Blue Paper
Impact of Mobile Payments on the Financial Services Sector Thibaut Loilier - Market Research March 2013
Table of Contents 1
Executive Summary ............................................................................................................ 4
2
Introduction ......................................................................................................................... 5
3
Mobile Payment Market Overview ..................................................................................... 6
3.1
A brief review of terminology ................................................................................................ 6
3.2
Mobile broadband subscriptions: One of the fastest-growing global markets in history ...... 7
3.3
Smartphone and tablet sales outpace computer sales ......................................................... 8
3.4
NFC is becoming widespread and will likely be a must-have smartphone feature .............. 9
3.5
Mobile banking apps are becoming mainstream ................................................................10
3.6
Credit card adoption: focus on the European Market .........................................................11
3.7
M-commerce will process more than $800 billion per year by 2016 ..................................12
3.8
M-payments gaining use among a larger population base .................................................13
3.9
M-payment market size: $130 transaction volume per person by 2016 .............................14
4
The Mobile Business Ecosystem ....................................................................................16
4.1
Many new players have entered the mobile payment world...............................................16
4.2
The German mobile wallet (NFC/contactless) ecosystem ..................................................17
4.3
Incumbents and new entrants are disputing “ownership� of the customer .........................18
5
Mobile Payment Impact on Financial Services ..............................................................19
5.1
New entrants to the market are large players making bold corporate moves ....................19
5.2
Disintermediation: Leveraging data through targeted cross-selling ...................................20
5.3
Data ownership ...................................................................................................................20
5.4
Regulation ...........................................................................................................................21
5.5
Interoperability: enabling widespread adoption ..................................................................22
5.6
New sources of revenue: a macroeconomic approach ......................................................23
6
Recommended Strategies for Financial Institutions .....................................................26
6.1
Monitor the market ..............................................................................................................26
6.2
Develop an enhanced mobile presence .............................................................................27
6.3
Focus on the user experience ............................................................................................32
6.4
Build partnerships through the ecosystem ..........................................................................37
6.5
Develop and implement mobile payment trials ...................................................................38
2
The intention of this report is to make trends transparent and understandable within their context and give readers information germane to their business. The content has been created with the utmost diligence. Therefore, GFT Technologies is not liable for any possible errors. GFT Technologies AG Executive Board: Ulrich Dietz (CEO), Jean-François Bodin, Marika Lulay, Dr. Jochen Ruetz. Chairman of the Supervisory Board: Dr. Paul Lerbinger Commercial Register of the local court (Amtsgericht): Stuttgart, Register number: HRB 727178 Copyright Š 2013 GFT Technologies AG. All rights reserved.
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1 Executive Summary This paper analyses the potential impact of the mobile payments on the Financial Institution, and is mainly focused on the developed marketplace. Although we tend to think of mobile payment as those payments made by the relatively new technique of pointing or waving a smartphone at a point-of-sale or other payment system terminal, the market is in fact rather broader and more established than the Near-Field Communication (NFC) technology that currently has the world a-buzz. The Blue Paper provides a general introduction to the mobile payment marketplace, maps the new mobile payment ecosystem, describes the players, both financial and non-financial, and examines the impact this new market will have on traditional financial institutions. Based on our extensive experience of the financial sector and IT services provisioning, as well as our knowledge of the mobile payment market, the report provide a series of recommendations for financial institutions that will help them to move forward with a strategy and action plan to leverage their strengths and assure their place in the mobile payment ecosystem for many years to come: Monitor the market to keep up to date with what’s happening in the m-payment ecosystem Develop an enhanced mobile presence to better engage with current and potential customers Focus on the user experience to rebuild confidence and trust and also compete in the digital world Build partnerships through the ecosystem to create value and new business opportunities Develop and implement mobile payment trials to drive consumer adoption and awareness The market is still evolving and there are likely to be some significant shakeouts over the next few years, but it is clear that mobile payments are here to stay. In the coming years, the number of nonfinancial services companies active in the mobile payment ecosystem is likely to grow: Financial institutions are becoming more proactive participants as the m-payment ecosystem matures. The majority of the financial institutions have realized that having a mobile banking strategy is now a business imperative for financial institutions. In the mobile payment space, financial institutions have an advantage with their established relationship of trust with the consumer.
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