Keith Dyer:
Peter, the mobile banking and mobile payments market has often seemed to be an assortment of piecemeal applications, delivering one-off solutions. Is there some scale forming now?
Peter Simpson:
Certainly I think we have seen exceptional growth in recent times, and we are seeing the market stepping up through the gears.
For instance, we at Monitise had 100,000 new customers register for our services in the last month alone, and we have said that we aim to have one million customers by the end of the year.
We’ve also seen a gathering ecosystem of banks and financial institutions, payment providers, merchants, and mobile network operators.
We can operate with almost any mobile network operator, and on any handset or device, providing a range of money management, alert and payment services, in partnership with banks and financial institutions.
Keith Dyer:
Do you think users are now more ready to use their mobiles for banking and payment?
Peter Simpson:
I do. We recently commissioned research from Future Foundation that shows that mobile banking is the fastest growing way that consumers are checking their accounts and it is now used by over 5% of people, an increase of 25% since October 2008.
We’ve also seen the impact the economic situation has had in the short term, with over half of consumers are checking their balances more often in the recession, representing a 10% increase since October 2008.
The research also shows that consumers continue to use and trust debit cards, with far less of a ‘flight to cash’ than might have been expected. Only 1% of people said they had stopped using their debit card, while over 10% said they were using their debit card more.
However, consumers maintain their overall reluctance to take on more credit commitments, with only 34% saying they are using their credit cards as often as they always did and 33% saying that they have either stopped using or never use credit cards.
We are seeing more and more consumers managing their money by mobile phone or online, clearly indicating that technology tools are seen as part of the solution in this current economic climate. However, we see this flight to technology as a long term trend as people increasingly choose fast, convenient and secure ways to manage their financial affairs.
Keith Dyer:
How would you say Monitise is positioned to address this opportunity?
Peter Simpson:
I feel we are in a strong position in what we believe is a wonderful market to be in. Our strength is that we offer a very simple range of services, meaning a consumer can choose how they want to interact with the services. In the USA, for instance, we see users utilise the browser a lot more than in the UK. Subscribers can use a simple text-based service, or increasingly we are seeing users choose an application download, and we will see users use a widget-based service quite soon.
With a background in banking, I saw the introduction of telephone banking in the 1990s, and internet banking in the late 1990s and early 2000s. I think we are now all set to see mobile becoming bigger than both. The first reason for that is the ubiquity of mobile phones. Users are becoming more and more confident about the use of data, and they trust the technology. If you give people technology that’s easy to use and understand then they tend to use it.
Finally, we are well-positioned to provide the linkages between the different elements of the ecosystem – from the banks and financial institutions, to the merchants, through to the mobile operators.
Keith Dyer:
What is the role of Monitise in bringing together the different elements of the industry to make this happen?
Peter Simpson:
Basically our job is to provide the linkages, as I said, between the users, the mobile operators, the banks and the payment service operators. The operators know that we can bring from the banks large numbers of people who will use extra data services. And we can bring the mobile subscribers to the banks. But the most important thing is that we can do this in a secure and scaleable way, with a compelling and simple user experience. We deal with all the major operators in the UK, as well as in the USA. The operators have been most supportive because they are looking for a kind of ubiquity. Only with the development of a true ecosystem will everybody feel the true benefits. But is has to be simple and straight-forward to use.
Keith Dyer:
What relationships do you currently have with mobile operators, and what are the benefits to them of mobile banking and payment applications?
Peter Simpson:
We deal with all the major network operators in the UK. They understand that we can provide the linkages that are difficult for them to put together, such as in security, the back end processing and service assurance. They have all been most supportive, and like us are looking for a kind of ubiquity, so that they can feel the real benefits. They know that they face one or two complications in the future as to how they can create more and additional services. They know that we can bring, through the banks, large numbers of people that will use these extra data services, and they see the value in that.
Keith Dyer:
How do you see mobile payments moving forward in the future, beyond m-banking and payment applications?
Peter Simpson:
We do believe that in the future this market will expand into m-commerce, the type of activity that uses NFC for contactless payment and other applications. We can easily envisage consumers using the phone to obtain information, or vouchers, or to do their shopping. And then we will see SMEs and other businesses increasing their use of the technology, to collect payments by mobile phone.
Our research with Future Foundation concluded that contactless technology, already introduced to some consumers when their card renews, will become an important part of the mix. While some retailers remain hesitant about contactless payment, the success of Oyster in London and the positive results of some bank trials demonstrates that once consumers have seen, touched and used the technology they quickly come to trust and adopt it. It is likely that banks will have to take a lead in encouraging adoption of cashless payment both among consumers and retailers. But their task will be made easier due to the trust that consumers have in financial services technology. It is therefore likely that we’ll see a rapid adoption of new technologies such as contactless payment and mobile phone banking. What the banking industry has shown in the last twenty years is that it can build trust in new technologies successfully and therefore it is within the grasp of the industry to be able to use technology to give consumers a much greater feeling of control; perhaps towards the level currently enjoyed by cash.
But just as with the services we offer now, the user experience will have to be simple, and it will have to be straightforward, to make the process a little less difficult to understand. I think if we do that I’m confident we will see such transactions developing a higher commercial value in around 2010-2011.
Keith Dyer:
What are the elements – the linkages as you describe them – required to put this together?
Peter Simpson:
First, you need to be able to associate the phone with one or more payment instruments that the customer already has – whether it’s a bank, pre-pay or credit card – at a banking grade level of security. Secondly, once the user is securely associated you need to give them a tool to download (through SMS, the browser, or a java app) to carry out the payment itself. Thirdly, once the payment has been made you need to take that information and pass it to the back end infrastructure to execute that partner’s transaction.
Because we already have payments systems in place with the banks, we’ve extended that to include mobile, and to ensure the security of that mobile extension.
Keith Dyer:
Do you think this gives you an advantage? Are you the best placed to put this ecosystem together?
Peter Simpson:
I think there are only a very limited number of players that have the flexibility we have – certainly there are a number of players that can do parts of this, but we want to try to put together the whole system, end-to-end.
Keith Dyer:
Are you keen to enter other European markets?
Peter Simpson:
We developed the system in the UK, and have replicated that in the USA. I can’t say too much about expansion plans but we have good relationships in India and Hong Kong, and in a range of different markets in Africa and the Middle East. We are also looking at moving into Europe, where in each particular market we have to be talking to the people who can do the back end prcessing and assurance of the transactions – which means the banks and payment providers in each market.
I think although mobile is complex, we as a company understand the way that markets develop, and we have the capacity and knowledge to bring this vision of mobile payments to any market.