While the Payments industry is witnessing a major consolidation in the banking middleware and back office processes (payment processing, clearing and settlements), there is a great degree of disruption in the payments origination and instrumentation processes led by mobile devices. This generates equal opportunity for consumers, banks, merchants, merchant acquirers and IT service providers who can be a part of an exciting future.
Here is my view on potential evolution of mobile payments, driven largely by technology and consumer behaviour, given that we are able to enforce user adoption through proper products, services, governance (privacy and regulatory issues):-
- Level-1 - Ability to use banking services over mobile - Transaction history, fund transfer, treading, cheque deposit, chat, click to call, e-statements etc. It has a high degree of adoption in developed and rapidly developing economies, and also has the critical user base for sustainability and maturity of services. A mature web, mobile platform with portal, collaboration, ECM, and middleware integration (API), capabilities could help achieve this stage.
- Level-2 - Ability to do commerce and services using mobile services - Pay for services (Gym subscription, or pay movie tickets) or goods purchased (m-Commerce). Ability to up-sell and cross-sell based on location and history of purchases for specific brands, potentially if banks are ready to participate in promotional activities then cross brand sales and services are also possible.
A mature web, mobile platform with e-Commerce platform, digital marketing (targeting, web Analytics, optimization, social, content management), guided search, ECM, BPM and middleware integration (API) capabilities could help achieve this stage.
- Level-3 - Ability to use location and payment information to provide value added services – This revolves around the ability to assist in planning based on funding objectives. This needs to be driven by digital wallet (NFC) strategy (PayPal, Square, Google Wallet, Apple Pay or even banks’ owned digital wallet).
Banks can drive adoption of financial tracker against define and measure savings objectives (Standard Chartered Breeze wish list). If we extend this further, banks can offer financial negotiation services where they can negotiate a deal with hotels and airlines for a possible holiday package, drive co-financing or even co-development of product and services.
Also, banks could drive reward and loyalty through merchants or card issuers and align it to consumer preferences. (JPMorgan Chase acquired Bloomspot to deliver discounts in restaurants, Barclaycard has custom-made offers website). It is still not driving main stream revenues and critical user base is yet to come for sustainability and maturity of services. For this to happen there needs to be wider collaboration between merchants, acquirers, issuers and networks to drive this ecosystem for wider consumer adoption. But, once it is part of main stream it will drive the next phase of maturity.
A mature web, mobile platform with marketing, sales and servicing platform, digital marketing, biometric security, big data driven insights & predictive analytics, intelligent BPM and middleware integration (API) capabilities should help achieve this stage.
- Level-4 - Ability to use mobile as payment advisor - Dynamically advise consumers on the most appropriate payment solution for any particular transaction. The solution knows the user's payment and loyalty cards, the balances on each account, and the payment history associated with each. It also understands the physical location of the user. It could even supplement its recommendation engine based on the consumer lifestyle and habits.
Once this stage of maturity is achieved we are moving into the realm of hyper-personalization and it is done by either the digital wallet owners or the device owner or even to some extend Banks.
The technology to achieve the basic capabilities is more or less there. It will be a combination of advanced middleware integration (API); biometric security; big-data (Hadoop) driven advanced real time backend or in-mobile analytics for insights, predictions and recommendation; Voice recognition and cognitive intelligence to drive a truly virtual agent who you are able to interact with you and advise you.
- Level-5 - Enabler for alternate payments business models - Once mobile helps to achieve a payment advisor status, analysing a segment of society and understanding the gap in product and services will be easy. This in turn will drive disruptive business models to address the gaps.
Starting from how to help drive digital banking or create an alternate infrastructure to P2P lending & payments or crowd-sourced lending or m-pesa (Kenya) type services, P2P foreign exchange, Crypto currency based services or even interplanetary payment services if we decide to colonise Mars! Whatever is the future, it’s going to be exciting and the world is looking forward to it!