He argued that mobile is a self-service banking channel for consumers and the role of market participants, such as IT vendors or banks, is to enable its consumption.
Mobile technology has certainly become an increasing dominant presence in the financial services industry over the past 18 months, as consumer behavioural trends cross over into the corporate world. At the conference its impact was blatantly obvious - the majority of attendees spent the sessions tapping away either on a smartphone or tablet.
Statistics quoted by in Liz Lumley, Finextraâs special projects editor, presented statistics emphasising the impact of mobile on the banking world since 2010.
Gartnerâs figures, which were quoted in Ernst & Youngâs Mobile Money 2011 Report (1), showed that the greatest anticipated increase in the amount of mobile payment (m-payments) users is in the Asia Pacific region - up from 41.8 million to 62.8 million users in 2010. A study by Pew Research Centre (2) showed that a fifth of so-called âGeneration Yâ have used a mobile device to make a payment. Both sets of statistics show that growth lies in new areas - both in terms of region and user demographic.
Despite the enthusiasm for this new technology, there are still potential issues, as the massive BlackBerry outage last week demonstrated.
Lumley said that key concerns for the market place are based around security and standards. âThere is a need for collaboration by banks, vendors and regulators in the area to agree on how this innovative technology is going to be monitored,â she explained.
As the banking world continues to get to grips with this new technology, she said, there were four key points surrounding the m-banking debate at this point in time:
1. Discussion should no longer be based around how or why mobile payments will happen, but when.
2. Banks, telecos and other market participants (e.g. Google) need to collaborate and agree on standards.
3. Emerging and Eastern economies are key areas for growth.
4. Innovations in the retail banking sphere will influence the development of technology in other areas.
Tim Harford, a Financial Times journalist and economics author, delivered the key note address in the main room earlier in the afternoon. He used his speech to compare the global financial crisis to disasters seen on an oil rig or a nuclear reactor.
âRisky infrastructures and systems, in both financial industries and engineering sectors, are characterised by complexity and tight coupling,â he explained.
Harford warned that too much regulation can sometimes be worse than too little. Risk compensation can ostensibly lead to increased safety but can mean participants create risk through less cautious behavious. He likened this to the introduction of airbags in automobiles, saying that when these safety devices were introduced, the number of drivers killed in accidents went down while the number of pedestrians deaths went up.
The journalist outlined a number of recommendations for the financial services industry to manage risk more effectively;
1. Banks need to raise capital through equity rather than debt.
2. Greater investment in contingent convertible bonds (CCBs).
3. Recommendations in the Vickerâs Commission surrounding reducing the size of banks should be followed.
4. More effective bankruptcy resolution laws/contingency plans are required.
5. Employees and non-financial regulators/commentators need a platform in order to spot risks.
He concluded by saying that in any system, be it financial or not, accidents will happen. Effective risk solutions need to be capable of minimising the impact of this potential volatility.
By Jim Ottewill
(1.) Ernst&Young Mobile Money 2011 Report
(2.) Pew Research Report