The vast range and diversity of available mobile offerings can be mind boggling. Having an agreed common language and a clear taxonomy is critical for financial institutions developing a mobile strategy, says Celent in a recent report.

Mobile phones, and especially smartphones, can be so much more than voice communication devices. Many of those applications are not particularly relevant for a financial institution deciding its mobile strategy. However, Celent believes that financial institutions should care about a mobile phone being used in the following five ways:

 

 

•    As a media channel. Leading marketers have found creative uses of a mobile device to promote the overall brand or specific products. Mobile phones can and should be an explicit component of any financial institution's media strategy.

 

 

•    As a channel for banking (account) services—mobile banking. Just like online banking, delivery of mobile banking is no longer an option for a financial institution. The key questions include what type of services should be provided to which customer segments, how to cost-effectively manage the delivery across multiple mobile operating platforms and devices, and how to ensure multi-channel integration. Celent includes both information and transaction services as part of the definition of mobile banking.

 

 

•    As a traditional payment instrument acceptance device—mobile point-of-sale. In this category Celent includes check remote deposit capture applications (mobile RDC) and various services which turn a mobile phone into a POS terminal enabling card acceptance (e.g., Square). While these may look like payment transactions, Celent views them as acceptance innovations for traditional payment instruments and does not consider them as "mobile payments."

 

•    As a payment initiation or approval device, enabling mobile payments. There are at least three subcategories: Money transfer services, which include domestic person-to-person and other transfers, bill payments, and international remittances; mobile commerce, which includes various mechanisms allowing one to buy physical and digital goods and services from remote merchants through a mobile phone; and retail point-of-sale, sometimes referred to as proximity payments, which includes paying via mobile for purchases from brick-and-mortar retailers. Near field communication is the technology receiving the most attention, but there are alternatives, such as Quick Response codes or even remote payment methods.

 

 

•    As a repository of “wallet services.” Mobile phones can receive and store coupons, act as a ticket for transportation or events, and perhaps even be used to confirm the owner's ID. In other words, it can replace many items currently residing in our physical wallets. While not financial, these services are important for financial institutions to understand, because they will likely reside along the payment mechanisms in the successful mobile wallets. In fact, Celent's view is that many of these applications will be critical in reshaping the retail landscape and driving adoption of mobile payments.

“The diversity of mobile offerings available can blur the lines across categories,” says Bart Narter, senior vice-president of Celent’s Banking Group. “However, without a clear taxonomy as a starting point and an understanding of where overlaps may occur, making sense of any new announcement becomes particularly challenging.”

“Mobile is also blurring the lines between the physical and online worlds and between various payment transactions, which isn’t making the job of sizing the mobile market any easier,” adds Zilvina Bareisis, senior analyst with Celent’s Banking Group. “Any mobile market sizing initiative needs to be a carefully tailored effort designed to achieve specific objectives of a particular organization.”

http://www.celent.com/node/29053