IBS Journal Supplement 2015
see that today’s highly connected, social media-savvy youngsters, as they start to find employment and have financial needs, will only want to be a customer of a bank if they can do so via a mobile phone. ‘It will drive banks more and more into this,’ he says. This is precisely what State Bank of
India is seeking to do with Amdocs/Uti- ba. This is the first post-acquisition deal announced by Amdocs. The aim is to pro- vide a single mobile wallet which custom- ers can use to manage their finances with a wide range of services, including money transfers, bill payments and m-commerce, savings, loans and insurance, gain loyal- ty points and make top-up transactions. Here, the mobile operator, Bharat Sanchar Nigam Limited (BSNL), is purely providing the network. The solution is also intend- ed to support an ‘extended ecosystem’ of multiple merchants and other business- es, including credit card companies, utility providers and employers. Indian company, Triotech, will provide project management and will develop the customer and retail end applications and portal. As mobile financial services, as
opposed to pure mobile payments, evolve, so this could play into the hands of the banks. ‘Regulators usually prefer banks to be involved, because banks know how to manage money,’ says Kaftzan. If there are loans, credit, insurance, savings using mobile, he feels, then most regulators will want the banks to be at the centre. On the other hand, he feels banks still struggle with the consumer-led demand for con- venience and speed, which is more the domain of the likes of Google and Apple that also have much better brand recog- nition and acceptance among young peo- ple. Samsung showed its e-wallet intent in February 2015 when it bought US start- up, LoopPay. Samsung had been an initial investor in the company, alongside Visa and US bank, Synchrony Financial. Even though banks are taking centre
stage, they can’t do so alone. John Brox- is, managing director at EBA Clearing’s MyBank subsidiary, believes that banks will need to succeed via partnering. Gone are the days, he feels, of banks looking to tie up with telcos. Mobile wallets are now the focus. However, this needs other types of partners. ‘Banks have understood that, whatever they do, they cannot do it on their own.’ It isn’t conceivable that a
16 © IBS Intelligence 2015
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merchant’s site would have multiple bank gateways. Banks are either getting togeth- er for mobile finance, as they have done in Italy and Greece with MyBank, or where they are working on individual projects, they are seeking to partner with local mer- chant acquirers. MyBank is described as an e-authori-
sation solution that enables safe digi- tal payments and identity authentica- tion through a consumer’s online bank- ing portal or mobile application. It is an infrastructure which facilitates real-time e-commerce services between seller and buyer banks across Europe. While it has been accused of being more complicated than Paypal, says Broxis, it has advantages not only for the banks (they control it and it puts the current account at the heart of the mobile payments cycle) but also for consumers. They do not have to sign up for MyBank and they can manage all of their transactions from one place. There is no requirement to enter credit card details online and some people also have fears about security and privacy related to Paypal. That complexity can be seen as an
upside as well as an issue, adds Broxis. MyBank uses one-time, two-factor authen- tication, which some people find reassur- ing and, anyway, from 1st August 2015, the EBA has ruled that two-factor authen- tication will be needed for most payment initiation, e-mandates, wallets and cards used over the internet in the EU. ‘It will lev- el the playing field for everybody,’ he says, and perhaps redresses the balance. Many people feel that the trade-off between usability and security had shifted too much towards the former. ‘Every mobile wallet and payment
provider faces the same challenge, of building the right ecosystem,’ says Kaftzan. It was something the credit card compa- nies took many years to solve. Merchants won’t invest in the near-field communi- cations (NFC) POS and other infrastruc- ture, as well as still incurring interchange fees, if they don’t see sufficient custom- er demand. Conversely, customers won’t sign up if they don’t see enough mer- chants involved. Even Apple Pay is strug- gling to gain acceptance from merchants in the US, with only around three per cent of retailers accepting it by the end of last year. The Merchant Customer Exchange (MCX), set up by a number of large US
analysis: mobile banking
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