Mobile payments offer customers a far richer banking experience and at very low cost, but given the rate at which UK and most global banks are responding, will it be a social media player that corners the market?
Anyone still sceptical about the likely impact of mobile payments should look east for evidence of how important such capabilities will soon become. Emerging markets, unencumbered by a legacy banking infrastructure, have leapfrogged to mobile payments as a means of delivering financial flexibility to those previously limited in their options. Across the UAE, the Philippines and Kenya, advanced systems are already being formed to bring convenient, secure mobile payments to the masses.
In Europe, innovation is far less advanced. There has been confusion around the distinction between mobile banking – something most major financial institutions in developed markets already offer to their customers – and mobile payments. The former, a basic housekeeping facility, typically allows customers to check their bank balance or transfer money between their own accounts, adding only minor value. The latter enables consumers as well as businesses to actively make payments while on the move – triggering spending – by allowing them to settle bills, transfer money to third parties or authorise corporate payments from any mobile device, using text messaging, mobile internet or mobile applications.
While UK banks are monitoring the opportunity, the majority remain unsure how to take matters forward. They have their existing infrastructure to consider – bank branches, ATMs, card processing and direct debit services – not to mention the stringent regulations they are bound by, which have made the financial services industry increasingly risk averse.
However, doing nothing is not an option. Competitively, any financial institution that fails to build full-blown mobile payments into their immediate plans is likely to be risking far more. As things stand, the likelihood is that a serious challenger will emerge from the social media community, as the likes of Google or Facebook continue to branch out into new value-added services. Social media players act swiftly too, reacting to the expectations of their customers. So every month lost to indecision risks pushing the banks further behind.
Anyone seeking to make rapid headway with mobile payments will need access to proven, secure, cost-effective processing capabilities and speed to market. This is where Financial-i Leaders in Innovation award-winner Luup comes in. Luup has the world’s only universal mobile payment platform as an easily accessible, managed service, and the platform already supports sophisticated mobile payment systems in emerging markets. For example, the National Bank of Abu Dhabi relies on Luup for its Arrow mobile payment service, which includes international money transfer.
Luup’s all-encompassing bank-grade solution supports every type of banking system, mobile network and mobile device, as well as any currency and any language. By connecting into the Luup service, banks or new players in the payments space can offer the full branchless banking experience to their customers or corporate clients.
In whichever way the market evolves, adding mobile payments capabilities based on a partnership with Luup gives contenders the best chance to make the leap, fulfilling the promise of the mobile payment revolution. It may well take a market shock – a major new entrant coming into the payments market – to provide the necessary catalyst for change.
Martin Wilson is CEO of Luup.
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