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Big box retailers have been struggling to grow their business in an increasingly mobile world. Mainstream media is already pronouncing the imminent death of big box retailers like Best Buy. What is being overlooked is the explosive growth of mobile commerce that is transforming the retail industry.
Consumers are increasingly shopping from their smartphones and tablet devices. And retailers are rapidly innovating to stay relevant in a mobile world and attract mobile consumers.
To facilitate mobile shopping, they are investing in everything from mobile-optimized websites to companion mobile apps on smartphones and tablet devices. They are leveraging QR codes for sharing product info and driving media campaigns. They are delivering mobile coupons and embracing social media channels for branding, as well as for building purchase intent. They are learning to adapt and thrive in the new mobile world.
But are the banks ready for the disruptive change being driven by the mobile tsunami? While they have gone after the low-hanging fruit such as mobile banking, and while some of them offer remote deposit capture, there higher stakes on the table in mobile payments.
Mobile payments are still in their infancy and they look poised for explosive growth. At this stage it looks like the banks are ceding market leadership to intermediaries.
Consider PayPal, which is making strides with its mobile payments platform. Leading POS retailers such as VeriFone and Ingenico have endorsed their payments platform. In addition, major retailers including Home Depot, JC Penny and Office Depot are also rapidly aligning behind PayPal’s alternative mobile payments platform.
Other mobile payments vendors including Google Wallet, Intuit and Square are battling for market dominance. Even the telecom carriers plan to launch their own mobile payments initiative called ISIS. Over time the market for mobile payments will consolidate around a few clear leaders; banks are unlikely to be among them.
The challenge for banks is that as mobile payments accelerate, they risk losing the direct relationships and intimacy they have built with their customers. They may get confined to the boiler room or the back office while new market intermediaries engage with their customers and get their mindshare.
Some banks are fighting back to ensure they own their customer relationships by providing innovative mobile solutions. Consider Pingit, the mobile payment system launched by Barclays Bank as a rival to PayPal. Pingit allows users to easily and rapidly make and receive payments via a mobile phone number.
Imagine making a quick payment to someone with Pingit — splitting a restaurant charge or returning a borrowed $50 bill!
Initially launched as a mobile payments platform for the small business market segment, Pingit has now been rolled out to all businesses including the company's corporate banking clients. Businesses are assigned a Quick Response (QR) code which is linked to a corporate account with Barclays.
Isn’t it time for banks to deliver service innovation that capitalizes on this disruptive change? What do you think?
Harish Bhat is managing director at ESQ, a leading provider of business transaction management solutions. His extensive background in IT includes work with NCR and Tandem and skills in business development, product and strategic alliance management and more. Look for his regular blog, "On the frontlines."
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