Mobile payments - a game changer for financial services

The mobile is revolutionising the way financial services brands serve and market to their customers. It’s having a major impact on retail banking and there are some particularly exciting developments in the mobile payments space. Two key areas of opportunities are peer to peer payment and mobile payment to retailers, with near field communication (NFC), contactless payments and mobile wallets creating a new world order for consumers and business.

Mobile and technology players enter the market
We’re also seeing the fracturing of the competitive landscape as technology and mobile players become more involved in areas that have traditionally been the preserve of card issuers and credit card companies. As well as more competition, it is also bringingfinancial services brands new opportunities in the loyalty and offers space.

The concept of the mobile wallet being more than just a payment method can add value for customers and give them a reason to pay using their mobile rather than, say, cash or card. The transfer in real time of data can, for instance, reward customers with real-time offers.

This is something that Apple is looking to tap into when it launches Apple Passbook later this year. The Apple Passbook will store mobile payments, loyalty and store cards, vouchers, tickets and even boarding passes in one place. The app uses geolocation to pull up the appropriate card for the user when they enter a Starbucks, for example, as well as any current offers or deals.

Mobile wallets and loyalty schemes
So, as you can see, mobile is much more than just another payment method. I would go as far as to say it’s a new direct channel – a really powerful, immediate one. What brands need to do is find a way to link it with other marketing channels to add value to the customer experience. Their success depends on the ability to do what Apple does brilliantly; make things very intuitive and easy. American Express is particularly good at linking with social media. Its Link, Like, Love app on Facebook delivers deals and discounts based on the location, likes, interests, social connections of the cardholder.

Of course, the mobile payment space is virgin territory in many respects. The market is being formed on a weekly, even daily, basis and will follow the traditional model of product uptake of early adopters through to luddites.

Mobile payment and security
One of the key issues will be security. People are loath to sign up to anything if they don’t trust the technology or the brand. Because financial services brands invest heavily in security to ensure customer safety, they are in a strong position in this respect. They also have good relationships with customers that run very deep. There are also security measures within the technology itself. For instance, customers can only make NFCpayments of up to £20 per transaction without entering a pin code (the limit was raised from £15 to £20 in June).

With mobile technology moving so fast, it’s hard to predict what the future holds. For instance, are mobile wallets just a stop-gap as people wait to see if NFC fully takes off? Some smartphones (including the Apple iPhone) don’t have NFC capabilities yet.

Exciting as the technology is, it’s important not to get too carried away. We’re a long way off from seeing complex products, such as mortgages, being sold and processed entirely through mobile. Saying that, for people joining the workforce now, the mobile is an integral part of their daily (and social) life. They have never known life without it. Financial services need to recognise this and stay ahead of the curve so that they can tap into the needs and desires of these mobile-social consumers.

Michael Bristow, DMA Mobile Marketing Council member