Today we are looking at the role of Financial Institutions. As mentioned in the previous articles beside Mobile Network Operators, Payment Schemes and, retailers; Financial Institutions want to have a piece of the mobile payment cake. And they have good arguments to be a mobile payment solution provider in the future and to offer their customers the next level of mobile services.
Retail Banks have been the single touching point for any kind of Financial Services in the past. During the second part of the last century more and more new services and new companies entered the market and threatened their market position. In the online payment business, banks are losing the single touching point, but of course people still use credit or debit cards for online payments. However, they normally pay via PayPal or AliPay instead of using payment methods offered by Financial Institutions.
But why is this the case? Banks still have one big advantage over others…Trust. Customers trust their bank brand more than they trust online brands. But with their size, innovation, power and fewer regulations to consider, online companies have a competitive advantage over Financial Institutions.
Nevertheless banks are also able to offer a striking mobile payment user experience beside their existing financial services portfolio, either for IOS or Android operating systems. And most of the populace are missing the point that Android is much bigger than IOS. This comparison leads us to the cloud payment approach of Android devices. Googles latest KitKat Version includes HCE which stands for host card emulation. With regards to cloud payments, HCE will be used to securely provide and store payment card information in the cloud and unlike Apple´s secure element approach to be physically on the mobile device. The HCE Cloud Payment approach could be a great opportunity for banks to act independent from Apple and also mobile network operators.
Coming back to Apple. With their brilliant payment system they offer contactless, online and In App Payments, Apple combined three different type of payments in one single system for various debit and credit cards of different Financial Institutions. With an embedded secure element Apple distanced itself from the mobile network operators favored SIM based solution, which is great news for banks. Now they know that they are able to offer a Mobile Network Operators an independent solution.
In my opinion one financial institution will not be able to offer different card products of different institutions within one single banking app. As more and more people begin using more payment cards of different providers, Apple, Samsung and Google will always have a competitive advantage over card issuers.
But for their customer loyalty and brand awareness it is crucial to enter the mobile payment market and not only participate in Apple Pay, Samsung or Google payment systems.
Conclusion:
As in nearly every industry, the financial sector is seeing major changes in consumer habits and the competition landscape. More and more online companies are entering established markets and forcing the shift into the digital world. They are counting on an enhanced user experience and consumer convenience of established processes, which we can also see in the payment market with Apple´s payment system. Due to that reason Financial Institutions are about to lose their single touching point which had existed for ages. We can see very interesting and promising approaches of banks all over the world. Especially Canadian and Australian banks are very innovative and are leading the race in mobile payment solution provided by Financial Institutions. The most promising approach right now for us is the CommBank App of the Commonwealth Bank of Australia (CBA). In our opinion the CBA is one of the most innovative banks in the world and they have already started to expand their existing portfolio with mobile payment solutions.
In general Financial Institutions will have to find a way to combine their existing services like mobile banking and person to person payment with mobile payment solutions to offer their customers a payment experience throughout their whole portfolio.
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