A Force for Change in Mobile Payments
by Kee Joo Wong, Head of Global Payments and Cash Management, Asia Pacific, The Hongkong and Shanghai Banking Corporation Limited
Despite mobile devices becoming ubiquitous in almost every country around the world, it has taken longer to realise the potential for mobile banking solutions to transform the payments landscape. This is now changing as individuals become more accustomed to using mobile devices for personal banking, and are therefore seeking to achieve comparable advantage at an organisational level. Similarly, a growing number of corporations are leveraging the value from the mobile money solutions that are expanding across developing markets to improve collections security and efficiency.
The mobile catalyst
The use of mobile phones for banking and transaction purposes has evolved in a variety of ways over recent years. In the developed world in particular, mobile banking initiatives were initially targeted at retail banking customers, firstly for balance checking and transfers, then for C2C and increasingly C2B payments using only a mobile phone number.
In the developing world, mobile money has already been transformative in shifting people’s reliance on cash and manual payments to secure, immediate convenient payments. The most notable example is M-PESA. As the mobile networks association, GSMA’s State of the Industry 2014 report illustrates, with 3.6 billion unique mobile subscribers worldwide and 103 million active mobile money accounts so far, the success – and potential - of these initiatives is groundbreaking, not only for users, but as a catalyst for innovative new business models.
Taking the initiative
With its cultural and economic diversity, Asia is taking a pioneering role in the development of both mobile banking, including mobile-to-mobile payments, and mobile money solutions. The five top countries globally for the use of mobile banking, for example (excluding SMS-based mobile solutions such as M-PESA) are all in Asia: South Korea (47% of the adult population); China (42%); Hong Kong (41%); Singapore (38%) and India (37%) according to 2015 data. There are three key reasons for this:
Firstly, Asia combines both the sophisticated user base and large underbanked populations that are driving the success of mobile banking and mobile money solutions respectively.
Secondly, there is strong regulatory support for mobile-based banking and electronic wallet solutions, including in countries such as Vietnam, Philippines, Thailand, Indonesia and Bangladesh.
Thirdly, banks such as HSBC are playing a seminal role in designing practical, robust solutions for implementation that will meet the needs of both retail and corporate customers, such as HSBC Mobile Collections and solutions that leverage real-time payments infrastructure in developed markets.