Reflections on Mobey Day 2016: the next steps to changing mobile commerce

November 10, 2016 | Daniel Armstrong

Mobey Day is the annual flagship event by Mobey Forum that brings together decision makers from the financial services and FinTech industries. Following this year’s event in Barcelona, the GSMA held a Q&A session with Sirpa Nordlund, Executive Director at Mobey Forum.

What were the hottest topics covered at the event?

One of the main topics was the European PSD2. What happens to the business models ahead of PSD2? What happens for strategic planning within the banking area? What opportunities does it provide for various players in this area as well as the latest Regulatory Technical Standards that were published by the EBA. We also discussed stronger authentication requirements and what it means internationally.

The second topic of discussion was emotions and trust in the digital era because we believe that the more personal banking and financial services becomes, the more emotions are involved. So how can this be met in this era?

We also discussed cyber security and cyber resilience – what does it mean that cyber security is becoming a hot topic not only in politics but also in financial services? How can we build resilience towards the attacks? We came to a conclusion that cyber security is more an enabler than a threat, but we need to be aware.

Innovation in banking – what are the most important new technologies driving payment?

The most important new technologies are in fact those that are not very new. Think about contactless payments – it was a technology that was invented in the 1980’s. We have a smart card technology that is 30-40 years old and it is only now that it is embedded into mobile devices and become regular in every day usage. So is blockchain technology as such.  I would say the real new technology is in-app payments. This is new and I believe it will be the biggest evolution in brick and mortar payments.

Challenges – what are the biggest challenges facing the banking sector at the moment?

The biggest challenge is keeping the retail banks relevant. The banking sector is known for being traditional and conservative and because trust plays a big role and the banks as organisations are big – it is very challenging for the banking sector to adjust in this agile fast moving digital world. When I say difficult, I mean it is challenging for everyone in the banking sector, but it is more challenging for some than others. So the winners are the fastest ones to move and who make the decisions quickly and take the new technology into use even if it means cannibalising their existing ‘cash cows’.

What are the implications of PSD2 on the banking sector? What were the main messages from the speakers on this topic?

The implications of PSD2 can be divided into four points;

  1. Increased competition. This means there are new players and new FinTechs but also other players in the market that are coming into the same area. And at the same time there are changes in customer expectations.
  2. Digitisation – so PSD2 fits perfectly in the digitising world. It is interconnected, it has new market logic and it has a new level of flexibility.
  3. Technology (strong customer authentication, big data, blockchain, promising technology that will start flourishing as soon as PSD2 is out in full force).
  4. We live in a low interest era so the banking sector and financial industry is experiencing reduced revenue (we are seeing that the areas that have been stable and predictable are flat and the business models that have lasted the last 200 years are eroding).

These four areas combined with PSD2 make the world a very exciting place to be.

Where are we today with mobile payment?

Mobile payment has been disappointing for many and hasn’t taken off as expected. This is down to its acceptance, both merchant and consumer acceptance. Spain for example is a contactless country with many contactless solutions in place but the user base is not very big. The UK is one of the biggest but again, it still hasn’t seen enough success. In my opinion, the biggest problem in mobile payments is that it doesn’t provide added value for the user. We are still used to using a plastic card – this comes automatically but the mobile device doesn’t. However, this might change once we start paying with app based payments. So if you can order coffee from your favourite coffee shop in advance, pay in-app and collect your coffee as soon as you enter the shop, the game will change and change the balance of power with or without PSD2. I am also afraid this is the biggest area of competition in the future: the traditional playing field is being disrupted in a big way.

What are the drivers to make mobile payment scale?

It’s such a cliché, but it needs to be adding value to everyday life. If I could save time getting my coffee in-app instead of purchasing in the coffee shop, I would use it. But if I have to decide whether to take my phone or my plastic card from my bag and pay at the counter it is still in my DNA to take my purse and plastic cards because I’m used to doing it. So forcing people to make the decision, whether to use mobile or plastic, should not be the starting point. Instead, giving people the possibility to make things faster, more convenient, more reliable by ordering and paying in-app, will make mobile payments scale.

How do you see the emergence of authentication/identity management moving forward?

At Mobey Day we had a very nice sentence that frequently came up “payment is all about authentication, the rest is accounting”. I liked it because that is how it is. It’s authentication and the rest is like putting the pieces of a puzzle together. Once you get authentication going you have nothing to be afraid of and I think it’s the biggest thing missing at the moment. And I do believe there is a possibility of Mobile Connect helping the world in this sense by providing a simple but robust mechanism for ensuring the right person is authorising the payment transaction.

How big will mobile banking/ mobile payments be by 2020?

In 2014, mobile banking exceeded the usage of desktop banking for the first time ever and it will continue to increase past 2020. However, it becomes flat at some point and I don’t think we’re too far away from that point. I think we will reach something like 70-80% of all banked customers using mobile banking and mobile payments.

When and where is the next Mobey Day?

North America, Toronto, 7-8 December hosted by Carta Worldwide.

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