Photo: JPott on flickr
The recent announcement from Canadian mobile operator Rogers Wireless—that it applied to the Minister of Finance to become a bank—confirms that we’re seeing a new trend.Rogers says it has no plans to “become a full-service deposit-taking financial institution,” but is “actively looking at the mobile payment category.”
By applying for bank status, Rogers is serious about being part of the mobile payments space.
Becoming a bank requires a huge commitment, and the company obviously feels that it can be successful in the market.
Rogers and other mobile operators clearly have a part to play in the mobile financial services game. Exactly what role that will be is still undecided.
Right now, operators are the ones that have the customer base and a brand, and the fact that they aren’t banks has really been the major stumbling block precluding them from getting in farther, faster.
Operators have historically looked to partner with financial institutions, such as the Telefónica joint venture announcement with Mastercard for the Latin American market, and the ICICI Bank and Vodafone Essar partnership for financial inclusion in India, but Rogers is now one of a few that have started down the do-it-yourself path.
China Mobile is another. Just last year, we saw that company acquired a 20 per cent stake in Shanghai Pudong Development Bank, in a move to offer mobile financial services. Another is O2 (a Telefónica subsidiary) applying for an electronic money licence in the UK to offer mobile money transfers and contactless payments.
Once again, however, the real key to making a payment system work is interoperability. The popular paybox mobile payment system that has been running in Austria for 8+ years has already taught us this lesson. The payment platform must work for everyone and be totally interoperable: Merchants, consumers, corporate, no matter which operator they use, no matter which bank, should all have access.
Mobile operators buying or becoming banks isn’t going to solve that issue. In fact, it might take them farther away from interoperability, if you take their cutthroat competitiveness into account.
Rogers becoming a bank won’t solve the interoperability issue, but they could lead the way in bringing the Canadian operators together.
Rogers isn’t new to the mobile payments space. It joined with fellow Canadian mobile operators Bell Mobility and Telus in 2009 to form EnStream and launch the Zoompass mobile wallet in June 2009. Zoompass is available to all subscribers across all Canadian mobile carriers, including prepaid phone users.
At the end of the day, it’s great to launch mobile financial services, but if there’s no interoperability, it’s still going to be a long, hard, uphill battle to get merchants to accept it and consumers to use it, unless it becomes dominant like a PayPal. Let’s hope this is the plan for Rogers.
How about you? Do you think we’ll continue to see mobile operators moving into the financial services business? Will operators’ do-it-yourself banking speed mobile payment adoption?