Challenger Banks Must Strike the Right Balance Between Mobile and Card

Challenger Banks Must Strike the Right Balance Between Mobile and Card

Paul Underwood

Managing Director at Thames Card Technology

Views 282

Challenger Banks Must Strike the Right Balance Between Mobile and Card

09.03.2016 10:45 am

NFC mobile payments continue to grab headlines, but to really drive uptake and ensure full market coverage, combining contactless cards with next-gen mobile banking apps is surely the right way to go for 2016’s challenger banks, says Paul Underwood, managing director, Thames Card Technology.

Much has already been said about the opportunity for challenger banks to disrupt the traditional banking system. These next-gen financial institutions have a very different view of the world and are, in the main, also quite different from one another. What unites them, however, is the belief that they can deliver a more convenient, value-oriented and better contextualized banking experience than their bigger, traditional counterparts can.

No challenger bank would disagree that mobile is a key weapon in their fight to disrupt the market. Virtually everyone today supplements some form of daily activity with a mobile service, and few of attract such close scrutiny as those that support the business of spending. In the post Apple Pay world, therefore, it is little wonder that NFC mobile payments remain central to mobile fintech industry dialogue.

But NFC payments would be nothing without contactless technology. And, while whole-of-market NFC payment solutions remain waylaid by their issuing stakeholders divisive battle for market supremacy, contactless card issuance and use has absolutely exploded. Some stats from the UK alone (courtesy of UK Payments Council): In October 2015, there were a total of 76m contactless cards in issue (that’s comfortably more than one each for the whole population), representing a year on year hike of 39.7%. 120.5m contactless transactions were made in that month alone, each worth an average of £7.72 and total contactless spending was up by more than 213% year on year, to almost £930m.

What does this signal for the coming year’s mobile oriented challenger banks? We know that enabling customers to track their transactions and account balance throughout the day in real time will be a major proving ground for them in 2016, not least because traditional banks’ legacy systems just can’t deliver this level of agility. This real time transaction data can also help them provide handy location-based info on retail offers, for example, or the whereabouts of the nearest ATM. The key point here is that contactless cards can provide this data right now, in real time, and regardless of which handset the customer uses. This means challenger banks hell bent on positioning themselves at the heart of the customer’s spending experience can, via a contactless card, deliver the exact same tap and go, value added service enabled, location optimized experience as mobile NFC-payment services, only they can deliver it to everyone right away; not just those with a premium NFC-enabled handset.

So, my message to challenger banks gearing up for 2016 is this: By all means, get stuck into the mobile channel, just don’t get hung up on NFC payments. In contactless cards, you have an uncomplicated and proven route to market which your customers already use and love, and which will deliver you the data you need to create the disruptive customer experience you seek. So why wait around?

Latest blogs

Darren Capehorn Icon Solutions

Unbanked and Unconnected: Supporting Financial Inclusion Beyond Digital

Many of us take it for granted, but accessing basic financial services is fundamental to our economic and social development. It is hard to ‘get on’ if you are forced to hide life savings under the mattress, or rely on predatory loan sharks for Read more »

Konstantin Demishev Archer Software

How Machine Learning Helps Fintech Companies Detect Fraud

Machine learning (ML) is one of the most discussed technological tools, and if in the past only a few companies could use it due to high cost and lack of resources, today many industries use ML. The financial sector is not an exception and embraces Read more »

Nish Kotecha Finboot and Bryan Foss, NED, Visiting Professor at Bristol Business School and member of the FRC Audit & Assurance Council

How Listed Companies Can Use Blockchain to Prevent Auditing and Reporting Malpractice and Avoid Scandal

Not too long ago, there was very little to link Wirecard, the disgraced payments platform in Aschheim, Germany, with Boohoo, the fast-fashion online retailer in Leicester, England, but both have recently been embroiled in high-profile scandals. Read more »

Leon Muis Yolt Technology Services

The Time for Financial Services to Become Truly Digital is Now

The financial services industry looks set to change dramatically over the next couple of years in response to COVID-19. The pandemic has certainly highlighted some inefficiencies and weak spots in current processes for many businesses, such as those Read more »

Granville Turner Turner Little

The Lockdown Money Revolution

Many Brits have found that lockdown has been beneficial for their money, having cut back on personal spending and managing to put away some extra cash. According to eToro, Brits with unspent discretionary income are set to accumulate £75.5bn in Read more »

Magazine
ALL
Free Newsletter Sign-up
+44 (0) 208 819 32 53 +44 (0) 173 261 71 47
Download Our Mobile App
Financial It Youtube channel