Changes to the payments ecosystem from the advent of mobile payments has put more than $20 billion in play for financial services industry participants—through both new revenue opportunities and potential loss mitigation. Financial institutions have been cautious entrants into this space, leaving the door wide open for a leader to emerge and gain significant first-mover advantages.
While mobile operators, financial services firms, and retailers have been evaluating the feasibility of mobile payments since early 2000, recent developments on both the supply and demand side are prompting the key players in the value chain to get serious about its potential. Mobile is bringing changes to commerce that will inevitably impact the transaction path as we know it today – creating both opportunities and threats.
The ubiquity of mobile payments is becoming a reality and is threatening financial institutions' control of payments. Financial institutions need to recognize opportunities and threats to craft strategies that will defend and grow their current value streams. This opportunity exists for both traditional and non-traditional industry players capable of offering a compelling, bi-directional value proposition and a meaningful integration platform. Financial institutions need to create “defend and extend” mobile payments strategies in order to protect their current revenue stream as well as capture new customer value (increased spend and revenue, increased brand loyalty and customer satisfaction, etc.).
For financial institutions to succeed, there are organizational changes that will be required to deliver the right operating model. This will enable them to play new roles and deliver new services in an open, collaborative, and fast-paced ecosystem. While there are hurdles to mobile payments adoption, current advancements in the market and learnings from global players demonstrate critical lessons on how they can be overcome. Innovative players will adapt, test, learn, and adopt.
The question for most observers remains, “Who will be the winner in the emerging space?” Traditional players currently have an early lead; however, if they do not keep up with the fast pace of change, tech innovators and collaborators will prevail.
Global Financial Services Leader, PwC US
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Principal, PwC US
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Principal, PwC US
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