The second of the British company Monitise "Pathway Papers" focuses on mobile-commerce for banks and analyses the key factors for success and the pitfalls to avoid. Rozenn Le Ru takes a look.
The rise of the smartphone has completely revolutionised the way people buy, bank and pay in half a decade. The mobile accompanies the consumer everywhere; interactions and transactions can occur at any time and any place.
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According to Forrester Research, 41% of smartphone owners purchased using their mobile last year.
Monitise believes that banks have a head-start over their competitors as they are already trusted to handle consumers’ money. In a survey conducted by Future Foundation 2013, 57% of UK consumers say they "would feel more confident buying goods and services through a mobile if they could do so via an app offered by their bank".
Monitise’s strategy director Richard Johnson explains: "The UK is Europe’s most advanced e-commerce market in general. It tends to be very open to adopt this kind of services."
Checking their account balance when buying a product seems to be the first preoccupation for 69% of the UK consumers surveyed, followed by comparing prices, checking e-mails and reading product reviews.
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By GlobalDataPersonalising transaction offers
Banks already possess a wealth of data stored in customer records and account activity. By combining it with other sources, they could generate powerful insights used to create location specific and time sensitive offers and recommendations to customers.
Such data driven analytics would allow providers to continually refined their service and create highly targeted offers – leading to longer, more profitable customer relationships; a win-win for banks and retailers, according to Monitise.
"Bank’s apps are often on the start screen of smartphone, alongside with facebook and twitter," says Johnson. "The strategy followed by banks should be to create a brilliant app that customers will visit 40 to 50 times a month. It is better to add interesting features to an app than having a series of separate apps."
"Banks are starting to be very conscious that they are not only competing with other banks but with a rising number of other payment systems. For example the Chinese search-engine Baidu has launched Baifu – a money market saving accounts – and apparently, lots of people are putting their money into it," he adds.
The key is to understand consumers’ needs and how they interact with technology. For example, Amazon’s mobile app is a relevant example of direct engagement and analytics-driven, cross selling opportunities.
Customers can browse quickly and efficiently, discover items related to their purchasing habits and interact directly with the brand and other users by posting reviews on the go.
A study conducted by AlixPartners Financial Services shows that 15% of consumers would switch banks to get access to targeted digital coupons and offers – meaning that this could also be a point of differentiation between banks.
Conclusion
For Richard Johnson, a question remains unanswered: "What will be the mass-market solution? It will not work if people need a different type of solution depending on the shop they go into, or the country they are visiting, or the phone application they use."
"If credit and debit cards work so well, it is because of their universality. With it, I can take cash or pay in a shop everywhere in the world. Collaboration and open networks is the key to a mass-market solution and that is why one of our crucial partners is Visa," he adds.
"We are an enabler. Our role is to connect the bank to a huge ecosystem of potential partners," concludes Johnson.
In 2013, UK mobile traffic accounted for 58% of all online traffic to retail websites, a rise of 42% compared with 2012.
Mobile commerce transactions conducted via smartphones and tablets are expected to exceed $3.2trn by 2017.
