When it comes to banking technology, there’s strength in numbers

Philippe Eschenmoser, head of business consulting at SIX Payment Services explains why the Polish market could teach other European banks a thing or two about driving the mobile payments industry.


Smartphone uptake has soared in recent years, in part encouraged by how easy it is it is to carry out any number of tasks from a portable handset. For example, research from the Nielson Mobile Consumer shows that sending emails, engaging on social media and online browsing are some of the most common ways that consumers are engaging with their smartphones in the UK. As other everyday functions increasingly go mobile, you would be forgiven for assuming that mobile payments would automatically be met with the same enthusiasm.

There is clearly an appetite for mobile functionality across the board, and yet so far uptake of the mobile wallet has been somewhat sluggish. Last month Gartner was forced to revise down its predictions for the growth of mobile payments in the coming years, after uptake in 2012 was slower than expected. Yet, technology to support mobile money is ready and available and comes in many forms from proximity payment methods such as NFC, to mobile remote payment, such as purchasing goods on a mobile site. So why is mobile technology for banking not soaring in the same way as it is for other everyday functions?

Too many cooks
The sheer number of different technologies available in the mobile payments space is one of the key barriers to its growth. With so many banks offering a variety of different solutions, with varying degrees of sophistication, there is a huge amount of confusion in the mobile banking and payments market place. Add to that the fact that alternative financial players and mobile network operators have all had a go at breaking into the mobile arena, and unsurprisingly customers are left puzzled about where to turn, which largely leads to them sticking with what they know and trust.

Recognising that mobile payments will only become mainstream when the market becomes less fragmented, a number of banks in Poland have collaborated to develop a mobile banking standard. Alior Bank, Bank Millennium, Bank Zachodni WBK, BRE Bank, ING Bank and PKO Bank Polski intend to build a common infrastructure which is open to all market participants including other banks. Comprising of standard authorisation and settlement, the system will support abilities such as 4G mobile banking and mobile shopping.

The benefits of combining forces
While some banks may see this as working with the enemy, these six Polish banks have established that spending money on developing these innovative mobile banking offerings is a waste all the while customers continue to ignore them. With a standardised system across the board, customers will have more clarity about what’s on offer and will feel more comfortable about embracing such technologies. Banks will still be able to maintain their individuality, and subsequently their competitive edge, as each bank will use the same mobile banking platform but then add its own features.

Working together in this way to build a collaborative and cohesive standard, the banks are hoping to reach 70% of banking customers in Poland, according to estimates provided by Bank Zachodni WBK. BRE Bank says it will bring four million BRE customers to mobile payments.

Challenging the biggest and smallest competitors


Such an initiative could help banks to compete with innovative challenger banks that are starting to make their mark in the industry. There is currently a certain amount of anxiety amongst banks, as they fear that the new players have the advantage. For example, without the backlog of regulations and red tape to work through, it may seem easier for nimble start-ups to come in and dominate the market, while their technological and regulatory flexibility allows them to adapt to frequent market changes.

In particular, when the account-switching legislation comes into play in the UK, banks will have to be even more careful to ensure that innovative offerings from challenger banks do not catch the eye of restless customers. Due to be established this September, the regulation change will offer customers the opportunity to switch their bank account in just seven days, which may just be enough of an incentive to prize customers away from their long-established bank relationship.

A mutually agreed mobile banking standard will no doubt minimise the stress of regulations for Polish banks and enable them to keep up to speed with their younger counterparts.

Playing to their strengths
Despite the flexibility of these up-coming challenger banks, research from PwC highlights that 61% of customers trust their traditional banks more than unknown newcomers. The fact remains that security fears represent a large barrier to the uptake of new banking technologies and therefore well-established, trusted banks have the potential to be the real winners in the banking technology race – if they can just educate their customers correctly.

Building an industry-wide secure solution could be the best way to alleviate customer fears about new technology. Banks already have the benefit of both a large customer base and significant marketing clout; consequently following the example of the Polish banks and working together could be the push they need to take the industry lead.

Where next?
It will be interesting to see how well this initiative fares. Introduced at the beginning of the mobile banking life cycle in Poland, it has the potential to be a great success. Many mobile payment functions are not currently available in Poland and as such the collaborative effort is likely to have a huge effect on the country and its consumers.

Markets differ across Europe but while the quiet introduction of mobile payments has so far failed to excite customers in countries such as the UK and Holland, it may just take the efforts of a huge initiative such as this for the technology to create waves in the market. Knowing that the technology exists is not enough – banking customers need something to draw them into mobile payments and collaboration across national banks may just be the answer.

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