There’s no longer much doubt that your customers will soon be making purchases with their mobile phone on daily basis.
by Giles Sutherland
Vice President Strategic Alliances
- How much to outsource: Look at your core capabilities and determine what portion of mobile payment app deployment you’ll keep in-house, where you should partner, and what you should outsource. It’s true that HCE makes it easier than ever to create your own payment solution, but there’s complexity under the hood, and a total in-house deployment has a huge impact on your existing back-end systems. Decide what’s core – driving real value and differentiation – and what’s context. You may want total control or you may want to focus your efforts on value-added services, leaving the complex stuff to a trusted partner.
- Testing, testing, testing: Choosing to go in-house brings its own set of considerations. While Cloud Based Payments have enabled issuers to take control of their mobile wallet, that also means serious testing and certification processes that are new to most banks. If you’re a multi-scheme issuer with credit/debit portfolios on more than one payment network, then those requirements may multiply. Has testing and certification been factored into your target roll-out budget and time lines?
- Tokenization – Token Providers, Requestors and Wallets: Tokenization is foundational to the new wave of mobile payment solutions including HCE. Previous mobile and NFC models focused solely on delivering card data to the phone and managing the lifecycle of that account data. Tokenization now impacts the very transaction stream itself. There are important decisions to make that have immediate and long-term impacts.
Updating existing issuer platforms to support core tokenization requirements has significant time and cost implications. Using tokenization services from payment networks may alleviate internal system impacts, but introduces other decisions around issuer control, roadmap and support for multiple token types—not to mention timing for market availability outside the US.
- Still a shifting landscape: Recent developments including the Apple Pay launch last year have cleared up a lot of speculation, and NFC and tokenization are now established standards that are going to be fundamental to the payments landscape moving forward. What remains to be seen is how the ecosystem will take shape as global technology players and payment networks expand their offerings.
They key will be finding a balance between acting now while retaining flexibility to adapt as the market evolves. The risk of doing nothing now is too great, but as we have seen from some high-profile mobile wallet deployments of the past, the risk of making a large investment in mobile wallet technology, only to have an ecosystem shift and negate that investment is also very real.
- The business case: Clearly there’s no shortage of complexity around the technology framework, and this can divert attention from the most important element of the whole proposition: how does this generate incremental revenue, or improve retention rates, enhance engagement or other real benefits?
While tap and pay solutions may have some consumer “cool factor”, and total spend may shift from cash towards card, it’s unlikely that the business case is going to be driven by the actual “payment” aspect of the solution. Instead it will be the user experience, value added services and associated functionality. The likely winners in this space will be those that stay a step ahead and can focus mindshare and investment on the value-adds that will drive real consumer action when mobile payments really hit critical mass.
Every bank has their own expertise and their own capabilities. As you evaluate your mobile wallet wish list and the current state of your IT department, consider how you might future-proof and limit risk to your mobile wallet plans.
Stay tuned for our thoughts on solutions to realize your mobile wallet vision today, while retaining long term value and flexibility for the future.