Not so long ago, financial institutions suddenly found themselves in a state of transition. Existing channel integration strategies ceased to be relevant and demanded new approaches. Cross-selling efforts begged to be re-evaluated and customer retention and growth models yearned for clarity. To their credit, financial institutions quickly recognized the new rules of the game and embraced the new dynamic environment. They realized that they could no longer influence consumer behavior as it related to banking and financial services, and that they must become sensitive to the needs of the customers if they are to maintain relationships that have been carefully developed.

As newer mobile technologies evolved, institutions stepped forward and re-invented delivery of their core offerings to ensure continued business line growth. These financial institutions understood that standing by idly was not an option, but rather a guarantee in becoming increasingly marginalized and eventually obsolete.


Today, hardly a day goes by without an announcement headlining a new mobile alliance or joint venture, a press releases divulging "extraordinary" mobile payment platforms, conference calls prophesizing "earth-shattering" solutions, or white papers promulgating revolutionary "paradigm-changing' strategies.

And rightly so… for the destination is enticing, the possibilities are limitless, and the financial windfall is immense. Is it any wonder that companies are lining up to jump upon this runaway train? It matters little that the engineer is nowhere to be found, the dispatchers have gone silent, and the breakers bailed at the last crossing. Everyone wants to be on board, preferably in the cab, when the full potential of the mobile platform is reached.

And while there is tremendous activity in the industry, there is also very little lucidity and practically no direction. The questions that remain are numerous and complex:

  • Which alliances and vendors will offer "victorious solutions?"
  • Will adoption rates follow the trend in Europe and Asia and continue to climb in the US?
  • Will Congress weigh in with new regulations? If so, when?
  • How will revenue be allocated amidst the participants?
  • Who will control the data?
  • Will interchange fees survive?

And the one most relevant to our industry:

  • What does this mean for financial institutions and merchants?


The game is different this time around. The introduction of mobile channels forced financial institutions to compete among themselves for speed to market and customer acceptance. The playing field was level and those that were most successful in leveraging business intelligence and available technology gained an edge and quickly emerged as examples for the rest of the industry to follow.

The spread of mobile payments has introduced countless competitors and new obstacles that are different in nature and potentially more difficult to overcome. The stakes have been raised significantly and financial services firms find themselves facing a more daunting field of players. The competition is across industries and opponents include tech giants, wireless providers, credit card processers, large retailers, and well-funded start-ups. The organizations with tremendous resources, better technology, and wider ranging customer relationships will be best positioned to take advantage of the emergence of mobile payments.

To add kindling to the fire, telecommunication firms, merchant groups, and numerous established and start-up vendors all view mobile payments as an additional source of revenue and a way to deepen customer relationships.

The banks, along with the credit card associations, find themselves at the edge of a cliff, in the non-enviable position of being cut out of the picture completely and becoming less relevant in the sphere of consumer transactions. A world of contactless payments and mobile wallets will certainly force the industry to re-evaluate the need for bank cards and the ability to pay bills from your account. ISIS, Clear Xchange, and similar bank-centric ventures are the solutions to this problem. These partnerships provide financial institutions the ability to mine mobile wallet data, expose mobile wallet customers to cross-selling, and expose other account specific information to the user.

For financial institutions, the greatest risk of all surpasses the potential revenue loss associated with these contactless payments. It is the risk of endangering existing relationships with current customers and the opportunities and revenue streams that are associated with these relationships. Financial institutions have struggled with the challenge of redefining relationships with the "on the go banking" generation, and this is just another trend that threatens to push the two parties further apart.

If mobile payment adoption rates continue to grow as predicted in the Unites States, financial institutions will face unprecedented challenges to their business models. There is no question that a decision to explore options and invest in a mobile payments solutions is a difficult one due to the uncertainty of what the future will bring. However, taking a "wait and see" approach may turn out to be even more destructive to their business models.

So, as you are standing on the station platform, weighing the risks and the rewards of jumping onto this runaway mobile train, be forewarned-- technology is not slowing down for anyone. There is really only one question, ‘Are you ready to take the leap aboard this train?' CapTech Consulting can provide your institution expertise evaluating solutions and implementing cutting-edge solutions that will enable your institution to maximize its opportunities in the mobile payments arena.