Mobile Money trends for 2019
Senior VP, Mobile Financial Solutions, Comviva Technologies Ltd
From Secure Remote Commerce, mWallet to block-chain, here’s what to expect in 2019.
2018 was the year when many big things happened in the payments industry on both the customer and retail front which promises to make payments frictionless in 2019.
One of the key trends for 2019 will be Secure Remote Commerce (SRC), which is an industry-wide effort to extend the EMVCo standards online. Basically, SRC allows the customer to pay with a single digital button rather than having to enter their shipping and financial information for every purchase. SRC will streamline the current check- out experience, which is slow, tedious and repetitive killing the customer’s online buying experience.
2019 will not kill the card payments industry, as the card payments industry is gravitating towards a frictionless payments future powered by contactless payments and biometric authentication. However, the card payments industry will be challenged by mobile wallet providers, as mobile payments provide greater security and convenience to users.
The lending segment brings good news to the unbanked and to the small business owner by making credit cheaper and easier to access. Non-banks and fin-tech companies are quickly scaling the consumer and business lending space with the help of innovative credit scoring models and pioneering new marketplaces. In 2019, Banks will have to follow suite, or risk losing their business to their smarter and faster rivals.
Innovation in mobile money will allow mobile money users to access capital markets at a far lower cost than conventional channels allow. The end-to-end application allows the mobile money user to apply for bonds and equities on their mobile phones and receive interest or dividend payments as well. In many of the cash-strapped markets in Africa, MENA, South Asia, this mobile access to capital markets will allow governments as well as private institutions to raise capital from the unbanked population at a lower cost than conventional channels.
2019 will be a challenging year for banks as they navigate a bunch of new regulations like GDPR, PSD2 AMLD5, and eIDAS. Stronger KYC requirements will lead to more paperwork for the banks which will lead to more friction in customer facing functions like customer onboarding. This should set alarm bells ringing as a recently concluded study has found out that 52% of European customers abandon the on-boarding process and one of the main reasons for this is the need to present paper-based ID documents. The research further found that 52% of respondents would be more inclined to register for a new service should the on-boarding process be 100% online. In this very important aspect of modern day banking, the incumbent banks are facing heat from challenger banks like Atom, Monzo and Starling who have invested in making the customer onboarding process as frictionless as possible.
In order to compete with challenger banks European banks are investing in digital identity and digital verification solutions for reducing friction in customer onboarding. In 2019, we expect more incumbents to jump into the bandwagon to stay in business.
If 2018 was the year of the bitcoin bubble, the year 2019 will be about block-chain boom. In 2018, the bit-coin bubble rode on rumors on Wall Street, reaching an all-time high of $19,783, a 4000 % rise over 2016 price of $430. Bitcoin’s spectacular rise was followed by an even more spectacular fall, which saw the price of the crypto-currency falling by over 800% to $3,462. However, all is not lost for the crypto-currency, as currencies continue to be in free-fall across the world, with the Venezuelan currency falling by as much as 99%. As currencies continue to fall precipitously, crypto-currency will find favor in countries with massive hyperinflation as a hedge against currency depreciation. This in turn may raise many interesting scenarios, where merchant POS start accepting crypto-currency as a unit of transaction.
However, the future of block-chain still looks very good, notwithstanding bitcoin’s bumpy ride in 2018. Banks are hoping that block-chain will help in solving some of their biggest challenges by replacing a web of connected databases with a single, shared, immutable record of transactions which will help them to reduce long and expensive settlement times, systematic breakdowns and lack of clarity of risks. Similarly, it will help them to satisfy regulators needing seamless access to activities while protecting the interest of private parties.
Srinivas Nidugondi is the Chief Operating Officer of the Mobile Financial Solutions business unit at Mahindra Comviva, which currently has over 120 deployments globally, providing services for more than 750 million consumers and processing over $35 billion in payment flows.
He has over 17 years of experience in various industries including financial services, payments and commerce in a variety of business and product related roles and most recently with a specific focus on enabling banking, payments and related services through digital channels. He has not only enhanced the leadership position of Mahindra Comviva in the Mobile Money space but broad-based the offerings to cover other segments and thereby have a full suite of products and solutions – across the banking, retail and telecom industries – to meet the requirements of consumers and businesses.
Prior to joining Mahindra Comviva, he established and led the business for online banking and mobile payments at ICICI Bank and also headed product management and business development functions in start-ups and IT product companies. Srinivas has many distinctions including heading India’s first digital only banking offering; defining the world’s first mobile payments interoperability standard; South Asia’s first mobile banking offering; being part of the first nationwide financial infrastructure for MFIs among others.