Published: June 06, 2014
While mobile banking services have been available for a while in the global commercial banking space, the picture as regards mobile payments has been incomplete. But as Marcus Treacher, Global Head, eCommerce at HSBC explains, a combination of technology, infrastructure, and shifting attitudes/behaviour is changing this.
One of the most striking points about mobile payments is their ubiquitous relevance, irrespective of business size or location. They also have a broader significance in the way in which they complete the mobile banking jigsaw and are therefore likely to drive further new functionality that was previously impossible without access to the entire payment process. However, the maximum advantage will fall to users whose banks can integrate deep understanding of their clients' businesses with the right mobile strategy.
The demand for mobile payments is certainly evident. For instance, in the last six months of 2012 client payment instructions sent via HSBC’s corporate banking mobile application, HSBCnet Mobile, grew by 204%. Furthermore, while corporate treasuries are normally fairly conservative organisations when it comes to new technology, many are now using HSBCnet Mobile on a regular basis.
Mobile payments momentum comes from the way treasurers have changed their role over the past decade to play a far more active consultative role across the business and are therefore travelling extensively to meet and assist business units face to face. This trend has also been accelerated by globalisation. Corporations have hugely expanded the geographic range and sophistication of their sales and supply chains and have therefore had to learn to deal with the complexities of working in multiple currencies and countries. This has added further scale to treasurers' travel plans, which has consequently seen them expecting more in terms of mobile functionality that allows them to operate efficiently while out of the office.
The good news is that a lot of the building blocks needed to deliver enhanced mobile payment and banking functionality are now available. A major enabler of the greater use of mobile payments for business is the growth and quality of mobile networks in general, but especially in emerging markets. For example, India is expected to overtake the US and become the second-largest mobile broadband market in the world (behind China) by 2016, with 367 million mobile broadband connections.
Another important catalyst has been the improving quality and capability of user interfaces, particularly on smartphones and tablets. These now combine far greater ease of use, intuitiveness and screen real estate than conventional mobile phones, which has understandably driven greater adoption of mobile banking by treasurers. Those making business critical decisions or authorising multimillion dollar wire payments obviously will feel reticent about doing so on a traditional mobile phone with a small screen and keys where the increased risk of an error could have expensive consequences.
The on-going huge acceleration in mobile processor performance and sophistication also means that the business/financial analytics users wish to run no longer require a treasury workstation. This opens the door to far more sophisticated mobile services. For instance, a treasurer might be able to run scenario modelling to select an appropriate FX hedging strategy (which might include evaluating multiple option valuation models) and then execute their chosen strategy immediately with their banking partner.[[[PAGE]]]
However, the improved performance of mobile devices and networks puts the onus on banks to step up to the plate and deliver innovative mobile banking functionality; those who could once drag their feet by citing mobile hardware and infrastructure limitations will now find that excuse no longer available.
Nevertheless, while mobile hardware and infrastructure promise great things for mobile banking and payments, there is something of a technology dichotomy here in that they still have to be integrated with legacy banking/clearing technology, while also complying with regulation. To users accustomed to seeing the end result via a slick intuitive GUI it all seems simple, but in practice it is anything but.
While banks in general are accustomed to dealing with vast amounts of data, it is often held and processed through technology that was designed perhaps fifty years ago. Many clearing systems are a classic example, as they were designed when the limitations of the available hardware meant that reference data fields had extremely restricted capacity. So while today's smartphone might be able to display a list of the one hundred invoices a payment covered, the clearing system may have discarded all but the first eight digits of the first invoice number on the list.
If banks have the ability to find workarounds for this type of issue there is now a standard in XML that can render this data accessible to the end user. As a flexible and powerful mark-up language, this provides the ability to share data across providers as well as blending it with other data sources.
It is apparent that an understanding of mobile payments and the value they have to offer as part of a mobile banking service is now essential. Mobile payments can benefit treasurers directly in terms of their own efficiency and strategy, but also by dramatically improving collections and boosting the productivity of other parts of the business. Therefore corporations that can capture these opportunities by using mobile payments should enjoy an important competitive advantage.
Nevertheless, this advantage will be heavily dependent upon how holistically individual banks implement mobile technology. Technological advances alone can deliver only partial value; however slick the interface, it is what lies behind and how it can be deployed that will really count. While this depends upon the bank's ability to deliver the right data consistently, this must also be done in a client-centric manner. Those banks that take the trouble to really understand their clients' businesses will have a major advantage when it comes to delivering complete value via mobile services. Those who merely focus on bells and whistles will not.
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