Mobile finance is massive. In fact, mobile payments alone are set to be worth US1.3-trillion by 2017.
In emerging markets, mobile financial services have been disrupting the banking norm for years now. Developed markets have pretty much caught up now, and the field’s about to explode.
Thing is, there are still a lot of misconceptions about mobile finance and, according to Gartner research vice president Alistair Newton, they desperately need to be corrected.
Newton reckons there are seven myths that particularly need to be addressed.
1. Mobile money is fine the way it is
The mobile money industry was pretty much kicked off in a decade ago. Back then USSD was the only real option, but things have moved on since then. “Are we hard coding legacy into the systems?,” asks Newton. We’re moving to an environment where we have so many low-end smartphones and people want something more intuitive than UUSD. But you also can’t forget the people who do rely USSD.
People in the industry have to innovate. There are inherent inefficiencies. Partnerships like that between Visa and Fundamo are aiding innovation and more like it are needed.
2. NFC is the future of mobile money
Gartner reckons that NFC will be much more useful for loyalty programmes than payments. “You have to integrate loyalty and payment,” says Newton. He also reckons that the future of Google Wallet depends entirely on Google Offers.
3. Everybody needs the same thing out of mobile money
We all want every part of our lives to be tailored to our individual needs. The same is true of what we need from mobile money. Companies like PayPal are good at this. It knows that it has to partner with people to succeed. That’s because partners are good at building relationships.
Take Pizza Express in the UK for example. It partnered with PayPal, to allow people to pay their bill with an app. The partnership made it quicker for people to leave a restaurant. Only by a few minutes, but quicker nonetheless. It worked so well because it catered to a specific need.
Banks are starting to understand this too. In New Zealand, Westpac launched Cash Tank. The app allows people to check their balance on the go without logging in. The bank understood that people were perfectly okay with being responsible for who could see how much they had in their accounts.
4. QR Codes don’t work
While some people think that QR codes are a load of crock. Gartner disagrees. It thinks that they could help push back the adoption of NFC.
International coffee franchise Starbucks is a case in point. It initially brought its loyalty and payment cards together. From there it migrated it to mobile using QR codes.
Newton also says that people are getting used QR codes and once people get used to something it’s difficult to stop them doing it.
5. Mobile social commerce should be left to the likes of Zynga
Zynga and companies like it might have started the mobile social commerce boom, but that doesn’t mean it should be left to them. In app payment services are going to become increasingly important and everyone in the industry at least needs to investigate getting on board. American Express for instance now allows you to sync your payment card to Twitter and Foursquare. If you tweet about or check into a restaurant you can get a discount, its back-end can pick that up and send you a discount for the next time you go there.
Everyone will have to integrate social media in a wider context. Allowing people to log into their internet banking using their Facebook ID like South African bank FNB has is a good example of this. German bank Fidor meanwhile bases the pricing and interest rates of its products on how many likes it gets on Facebook. Consider how many people access social networks via mobile and you can see why this is so important.
6. Services like Square are just trying to undercut banks
While Square started out trying to help people accept credit card payments on their mobile devices for cheaper than they could’ve at a bank, that’s not what it’s about any more. It’s now a product that helps retailers deliver retail schemes, get loyalty as well as card system. This has made it a much stronger proposition and others are likely to follow along the same path.
7. If someone is doing something clever with mobile, people will buy from them
Just because a store has QR codes or NFC-triggered discounts, doesn’t mean everyone entering the store becomes an idiot. In fact, the opposite is true. Smartphones mean that people are more informed. They’ll open up their payment advisor app for instance. It knows all their balances and loyalty points.
Players in the business will increasingly have to focus on User Interface and what people want to get out of their apps. “I don’t actually need another way to make the payment, but I do need somebody to help figure out how to best make the payment” says Newton.