Photo: Ashley Veasey, CIO, Standard Chartered Bank, Hong Kong.
When Apple launched the original iPhone way back in the summer of 2007, it started a tsunami of change that has now fundamentally altered the world. Mobile technology has become the catalyst that is bringing humanity some of the most dramatic and profound changes since the industrial revolution.
The digital revolution driven by mobile devices—particularly smartphones and tablets—is quickly changing consumer behaviour and we are seeing this in many facets of our lives, from how we socialise to where we eat; where we meet and even how we date; how we experience a visit to the doctor; how we shop and pay bills and what we know about the latest breaking news around us. According to a recent study by the UN, out of the world's estimated population of 7 billion people, 6 billion have access to mobile phones—that's more people who have mobile phones than access to sanitation and working toilets.
The ubiquity of the mobile device is a tipping point in banking. For banks to embrace the digital revolution and thrive will require a fundamental rethinking of the industry, moving the emphasis from the physical to the digital. This reorientation can drive efficiencies, deliver greater engagement with our customers by making sales experiences frictionless, and even create new revenue streams.
Perhaps the mobile revolution is nowhere greater than in the world of mobile payments. An oft repeated cliché is that people these days never leave home without their mobile phones but can leave their wallet behind. But can the mobile ever replace the wallet in our pockets or handbags? Can Banks by themselves create such a frictionless payment ecosystem loved by consumers?
In many developed economies, with the explosion in smartphone adoption, Near Field Communications (NFC) is seen by many as the key to convenient payments.
NFC is not a new technology. In fact, it has been around since the 80's in many successful transportation card systems around the world, including Octopus in Hong Kong. While innovative, the mainstream adoption of NFC for payments continues to be largely dependent on the availability of devices with NFC built-in or added-on. The adoption of NFC for mobile payments is also impacted by difficult customer on-boarding processes at banks or telco's, as well as the availability of NFC-capable Point of Sales (POS) terminals at retail outlets.
Perhaps it is wrong to blame NFC for the relatively slow uptake of mobile payments by consumers—after all, getting a consumer to regularly pay for purchases using a smartphone at retailers does require a convenient, ubiquitous, industry-wide payments ecosystem, and of course, a significant investment in POS by those retailers.