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Nothing's changed

  • Posted by Tony Poulos
  • March 27, 2013 8:11 AM GMT
Image courtesy of Stuart Miles /

“Today, banks are at another competitive crossroads. This time the new contenders in financial services are telephone companies, specifically wireless telecoms. The banks’ latest challenge is at hand, literally, in the form of the increasingly ubiquitous mobile phone. Unlike early experiments with consumer finance technology, such as “smart cards” and the first PC banking services, which were often based on tortured business logic, underdeveloped technology, and mistaken assumptions about their value to customers, mobile devices look like a natural channel for consumer financial services.”

The preceding quote is unusually relevant for today’s market but it was actually written 12 years ago in a report produced by executives from consulting firm Booz Allen Hamilton. One would be forgiven for thinking nothing much has changed, but it has, mainly due to the introduction of smartphones not even thought of back then.

Other parts of the report are far more poignant and have proven to be remarkably accurate foresights. For example:

“Although the first wave of deals has been concentrated among telecom, financial services, and Internet ventures, the shift to wireless finance is sure to have a broad impact on all retailing industries. This change in the retailing environment will accelerate as wireless, voice recognition, and other technologies improve.

Voice recognition and interactive Internet technology have the power to tie together a vast system of interdependent retailing that could even create entirely new and more efficient forms of retail services through cross-industry combinations (e.g., airlines, hotels, and car-rental companies).

The day is not far away when that consumer in the car might not only check her bank balance but also be reminded by the same system it is her sister’s birthday in two weeks. Then she’d be offered a choice of retailers’ catalogues that she could scan to select and purchase a gift. She could tell her car she’s planning a trip, and an online travel agent could give her a list of flight departure times, airfares, and hotels with availability. She could then make all her reservations and use her mobile phone as an electronic ticket at the airline gate and room key at the hotel.”

Indeed, all of this has come to fruition, and much more, but we have yet to see the full power of the finance and telecoms industries working closely together to offer a full range of online banking, payment and financing services to all mobile customers. Sure, there are pockets of successful providers of these services in developing and mature markets, but banks and telcos are generally competing for the same customers and face the ever-increasing battle for the hearts and wallets of those same customers from OTT players like Google.

Working together or forming joint ventures could also alleviate the rather restrictive regulatory environments both industries work under, not to mention the ‘trust’ factor the combination would bring to customers being increasingly aware and nervous of security, particularly where their money is concerned.