ComputerWeekly.com today published an interesting article by Jenny Williams on mobile payments and its implications on the traditional banking industry.
Barclaycard, which is launching the UK's first mobile payments network, Everything Everywhere, with Orange later this year, certainly expect that mobile payments will have profound implications for the banking industry and that retail banks will need to lead this innovation to stay competitive.
The most obvious threat comes from mobile carriers, such as O2, which is applying for an emoney license that will enable it to operate a payment network without partnering with a bank.
Vodafone, on the other hand, is focusing on M-Pesa, its mobile payment network in Africa. Having launched in 6 markets and achieved very impressive take-up, M-Pesa has provided large portions of the population, who were previously unbanked, access to basic banking services.
However, I do not personally believe that mobile carriers will have a disruptive impact on the banking industry unless they partner with other players for three reasons; (1) they have no experience in operating a payment network - a complex business, (2) they will offer only basic payment services, and will be unable to enter the savings or investment areas and (3) they are unlikely to introduce disruptive payment technologies.
However, disruption in the payment industry is likely to come from another area - Apple and Google. A number of manufacturers launched NFC enabled handsets for Android at the recent Mobile World Congress in Barcelona and Apple is expected to include NFC on the iPhone 5.
The article quotes Rachel Hunt at IDC Financial Insight; "As Apple and Google are considering NFC as part of their offering, they might get a score of applications that leverage that. This is an area where the bank cannot compete as it cannot act quick enough. Start-ups will be quicker to create apps".
She argues that the biggest challenge for banks is to predict how mobile payments will be used to create value for customers. While Hunt expects mobile payments to ride on the existing infrastructure and networks, she expects that online payment players such as PayPal can cause serious disruption.
http://www.computerweekly.com/Articles/2011/02/22/245531/Near-field-comms-How-are-mobile-payments-changing-traditional.htm
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