bit of our mobile banking capabilities, but we always look for best of breed in terms of whether we should build it in-house or outsource it,” said Michael J. Kennedy, head of innovation and payments strategy with Wells Fargo, during Sibos 2013 in Dubai.

But, where patents exist — such as image cheque deposit technology — or with emerging technologies where there’s a need to go to market quickly, outsourcing may be the best (or only) option.

As we evolve toward digital cash and mobile wallets, interoperability becomes increasingly important — and that means joint ventures or partnerships, possibly with companies you compete with or startups you’ve never heard of before.

“Running a cash infrastructure is very expensive and we truly hope with providing our customers with mobile payment services, that will replace a lot of the inefficient use of cash,” said Ineke Bussemaker, executive vice-president of payment services and savings with Rabobank Nederland.

And she believes this works best through formal or informal joint ventures between banks, credit card companies and mobile operators. (Rabobank has teamed up with Giesecke & Devrient in the Netherlands to allow customers to pay using their smartphones with near-field communications, starting in 2014.)

Bussemaker also believes we’ll start seeing more APIs offered by third-party developers that will make this emerging area much more interoperable.

Perhaps more important than the question of “build or buy” is the requirement for a degree of openness in an industry traditionally cloaked in secrecy (and proprietary technology).

Customers are demanding change, but they don’t care about the underlying technology. They just want it to work and they want it to be secure. And if it isn’t easy to use, they’ll ditch it in favour of something else.

Sure, there will be some industry resistance. But the alternative is getting left behind in a rapidly changing industry — and missing out on new ways to innovate and attract new customers.

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