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Mobile Carrier and Bank Convergence

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2 August 2010
Yesterday's report about AT&T, Verizon, T-Mobile, Discover and Barclays potentially working together on a mobile payment service in the U.S. brings up a a topic (banking and mobile industry convergence) that Bart Narter has blogged about, and about which I have added my two cents' worth. Looking around the world, there appears to be a number of convergence models unfolding in developed countries:
  • Mobile carriers offering their own mobile banking/payments services: e.g., NTT Docomo's DCMX Mini (Japan)
  • Mobile carriers making sizeable, yet minority mobile banking/payments investments; e.g., NTT Docomo in Sumitomo Mitsui Credit (Japan), SK Telecom in Hana Card (Korea), Korea Telecom in BC Card (not yet finalized, Korea)
  • Mobile carriers investing equally with banks in mobile banking/payments: KDDI & Bank of Tokyo Mitsubishi UFJ (to create Jibun Bank in Japan)
  • Mobile carrier joint ventures, with financial institutions playing a behind-the-scenes role: e.g., EnStream with Peoples Trust (Canada)
  • Mobile carriers entering joint marketing arrangements with FIs: e.g., Orange and Barclaycard (U.K.)
From the aforementioned report and conversations with industry contacts, it appears that the U.S. model would most closely emulate that of Canada. In both countries, the participating FI is relatively obscure, which means that it has nothing to lose and everything to gain by working with mobile carriers. The result would be a shift in payments volume from incumbent banks, an unwelcome turn of events in an increasingly less profitable payments market.

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