Mobile payments and mobile banking are set to transform the financial services industry by providing convenient solutions to a largely unmet need for access to a wide range of financial services while on the move. The potential of these solutions has generated tremendous interest among various participants in the value chain including financial institutions (FIs), mobile operators and solutions providers, providing significant impetus to market growth.
New analysis from Frost & Sullivan (mobileandwireless.frost.com), U.S. Mobile Payments and Mobile Banking Markets, finds that the number of users of mobile banking services in the U.S. expects to reach 21.27 million in 2010.
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"Mobile devices are becoming important tools in the payments and banking space and can definitely be expected to play an important role in the U.S.," remarks Frost & Sullivan Strategic Industry Analyst Vikrant Gandhi. "There is a flurry of recent activity around both payments and banking, with investments, operator adoption and development of innovative solutions driving these markets."
Various mobile payment solutions allow peer-to-peer (P2P) money transfer between individuals through the mobile phone, while increasing penetration of mobile data services such as messaging, mobile Internet and others offer multiple avenues for providing mobile banking services.
However, gaining subscribers’ confidence and educating them about the capabilities of mobile financial services offerings poses a major challenge. There are bound to be concerns about storing subscriber information on the handset or losing connectivity in the middle of an important financial transaction.
"A strong push by FIs and mobile operators is required to help in the adoption of mobile financial services," says Gandhi. "Specialized industry participants from the mobile payments and mobile banking segments need to work closely to offer solutions capable of satisfying a wide range of financial needs of mobile subscribers."
The key success factor will lie in giving customers the option of performing various financial transactions on the move. While mobile payments and banking may never fully replace online interactions, they could prove to be an ideal fit for particular types of transactions such as micro-transactions. These services can also be tailored to the needs of a particular niche or category of customers by adjusting various parameters.
Integrated mobile banking and payments services are likely to be a key future trend. Although the market may still be segmented into mobile payments and mobile banking verticals, future developments could see these functionalities being available in a single application from an end-user perspective.
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