Fiserv, a provider of financial services technology solutions, has produced a paper explaining why banks are best placed to win in the mobile payment space. This is good news for banks, but the problem is that high tech companies are already in place and others are getting in fast.
According to Pew Research, 30% of American smartphone users rely on their devices to manage their daily lives, including their financial ones.
Fiserv believes that banks are missing out on an â€˜open door’ opportunity. With 58% of smartphone users interested or somewhat interested in paying or receiving bills via their mobile device, the opportunity is obvious ($670 billion by 2015, according to Juniper), but the banks have not moved.
The key, according to Fiserv research, is that banks are the most trusted organization for financial transactions with 40% of customers choosing their bank as most trusted partner for mobile payments. There are other factors, including access to consumer accounts, payments knowledge, existing financial infrastructure and existing relationships to provide banking functions.
Banks are resting on their laurels and Fiserv points out that other high tech organizations are moving in. The research points to two non-banks being the second and third most trusted party among the survey group â€“ Paypal being second, Visa third.
Banks have the natural advantage, based on the survey findings. They are also able to address the trust issue â€“ 41% of the survey group were worried about accessing financial information through their phone. Banks can solve this.
The paper recommends steps that banks should take immediately to get into the game. Firstly, they should incorporate all four pillars of mobile payments requirements – bill payments, person-to-person payments, remote retail payments and merchant payments. Second, they should consider how existing infrastructure can be leveraged to provide a mobile solution. Third, they should offer some â€˜trailblazer’ services such as mobile bill pay and person to person transfers and build on that.
Banks are most trusted but early followers, not innovators in the field. Whether they can follow fast enough to catch up with more innovative technology companies remains to be seen.