Providing customers with facilities which allow them to manage their financial affairs anywhere, anytime: that`s the challenge facing financial institutions.
But says Steven Sidley, executive director: group sales at JSE-listed Prism Holdings, the greatest hurdles financial institutions will have to overcome to offer these services, relate more to their ability to implement alternative business models than technology issues.
"Integration problems between financial institutions` legacy mainframe systems and the front-end technologies which enable mobile communications are rapidly being resovled. And issues surrounding the security of the wireless networks have been addressed. This is underscored by the fact that several of SA`s leading banks now offer cellular banking services.
"However, cellular banking services barely scratch the surface of the range of value-added and mobile payment offerings which can be implemented right now. We don`t have to wait for WAP to come of age, or for the installation of 3G cellular networks.
"Using the current GSM networks and SMS technology, it`s possible to provide everything required for mobile commerce (m-commerce) transactions, including user identification, transaction authentication and secure payment capability," he adds.
Industry watchers predict that revenues generated by m-commerce in Europe will increase 100-fold to Euro23,5-billion by 2003, only five years after the enabling technology was first introduced commercially in 1998.
More than one-third of these revenues is expected to originate in the financial services sector and from on-line wireless shopping.
"Financial institutions which want to be part of this mobile revolution will have to change the way they operate. They must form strategic partnerships with cellular network providers as well as retailers who are looking to wireless as an alternative to fixed-line point of sale.
"Indeed there`s huge potential in this arena among entrepreneurs who don`t have access to a fixed-line connection to their bank. Think of plumbers, electricians, TV repair people, food delivery services - anyone who performs a service for customers at the customer`s premises. They should be able to enter the customer`s credit card number on their cellphone and have the transaction cleared and the amount credited to their bank account immediately.
"But the `killer app` of m-commerce is likely to be using the cellphone as a payment instrument at a point of sale. This will effectively cash from the system, with enormous advantages for consumers, merchants and banks alike.
"Financial institutions which don`t take steps now to lead the move to m-commerce, could find themselves sidelined in the future because retailers and cellular network operators are beginning to move into this arena themselves," Sidley concludes.
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Prism Holdings
JSE-listed Prism Holdings is a leader in the field of secure electronic payments and transactions. The company leverages this experience to straddle and merge the established physical world domain of secure electronic transactions with the emerging virtual domain of such transactions - e-commerce, Internet commerce and mobile commerce.