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Where Is the Future of Mobile-Focused Businesses?

The importance of mobile

Mobile technology has the potential to become the primary focus of businesses as customers tend to stick to convenience and seamless experiences wherever they are and whenever they want. The banking industry is no exclusion. Mobile-friendly interfaces didn’t complete the task of gaining loyalty, but mobile-first solutions have proven to possibly become the banking business model of the future.

However, banking and businesses have a future in mobile only if the market is ready for mobile and the adoption rates allow it. Mobile payments in some countries have picked up at incredible rates due to various factors: superior experience, highly developed high-speed connections, smartphone adoption, etc. Globally, mobile payments have reached a tremendous volume and will be scaling further.

In fact, the worldwide mobile payments volume in 2015 was $450 billion and is expected to surpass $1 trillion in 2019. If we were to look at the US in 2015, US mobile payments transactions reached approximately $8.7 billion. Analysts predict that mobile payments are expected to reach $142 billion by 2019.

Mobile payments were able to reach such a significant volume due to the global smartphone user base expecting to surpass 2 billion people in 2016. Moreover, mobile subscriptions are expected to hit a total of 9.2 billion by 2020.

China: One of the countries leading the global transition to mobile-centric business models

Although global mobile payments and smartphone penetration rates are at a high rate and expected to grow further, in some countries, mobile technology has been more successful than in others. One of those countries is China, where the factor of more than 1.35 billion people populating it has contributed to the opportunities mobile-focused businesses have in the country of the rising sun.

Mobile wouldn’t pick up in the country if it wasn’t for the developed high-speed mobile connection networks. 4G connections in China are expected to reach one billion by 2020, representing about two-thirds of the market by that point. Some experts believe that local mobile operators have a heavy impact on the overall shift to 4G connections since they are subsidizing the cost of 4G devices through their retail chains. In addition, China Daily suggests that domestic manufacturers are responsible for producing a higher proportion of 4D devices than international players.

Overall, smartphone penetration has reached more than 50% in China. In the case of urban population, the penetration level has crossed 65%. High smartphone penetration and usage instill frequent accessing of the Internet via mobile devices, which again result in more purchases through smartphones. The third-party mobile payments industry in China has seen a stupendous growth in the last three years. Currently, the value of mobile transactions is so high that it is almost double the value of transactions through checks.

Having a smartphone is not enough, of course. The most important part for businesses is whether the customer base prefers that channel for a variety of services. In the case of China, that’s not a problem at all since 88.9% of smartphone users in the country access the global Web through mobiles. It indicates the importance and the place mobiles take in Chinese customers' lives.

In addition to a significant rate of mobile adoption, mobile-first solutions and mobile-friendly e-commerce players have a truly great opportunity in the country as about 60% of online shoppers use smartphones to browse or buy products. When it comes to higher-income consumers, the number reaches around 75%. Digital retail is the industry to benefit the most from the accelerated mobile technology adoption.

Conclusion

The use of traditional payment methods – cash, checks and credit cards – are on the decline. By 2017, alternative payments will account for 59% of all transaction methods and mobile technology is expected to become a major revenue generating force.

The banking industry and FinTech, which is boiling with mobile solutions, are expected to take full advantage of mobile in the future. Convenience and immediacy are the key drivers for the increasing popularity of mobile payments and wallets among customers. With NFC payments opening up the opportunity for mobile transactions in-store, it is enabling retailers to provide varied payment options alongside other key retail elements like loyalty, offers and rewards.

China, along with other countries with high smartphone adoption rates and advanced high-speed connections, will represent the markets leading the transition from being traditional businesses across industries to being mobile-centric.

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