Building A Competitive Advantage
Financial institutions can implement a smart, nimble way to manage risk as they compete in the mobile payments space.
Consumers are increasingly using their smart phones to make remote or in-store purchases and financial services institutions (FSIs) are competing with mobile network operators, technology companies and others to provide this new mobile payment capability. At stake are new revenue streams for FSIs as traditional margins are reducing amid new consumer protection laws aimed at driving down transaction fees. As smart phone adoption accelerates, consumers are becoming more interested in — and increasingly comfortable with — making purchases through their mobiles phones. As a result, the volume of mobile payment users, transactions and total spending are projected to grow exponentially over the next few years.
Banks and other financial institutions should undertake proactive risk management steps as the mobile payments market evolves. This new space can be a game changer. But, they also cannot drive headlong into the space without assessing the high-level risks that are particular to the mobile payments sector. The agile risk management methodology can help FSIs move forward at a pace that can keep them competitive while addressing the potential risks.
FSIs should be ready to adopt an agile risk management methodology as a change within their organizations — and willing to train specific stakeholders so they understand the full process. That means top-to-bottom organizational buy-in is a required precursor for serious effort to build a risk management methodology for the mobile payments era.
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