Mobile payments need an open ecosystem

Consumer payments is where the mobile banking opportunity lies, but it will need a more open ecosystem if it is to reach mass consumer adoption, according to a senior Microsoft executive.

David Vander, Microsoft's managing director of banking for worldwide financial services, told ZDNet Asia: "Consumer mobile payments are probably where the big value lies [in mobile banking]."

The market opportunity, he said, is thanks to near-field communication (NFC) as well as the mobile phone as a reliable access and authentication device.

In addition, the form factor and convenience of the mobile device are factors that make it a "very compelling" proposition as a consumer payment device, he noted.

"[Mobile payments is] the most significant opportunity to really drive a lot of usage in the financial services context for the mobile device," Vander said, adding that there are still opportunities that can be provided to customers, such as application-based and browser-based banking services.

However, there are still many pieces in the ecosystem that need to be "flashed out for [it] to achieve widespread adoption", Vander said.

Noting that "there are many competing interests" among industry players today, Vander said hardware makers, software vendors, telcos and banks will need to agree on "a common format, ways or conventions" for consumers to conduct mobile payments.

"It (consumer mobile banking) will accelerate tremendously when the payments nut has been cracked," Vander said.

On the take-up rate of consumer mobile banking in the Asia-Pacific region, Vander said adoption has been limited and "most of it is trial-based and these trials come and go".

"You see many pilots going on, with a closed-loop ecosystem: with a hardware provider, a software provider, a telco and one bank. And there're many of these trials going around the world," Vander said. "But we all know that for widespread consumer adoption, that (ecosystem) has to be far more generalized and open."