In this preview blog anticipating some of the likely ‘hot topics’ at the Sibos 2013 trade show, Nick Diamond, head of cash management and payment sales at Lloyds Bank Commercial Banking, highlights mobile payments as one issue to look out for in Dubai, UAE, on 16-19 September.
I anticipate the rise of mobile channel payments will be a hot topic in Dubai, UAE, this year at Sibos 2013. It is a key growth area for the banking and payments industries, and one in which the end game is not yet clear, so I expect to see it constantly debated at the Dubai World Trade Centre (WTC) venue. There is an on-going conversation about sector adoption of mobile payments, the implementation of standards and the risks and opportunities presented by innovative technologies; this will be advanced at Sibos 2013.
While we are still at an early stage in the development of mobile payments, the trend regarding small-scale retail transactions is very positive and I expect it will eventually crossover into commercial banking. The industry conversations, before, during and after Sibos, will help to drive forward the advancement of this technology, enabling the industry to provide greater levels of client service.
Growth Will Be Driven by Consumers
Many mobile solutions in the market place are focused on consumer-to-consumer (C2C) transactions such as money transfers. However, the vast majority of transactions that consumers make are with businesses and the real boom in mobile payments will occur when companies start adopting them as a standard process for retail payments.
Businesses are looking to provide their customers with convenience and flexibility in payments, and mobile is one way of achieving this, as companies move towards an omni-channel approach in the field of customer receivables. In turn, consumers’ payment preferences will drive business uptake of mobile solutions.
The conversations we are having with clients are focused on helping them respond to, and keep abreast of, consumer demand for mobile payments solutions. The retail, utilities and charity sectors will all have strong demand for mobile payments. Naturally, sectors that have a strong interaction with their consumers, such as retail, utilities and charities, will have more demand for mobile payments, as a face-to-face transaction is well-suited to mobile payments.
Mobile m-payments can change the sales experience of consumers, by increasing the ease of payments for consumers and by deepening the relationships between consumers and companies.
In the retail sector, QR codes could be increasingly useful, as they encode payment and reference data into an easily scanned digital barcode. The jury is still out on the longevity of QR codes, but it is clear that mobile payments are here to stay. Self-service has become increasing popular in retail organisations over the past few years, and mobile payments can play into this trend, as customers bypass sales staff and process payments directly themselves.
The mobile channel has deepened companies’ relationships with consumers. The data that is amassed through their transactions can now be analysed and relevant marketing and loyalty reward point offerings can be sent to consumers via mobile devices. Ultimately, end users will decide on the technology and processes that are finally developed - Lloyds Banking Group will help our clients respond to their customers’ needs in order to deliver value.
B2B use is increasing
Mobile m-payments are currently seen as a consumer-dominated space, but we at Lloyds are seeing an increase in their use in a business-to-business (B2B) and commercial context. One useful application of this is in helping accounts departments and financial professionals in the treasury or elsewhere to settle invoices. Currently this process may require two signatures via online banking authorisation.
In the future, remote ‘on the move’ authorisation will enable people to authorise payments remotely via mobiles or tablets, thus increasing the efficiency of the accounts operation.
The fact that this sector of banking is linked to rapidly developing software has meant that it is proving fertile ground for start-up companies, who see an opportunity to outmanoeuvre the bigger players.
Start-up companies hope to compete with established banks on price, convenience and innovation. There is some opportunity for them in the social media space, but that is more in the peer-to-peer (P2P) arena in my opinion, less as a mass payment proposition.
At the moment, there are a number of mobile m-payment and commerce offerings in the marketplace, but it is too soon to say who will prevail in providing a comprehensive ecosystem. The tipping point will be provided by the agreement of established operational standards, shared among many. Building these solutions to agreed standards is fundamental to long-term success and widespread adoption.
A lack of standards will lead to a fragmented consumer market that lacks momentum, as there will be a huge number of possible solutions and a lack of certainty about how they fit into the value chain. At the moment, the end-game isn't clear for mobile payments and this is what makes it a hugely exciting area to work in. We are seeing a growth in demand for these types of solutions from our clients and consumer-facing companies cannot afford to ignore the move towards omni-channel commerce.
• For further stimulating technology discussions about the mobile channel please visit the mobile financial services (MFS) blog written by Sirpa Nordlund, executive director of the bank-led Mobey Forum and our MWC show report. To view other sector-specific blogs on information security by ISACA, capital markets by FIX, and many more please visit our new bobsguide blogger (aka contributing editor) landing page.