Rivals work together to capture expanding mobile market
How many industries can you pack into one slender mobile phone? “Lots,” says Doug Macdonald, a senior manager at the consulting firm Deloitte in Toronto. “Lots of big ones, he adds with emphasis. “And we’ll have to do that if the idea of a mobile wallet is really going to take off.”
The watchword for mWallet development has to be collaboration, points out Macdonald. A recent Deloitte white paper entitled “Convergence, collaboration and customer data – the changing face of Canada’s mobile payments market” uses the ‘c’ word liberally: “Financial institutions – and indeed all major stakeholders – must evaluate their mobile payment strategies and collaborate to realize the emerging benefits. Those that take action and work together with the other ecosystem players will benefit the most. Those that hesitate or try to act alone risk being left behind.”
Deloitte’s paper names as many as ten stakeholders and players in the mobile wallet ecosystem. Beside consumers, there are the big institutions, the financial institutions, and the Mobile Network Organizations like Rogers and Bell. There are also the small but essential players like the APP developers and handset makers. The key is that they all need to act in concert, says Macdonald. “The number of players that need to collaborate is staggering, and each is an industry in itself” he says. “The banks need to be on board. The phone companies need to be ready. You need phone manufacturers supplying the hardware. You need point of sale devices ready as well, and retailers convinced it’s the way to go. Consumers need to believe that security measures are in place to protect their information. These industries have to agree on across the board standards so they can all talk to each other.
They have to sort out revenue sharing models and they have to agree on which sector represents the whole constellation of interests to the consumer.”
What is it that makes natural competitors agree to work together? Two carrots and a stick.
One juicy carrot is the massive amounts of data mWallets will be able to gather.
According to Deloitte, mobile payments will allow for a level of data mining that is virtually unprecedented. Gaining a better understanding of consumer purchasing behaviour is the key to better marketing strategies and improved sales, the firm notes.
Berkley Scott, vice-president of digital media for the market research firm TNS Canada disagrees. “Pretty much all of that information is already available,” he says. The real benefit to stakeholders is transaction payments, he says: “Everyone will collect a fee, so as the value of mobile transactions explodes, so will the fees to be gained, says Scott.
The stick is the worry of lost opportunity according to Almis Ledas, chief operating officer for EnStream, a Bell, TELUS and Rogers joint venture. Ledas says that the biggest potential benefit to stakeholders like his joint venture is a whole army of new customers. Some are from third world countries where mobile phones outnumber ATM machines, he explains. “In the world today there are 6 billion people with mobile phones, but only 2 billion people with banking relationships. So for 4 billion people around the world the mobile wallet will be the first non-cash payment option they’ll have. The opportunity is there to make them “sticky” customers for life, he says.
In addition, he says, there is another new population waiting to be served, youths who are not yet active in the commercial world. “Companies that deploy capabilities that will reach that generation, a generation of people who will grow up with the mobile wallet as commonplace, will get a generation of new customers,” says Ledas. “If you don’t get proactive and get in the game you risk missing a wave of growth,” he says. “Who wants to play catch-up?” he asks: “Not us.”
Financial institutions – and indeed all major stakeholders – must evaluate their mobile payment strategies and collaborate to realize the emerging benefits.
Deloitte white paper, Convergence, collaboration and customer data – the changing face of Canada’s mobile payments market