Mobile payments are gaining ground as a way for the consumer to make easy payments for goods and services. The number of smartphone users worldwide is predicted to grow to over 2.5 billion by 2019. With the growth of smartphones across the globe and the consequential shifting of consumer habits, mobile payments are a natural step beyond plastic cards. Smartphones have become an extension of ourselves; they are always on and we always have them with us. In Q3 2015, 30% of the global online transactions were made through mobile devices. It is no surprise major technology players from Apple to Google and Samsung are pushing forward with their mobile wallets, but where does this leave the banks?
Banks have reason to be concerned
It is no secret that banks have concerns about the tech giants of Apple and Google entering their sectors with mobile wallets and payment solutions. As mobile payments become more popular, the risk of banks falling behind is very real, especially as the likes of Apple build on their consumer relationships to make further progress on mobile payments. Banks need to innovate and explore ways to retain their brand position and their customers’ loyalty.
Learn from history
Take mobile virtual network operators (MVNOs) for example, which in the early 2000s had all the influence over their customers. Fast-forward to 2007 and the Apple iPhone is launched. Exclusive contracts with operators were signed (AT&T in the US and O2 in the UK) and the operators’ worst nightmare of becoming ‘dumb pipes’ began turning to reality. Gone are the MVNO heydays; Apple is now the brand most synonymous with mobile innovation. How do banks avoid the same fate?
Innovate to stay ahead
Banks can ward off tech firms and disrupt the industry if they look at innovative ways to use existing technology quickly. There are a few early movers such as Danske Bank in the Nordics which has the MobilePay app using a phone agnostic beacon payment technology, based on mBeaconPay, to accept payments at retailers. It has over 2.9 million active users and has been installed on an estimated 90% of Denmark’s smartphones. The payment system has also been rolled out to Norway and Finland.
Denmark is well on its way to becoming the world’s first cashless society and MobilePay shows that frictionless, tech agnostic and highly secure POS systems are winning the hearts and minds of the customer, and delivering real value to the merchants and enabling banks to retain or even grow their customer base.
Beacon benefit to the banks beyond pay
Beacon technology not only provides frictionless payment solutions and the opportunity for banks to provide payment technology outside the walled gardens of the big tech players, but it provides the opportunity to combine payments with the power of proximity marketing, delivering value-add to their services, and their merchant clients, increasing customer engagement