Banks and operators go head to head

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Banks and mobile network operators are set to go head to head in a bid to control the market for NFC mobile payments services, according to a new research report.

“NFC mobile phones will be used to replace everything from credit cards and loyalty cards to bus and train tickets, library cards, door keys and even cash,” says Sarah Clark, author of ‘NFC: The Road to Commercial Deployment’. “What hasn’t yet been decided, however, is who will win the battle to provide consumers with their new hi-tech mobile wallets.”

So far, banks and operators have worked together to run field trials of NFC but, the researchers predict, the emergence of new ways to add NFC technology to existing mobile phones means they will soon find themselves in competition for control of this important new market.

“New products are now available that enable NFC functionality to be retrofitted to current mobile phones. These will enable banks to deliver NFC services to their customers without the involvement of mobile network operators and this has fundamentally changed the balance of power between banks and operators,” Clark explains.

While a collaborative approach between banks and operators may work in some instances, the report predicts that most commercial deployments will have only one lead player. And that lead player will not necessarily be a mobile network operator.

“Decisions made in 2010 will be critical in determining which mobile network operators, which banks, which industry suppliers and which service providers become the leaders in the field,” she adds. “Ultimately, only two or three companies in each country will succeed in building a major new business providing NFC services to businesses and consumers. The winners could be banks or mobile operators, or even a new entrant to the market.”

“We now expect a competitive market to develop between mobile operators and banks in each market,” says Clark. “Here, overall leadership will not be determined by what business the company is currently in. Instead, it will be based on their overall business strength, on how well they execute their NFC strategy and on the alliances that they put into place.”

Strong banks, for instance, will be able to make deals with weaker mobile network operators. And strong mobile network operators will make deals with weaker banks so that, ultimately, who ends up as a lead player in each market will depend not on whether they are a bank or an operator but on key factors such as: