by Bryan Cruickshank

Five steps to creating a mobile payment strategy

Aug 08, 20125 mins
Financial Services IndustryIT StrategyMobile

If mobile payments aren’t high on your IT agenda, then they should be.

Mobile penetration in many markets, both developed and developing, has surpassed saturation point.

Already, more than 20 per cent of Gen Y has used their mobile to make a purchase and mobiles are widely expected to surpass PC as the preferred method for accessing the internet by 2015.

But many CIOs still seem to be unsure about how to properly approach mobile payments to create competitive advantage for their businesses while mitigating the risks inherent in new technologies.

The anecdotal benefits are clear. In a retail environment, mobile can reduce walk-aways, shorten average queue lengths, increase throughput and enlarge wallet share.

For banks, the proposition will includeprotecting payment revenues, cross-selling services, enhancing transparency and driving customer loyalty.

Mobile payments will convert cash transactions to digital, giving a whole new set of data on customer behaviour.

In our experience, CIOs should be focused on five key activities that will help them better define their approach and create long-term value generation for their business:

1 Collaborate with the business Clearly, mobile payments offer different value propositions to different businesses and industry sectors.

For CIOs, the first challenge is in understanding how mobile will impact the operating model and deliver competitive advantage.

To achieve this, technology leaders will need to work closely with various parts of the business to develop a clear vision of the value that mobile payments represents to their internal clients and how they might respond to those needs through technology enablement.

For sales and marketing, for example, the benefits are not limited to the retail environment but also include access to a wealth of new customer data that will require better analytical systems in order to develop more valuable business intelligence.

For finance leaders, on the other hand, the introduction of mobile payments will require faster, more agile systems and processes to meet the near real-time demands of instantaneous payments.

2 Understand the value chain Many CIOs are already finding themselves bombarded with mobile payment propositions as everyone from telecoms companies to banks vie to take a piece of the action.

At the same time, a host of new players are rapidly entering the market to offer a range of innovative mobile payment services and solutions.

It’s enough to bewilder even the savviest of CIOs.

CIO Event:

The CIO Big Conversation Consumerisation: How to manage the new era of mobility

Date: Thursday 25th October 2012 Time: 6:30pm Location: The Mandarin Oriental Hotel, London

To register for your place, email

Event Overview:

The Big Conversation is a business technology leadership forum that brings IT leaders together to listen, share & shape opinions on the key issues the CIO community faces. The evening will include a keynote from a top CIO 100 speaker sharing his experiences on this topic, as well as the opportunity to share your views with fellow CIOs over networking drinks and canapés.

Armed with a clear understanding of the needs of the business, technology leaders must carefully identify and engage the right partners to support their particular value chain and augment their capability gaps.

Smaller organisations may need to rely on payment service providers in order to offer an effective solution to their customers, while larger global enterprises may be more focused on data aggregators and payment processors to achieve their objectives.

3 Focus on flexibility to withstand change The mobile payments market is still evolving and what may be a market leading solution today could easily be obsolete tomorrow.

As such, CIOs will need to ensure that their investments are focused on providing the greatest level of flexibility to the business while still delivering the required functionality.

So, for example, mobile platforms should be device-agnostic to support a wide range of technologies such as iPhones, Blackberrys and Tablets, as well as other innovations yet to be invented.

Most importantly, CIOs must, wherever possible avoid developing proprietary solutions that will be highly expensive and massively disruptive to adapt when new innovations once again change the value proposition.

Flexibility is key.

4 Recognise security but prioritise efficiency One of the biggest barriers facing mobile payments is security and rightfully so.

Business executives and IT leaders are keen to ensure that, whatever solution they deploy into the market, their offerings provide the highest level of security to customers.

This means not only securing their hard-earned cash, but also their personal information and transaction data.

But the reality is that there comes a point where draconian security protocols reduce the efficiency and ease-of-use of mobile payments and, as a result, destroy the technology’s value proposition.

So while CIOs will certainly need to ensure that their mobile payment solutions adhere to high security protocols, they must maintain a sharp focus on what is important to the customer, which more often than not is efficiency.

5 Progress from pilots Testing new mobile payment technologies through pilot programs is a critical step for CIOs.

Pilot programs don’t just help businesses improve their service offering, they also go a long way toward identifying and filling capability gaps.

But pilot projects can also be addictive and debilitating, particularly when no plans exist to move the findings forward into full-blown implementations.

CIOs must help their organisations move beyond pilot programs by leveraging their findings to create sound evidence and viable approaches that can be deployed into the market to drive adoption.

This will require longer-term thinking on the part of both CIOs and their boards and will necessitate a certain level of risk-taking.

Otherwise, the benefits of mobile payments will never rise off the strategy table to become real and sustainable business value.