Banks slow to act in growing mobile payments space: study
Nearly half of financial services, retail, technology and telecommunications executives believe mobile payments will be mainstream within two years, according to a new report from KPMG.
Companies are looking to opportunities in mobile payments as the adoption of smartphones and consumer interest in mobile payments is growing, according to the Global Mobile Payments report. While 83 percent of executives surveyed by KPMG feel mobile payments will be mainstream in four years, 46 percent feel mass adoption will only take two years.
“This is a trend that has been happening for some time but very slowly,” said Mitch Siegel, a principal of KPMG’s banking advisory practice.
“The intent of the report was to be a little bit of wake-up call to some banks that now is the time to dive into mobile,” he said.
“While some of the big guys have been playing around in mobile, below the top five there hasn’t been the wherewithal to invest.”
Be there or be square
KPMG issued a separate report, Monetizing Mobile: How Banks Are Preserving Their Place in the Payment Chain, which focuses specifically on banks and mobile payments. According to this report, 84 percent of banking and financial services executives think mobile payments will have significant importance to their business within the next one to four years while 73 percent said mobile payments will be mainstream within four years.
“Mobile payments is just one more medium that banks need to be sure they are playing in,” Mr. Siegel said. “Even if they’re not sure if it is going to drive revenue, they need to be here to make sure they are not losing customers.”
There are several mobile payments solutions currently being piloted by banks and a variety of other players, including credit card companies and wireless carriers. While banks may be waiting to see which of these is going to resonate with consumers and merchants, they need to act soon or risk losing customers.
The 1,000 executives from the financial services, technology, telecommunications and retail industries surveyed by KPMG for the Global Mobile Payments report said mobile payments are important to their business, with 72 percent of respondents saying that mobile payments are now or will be important.
Additionally, 58 percent of respondents said they have a mobile payments strategy in place.
The most important attributes for a successful mobile payment strategy, according to respondents are convenience and accessibility (81 percent), simplicity and ease of use (73 percent), security (57 percent) and low cost (43 percent).
While there are numerous players looking to capitalize on mobile payments, respondents said banks and credit card companies will have the most important roles to play in the mobile payments market.
Among U.S. respondents, online service providers such as Google, Facebook and Amazon ranked third in terms of their level of importance to mobile payments. Specialist online payment players such as PayPal and Boku and telecommunications companies tied for fourth place, followed by retailers and technology companies.
Globally, telecommunications companies ranked third, followed by online payment players, online service providers, retailers and technology companies.
In terms of mobile payment methods, survey respondents view specialist online systems as having the greatest prospect for success because they already have significant penetration and that penetration is expected to increase. Mobile banking, NFC, carrier billing and the mobile wallet followed.
“We think banks need to be in the market right now,” Mr. Siegel said. “While there are a lot of challenges that need to be addressed it is going to be hard for them to jump in two years from now with a me-too product.”
Chantal Tode, Assoc. Editor, Mobile Commerce Daily