Mobile network operators are central to mobile fintech. They provide reliable, global connectivity, products to fight fraud, and have delivered compelling fintech solutions for their customers seeing rapid adoption. As was discussed at the GSMA Fintech Summit at MWC22 Barcelona, the evolution of mobile fintech is an essential strategic consideration for the industry.
Digital assets in the metaverse
Questions were asked during the sessions such as how mobile fintech is evolving to incorporate new technologies such as blockchain, enhanced AI and XR. These collective technologies increasingly referred to as web 3.0 or the metaverse – are transforming the nature of how we interact and trade with one another. This new digital environment, comprising of mobile devices and eyewear, will require an architecture on which payments can be made with maximum security and convenience. In addition, businesses are increasingly dedicating resources to technology capable of hosting transactions in 3D digital landscapes – and increasingly collaborating with each other to do it. For example, in preparation for their enhanced partnership with Microsoft, Accenture, ordered 60,000 VR headsets to help with staff training and to bring more engagement to remote working. The initiative between the two heavyweights is a key example of enterprise collaboration that is likely to accelerate wider business participation within the metaverse and ultimately, serve as a means to connect with consumers by providing customer services, using tradable digital assets like NFTs and digital tokens.
In reality, the shift from cash to digital assets is already underway; increasing numbers of people in favour a cashless system by using digital wallets as ecommerce spending grows online and within the metaverse. This combination of factors is the perfect setting for transitioning to a new digital economy that provides access to ever-more sophisticated types of banking products and experiences. But how do we build this new digital asset infrastructure? According to Sophia Bantanidis, Analyst of Future of Finance at Citi Global Insight, “other than the physical hardware, the other main ingredient to the metaverse is the mobile infrastructure – that is going to power the metaverse. For us to enjoy it we really need sound and stable infrastructure, including 5G, that’s really important and fundamental to access a metaverse at scale.” As explained by Jens Herrmann, Senior Expert Corporate Strategy, Deutsche Telekom, this network infrastructure already enables the basis for the transaction of tokens and other next-generation digital assets by “providing services for several blockchains, validation nodes and our own cloud where blockchain networks can set up their own validators.”
This new infrastructure and resulting currency it underpins, Julia Carbajal, Global Head of Telecom and Media at Celo, argued, has many advantages over fiat currency; “Celo coin is extremely low cost, it’s extremely fast (less than 5 second per transaction) and it works across borders interoperably.” According to David Palmer, Blockchain Lead for Vodafone Business, blockchain will play a crucial role in enabling the metaverse to host the transfer of digital assets not just between people, but devices too; “as we move from the internet of things to the economy of things…every device will have a wallet, what we’ve done with our Digital Access Broker is enable devices to have wallets which can be executed by a smart contract – this will power the economy of things.”
Of course, the need for ever-faster and higher quantities of data is driving the development of the metaverse, but there are still technical roadblocks before it can be fully realised, claimed Luis Ramirez, CEO of the AR cloud streaming service Mawari. For example, interacting and trading on intensive IoT and XR applications through mobile networks requires processing power to be shifted away from consumer hardware and to the cloud instead. The importance of developing 5G cloud infrastructure to support this was acknowledged as critical to XR by Tad Brockway, CVP for Azure for Operators Program Management at Microsoft; “I think 5G can play an essential role – we’re investing to help telcos and their customers to take advantage of the cloud and the intelligent edge.”
Utilising data and transforming payments
As the industry undertakes the gradual process of deploying such network infrastructure, advances to the fundamental processes of payments are being made elsewhere. As a whole, the ecosystem is becoming more adept in data analytics and understanding the needs of its customers in relation to emerging technologies. With more resources being poured into insights, the industry can create and deliver more bespoke financial products. This need was underscored by Lauren Jones, Senior Advisor in Payments Standardization and Policy at Huawei; “we need to talk about the enhanced digital picture, how we can build a digital picture of a user – there are other assets than can be bought into this space.”
“Over the last decade, we’ve added various ways in which you can pay and connected devices to act as modes of payment”, said Sulabh Agarwal, Managing Director Global Payments Lead of Accenture. “Mobile wallets have undergone a huge journey in themselves, and where we are going next is fully enabled end-to-end experiences, in the form of a wallet or super app that caters for the user’s needs.” George Held, Chief of Staff for Veon, further explained how operators were making significant improvements to analysing conventional data to achieve such solutions; “what we’re bringing to the story is knowledge of our customers, we score customers, work out what they need and based on this, then deliver a product, and after all of this we use modelling to work out the preferred method of contact and time of contact.”
The creation of such services will greatly assist in ensuring that the metaverse -and interacting inside it- is accessible to as many people as possible, irrespective of their geography or financial position. This was neatly summarised by Sitoyo Lopokoiyit, CEO of M-PESA Africa & Chief Officer of Financial Services at Safaricom, “5G needs a payment system, and we’re going to be there – if a customer does not have money, we will lend them money based on the data that’s there.” Puneet Chopra, Chief Growth Officer of Yabx Technologies, explained how his organisation was working with operators to make this possible in the world’s emerging markets; “we are using technology as an enabler for the last mile of financial inclusion. We use the information provided to us by telco networks to construct a risk profile for people who lack a credit history and create scores and identities for them which our financial institutions use to offer products.”
A greater understanding of customers is not just needed for offering more bespoke products, it’s also increasingly fundamental in combating fraud. The old foe of SMS and call scamming still threatens confidence in digital services and will need to be greatly reduced for people to have faith in next-generation digital services. Zhang Yi, Senior Solution Architect for Ant Group, explained how their scam detection system “can figure out the pattern of scams – whenever there is a matched case our system will send an alert.” This combines with Ant Group’s interactive risk management engine, which, according to Zhang Yi, can further reduce the risk to the end-user by assessing the level of risk with an appropriate level of customer communication and authentication.
Glyn Povah, Head of Product for Mobile Identity at Telefónica’s Tech AI of Things, explained that the operator had launched a similar product. “We’ve done a lot of data science work with leading banks in the UK looking at fraud cases and what we found was that there was a really high propensity for this to happen over a voice call. We took this insight and delivered a really simple product inside the UK which lets banks know if the user is on an active voice call at the very moment of transaction, helping them to drive the decision making around fraud.” According to Keiron Dalton, VP International of Prove, utilisation of telco data and industry collaboration are essential; “digital expansion and transformation expose more people to digital processes and we need to help them…as such we are connecting with two telcos and a bank in the UK to monitor 250,000-500,000 transactions on a daily basis that are flagged as high risk, and we have to assess how the call impacts the transaction and still ensure the positive transactions still go through.” To help distinguish genuine from fraudulent transactions, George Cray, Senior Vice President of Product for iconectiv explained his organisation’s Branded Calls for Enterprise, which allows businesses to store information about their reasons for calling, which can then be used for cryptographic signing and certificates that go with phone calls, which in his words “effectively builds a set of information that can be trusted and utilised by service providers in action.”
Sharing essential insights is a vital part of helping to future-proof next-generation digital services and thankfully, the collaboration between network operators, financial institutions and service providers appears to be deepening.
To help further unite the industry we’ve created a new FinTech Forum designed to support innovation, support concept creation and scale product development. We welcome anyone from the broader industry who would like to work together and help us create a better digital future.
Watch the full FinTech Summit here.