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Top ICT tools for financial institutions identified

Top ICT tools for financial institutions identified

Concentrate on m-commerce and focus on becoming contactless later, says Ovum.

M-commerce is set to experience a renaissance in the financial industry, according to research firm Ovum. Ovum said instead of focusing on promoting contactless payment technology, banks should pay attention to m-commerce in the short term.

Ovum defines m-commerce as the purchase of physical products, services and digital content wherein the transaction is initiated and payment completed through use of the over-the-air (OTA) element of a mobile device.

Renewed interest in m-commerce

Banks that are spending time and effort in promoting contactless payment technology will not reap profits as industry players have expressed renewed interest in m-commerce.

Contactless is definitely the wrong target at the moment, according to Ovum's new report. Commenting on this issue, Alex Kwiatkowski, principal analyst at Ovum and report co-author, said financial institutions must tap the "golden opportunity" of m-commerce and not lose this chance to make profits.

"Ovum believes m-commerce has a vital role to play in the adoption of the next generation of contactless mobile payment instruments. Indeed, banks face the danger of losing market share if they do not play an active role in m-commerce developments," said Kwiatkowski. "In the past, banks were studiously indifferent to m-commerce, preferring to let others--most notably those within the mobile operator community--attempt to stimulate growth. This passivity must change."

Bridge to wider mobile activity

The failure to focus on m-commerce will result in losses to the financial institutions as other players will introduce products to capture the market. Currently, retailers are keen on using m-commerce to drive revenues, and mobile operators also want to increase the use of data services to increase declining annual revenues.

Ovum's sister company Verdict Research predicted a bright future for m-commerce and said the market will increase by 87 per cent by 2012. In future, m-commerce can also serve as the foundation layer for other mobile payment mechanisms, and can be a catalyst for future use of contactless services.

"M-commerce acts as a bridge for the consumer to wider mobile activity. It also provides a way for the payment industry to develop a complete suite of product offerings," said Kwiatkowski. "Crucially for banks, m-commerce is the most easily addressable segment of mobile payments. Near-field communication is the largest market opportunity in mobile payments by value, but cannot be tapped in the short term. Therefore, m-commerce offers the best target for banks to concentrate on--at least in the short term." MIS Asia

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