When it comes to technology and 2012, smartphones and tablets dominated the mobility space. Gartner (News - Alert) predicts sales of 1.2 billion smartphones and tablets in 2013, a 50-percent increase over this year; smart devices, including smartphones and tablets, will account for 70 percent of the total number of devices sold by the end of 2012. It seems mobility has made and impact on almost every industry, and the financial sector is no exception. M-banking services, m-payments, m-remittances and other mobile commerce services have completely integrated the worlds of financial services and mobility.
In fact, Frost & Sullivan (News - Alert) predicts that four topics will dominate the financial services market in 2013: contactless payments, commercial mobile payment offerings, cloud-based solutions and data analytics.
According to Jean-Noel Georges, global program director for ICT in Financial Services, by 2018, 38 percent of mobile phones shipped in Europe will be Near Field Communication (NFC) enabled, increasing the use of NFC solutions. Using contactless payment will be simpler and effortless. Like the touchscreens on smartphones, contactless payment will follow natural customer behavior and will generate a new payment experience.
According to recent research from NPD In-Stat (News - Alert), proximity or contactless mobile payment transactions will increase nearly tenfold during the period 2012-2016. The number is expected to reach 9.9 billion in 2016 from 1.1 billion in 2012. More than half of survey respondents are familiar with mobile payments, up from just one-third in 2011. Remote mobile payments will account for nearly $226 billion in mobile payments in 2012.
An example of contactless payment is technology from German firm Giesecke & Devrient (News - Alert), which brought technology to other cell phones without NFC technology earlier this year. The technology, dubbed SECCOS Mobile, comes in the form of a sticker that is attached to a user's phone. When the sticker is scanned, the user's bank or credit card account is charged for the purchase. The issuing banks determine whether a PIN or a signature is required for purchases. Signatures and PINs are only required for purchases over 25 Euros, or around $30. Using the sticker cuts the time to pay for things in half compared to using cash. The cards can be configured as either a prepaid, debit or a credit card.
Numerous commercial mobile payment offerings will be launched in 2013, and by 2014-2015, greater uptake will follow. An example of this is DeviceFidelity’s In2Pay microSD solution. Visa, in collaboration with DeviceFidelity, carried out the technology development for 18 months. The top financial institutions in the United States, Europe and Asia were included to carry out the trials. In2Pay microSD has been tested by Visa for use with top smart phones. Visa will also be supporting commercialization of In2Pay microSD.
Cloud computing will remain a cost-efficiency driver as these solutions are expanding faster than NFC-based solutions in the m-payments space. Amidst the economic crisis in Europe, many companies are looking to reduce or minimize their investment or functional cost. As the cloud uses Internet and server storage for payment purposes, associated business models will allow small and medium enterprises to better reach their expenditure objectives.
Frost & Sullivan further predict social media and data analytics will gain stronger importance in the CIOs agenda. Banks and financial institutions will increasingly focus on using social media and data analytics for processes to understand their customers better and, therefore, to target them with specific product/services and pricing offers. The reduction of the total cost for data computing provides an exceptional capability to identify new customer groups, gain greater visibility into their purchasing patterns, and thus define customized offers and services perfectly in line with their expectations.
"In 2012, regulatory pressures forced financial institutions to rethink their strategies," summarizes Jean-Noel Georges. "Market participants have to increase efforts to ensure interoperability and open environments. But 2013 will be an exciting and promising year for technology and innovation. Probably for the first time in the payment industry, all stakeholders are ready to promote new products and to start new services. So the race has already started.”
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