As non-traditional sources such as alternative payment providers continue to present a competitive threat to banks, banking executives are increasingly looking to mobile payment technologies to help defend payments revenues, according to a recent report from audit, tax and advisory services firm KPMG International.
According to a survey conducted as part of the KPMG report, titled "Monetizing Mobile: How Banks Are Preserving Their Place in the Payment Value Chain," 84 percent of banking and financial services executives said mobile payments will have significant importance to their business within the next one to four years. In addition, 73 percent of those executives indicated that mobile payments would be mainstream within the next four years.
Although the survey responses suggest that interest in mobile payments is swiftly increasing, they also indicate that banks still need to overcome significant challenges in order to achieve widespread adoption. More than 70 percent of respondents cited security risks as their biggest obstacle to overcome, with the top concern being that unauthorized access might be made to bank accounts, causing funds to be diverted. In addition, 54 percent of respondents identified a lack of technology standards and infrastructure as the main challenge in the roll-out of mobile payments (multiple responses were allowed).
The report also suggests that mobile payment will become more widespread as banks identify and implement the right payment technologies. “We believe that if banks can roll out a safe, easy to use and ubiquitously accepted system, consumers will very quickly adopt mobile payment solutions as they have other mobile services,” said Mitch Siegel, a KPMG Financial Services practice principal and co-author of the report, in a statement released with the report. “But adoption will also be driven by demand as consumers increasingly look to use their mobile devices to accomplish everyday tasks such as buying their lunch or paying for a taxi.”
Very few banking and financial services executives who participated in the survey would categorically endorse any single payment technology, but most identified Near Field Communication as the technology with the most promise and ease of use for customers.