Mobile financial services Barriers To Adoption

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Mobile financial servicesBarriers To
Adoption

• Sustainable Computing Consortium
• April 1st, 2003

Andrew J. Hartridge KeyCorp Enterprise
Architect 216-689-3248 andrew_hartridge_at_keybank.co
m
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Topics

• Types of financial services
• How are financial service organizations
  positioned to provide these services ?
• What are the challenges ?
• Strategies when designing solutions
• Questions / Discussion

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Overview of Mobile Financial Services

• Mobile Online Banking Brokerage
• Past pilot efforts
• Will wireless web become ubiquitous ?
• Micro-niche successes
• SMS success in Europe
• C to B Payments
• Bill Pay
• Broad scope of customers
• High volume
• Already mainstream in wired world
• Price sensitive
• Repudiation environment is relatively easy to
  arbitrate
• Point-of-sale payments
• Removing cash from transaction
• Opportunity to monetize transactions
• Foreign success in mobile content and services
• RFID success in vertical industries

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Overview of Mobile Financial Services (continued)

• C to C Payments
• Broad scope of customers
• Generally low dollar size transactions
• Price sensitive
• Likely to create a high level of repudiation
• B to B payments / authorizations
• Limited scope of customers
• High dollar amount transactions
• Less price sensitive
• Security requirements are high
• Niche services
• Lockbox for mobile funds collections (fees,
  fines, donations etc)
• Enabling mobile identification/authentication

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How are Financial institutions positioned to
provide these services ?

• Highest trust relationship with consumers and
  corporations
• Generally people trust their bank over other
  trading partners
• Existing relationships aid in business
  integration and performing piloting
• Highly regulated in areas of privacy and
  authentication.
• GLBA
• Patriot 326
• Backend systems are already built and integrated
• Current payment processing systems
• Card association networks are ubiquitous
• Equity trading systems are already in place

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Specific challenges

• Mobile Online Banking brokerage
• Business case
• Demand for similar experience as the web
• Bandwidth
• Device issues
• Legal Regulatory constraints
• C to C Payments
• Current association networks are not efficient at
  micro-payments
• Stored value technologies will require
  significant hardware investment
• Any significant change in consumer behavior will
  slow adoption
• Many competing solutions with no emerging
  standard
• Repudiation claims between customers
• North America does not have a single/standard
  wireless platform or network.
• B to B payments / authorizations
• Security requirements are high

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Specific challenges (continued)

• C to B payments
• m-payment historical data is very thin
• Data is very vertical by geography
• Customer demographics dramatically skews data
• Unlike some countries pay-for-content culture is
  not entrenched in North America
• Demand/need for mobile bill payment is limited

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Strategies when Designing systems

• Do not radically change consumer behavior.
• Only a dramatic convenience factor will sell a
  financial solution.
• Online banking works and has rapid adoption.
• Why have broad scoped alternate payment solutions
  failed ?
• Polls show security is very important to
  consumers. Reaction to secure payment systems
  shows otherwise.
• Put the business case over competitive leadership
• Focus on how systems can improve privacy and
  security over traditional systems.
• Market consumer benefits carefully if the real
  benefits are to the FI
• Build flexibility to address changing regulatory
  and legal environments

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Questions/Discussion