Harnessing mobile payments to spur economic development

• Payment systems are critical components of the economic and financial infrastructure
• Mobile phone a convenient channel to conduct banking and payment transactions

ACCORDING to IDC’s Worldwide Quarterly Mobile Phone Tracker, 301.3 million smartphones were shipped in the second quarter of 2014, a 25.3% growth over the same period in 2013 – a year in which IDC estimated that consumers across the world purchased more than one billion smartphones.
 
Today, this phenomenal growth is helping organisations across the world deliver a new generation of innovative products and services.
 
In Malaysia, the penetration of advanced mobile technologies has provided an opportunity for financial providers to introduce new service innovations like mobile banking and mobile payments.
 
Speaking at the BankTech Asia 2013 Congress, Malaysia’s Deputy Finance Minister Datuk Ahmad Maslan reported that in June 2013 there were 3.25 million subscribers to mobile banking in Malaysia, with the penetration rate at 10.9% of the population and 7.6% of all mobile subscribers.
 
He noted that Bank Negara Malaysia – the central bank and industry regulator – has set a target to raise the number of e-payment transactions per capita in Malaysia to 200 by 2020, a figure which is in line with the use of e-payment in more developed countries.

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In its Financial Sector Blueprint 2010-2020, Bank Negara said that payment systems are critical components of the economic and financial infrastructure of Malaysia and are highly important for financial development and the growth of the economy.
 
It has identified e-payments as one of the strategic tools Malaysia must use for achieving greater economic efficiency, productivity and growth as the nation transitions towards a high value-added, high-income economy.
 
As such the central bank, like many others across Asia Pacific, has been a driver for the greater adoption of mobile banking channels by driving the adoption of the mobile phone as a simple and convenient channel to conduct banking and payment transactions.
 
To achieve this and successfully harness the power of mobile, organisations in Malaysia’s mobile banking and payments ecosystem must deliver compelling and responsive end-user experiences.
 
They must also implement strong and secure authentication methods that instil confidence among users in mobile banking and payments.
 
Delivering superior user experiences

End-users today expect websites to deliver the same experience on mobile as they do on personal computers.
 
Delivering interactions to a mobile device that are on par with desktop experiences presents significant obstacles. These obstacles exist due to fluctuating performance of mobile networks that arise as a result of inefficient network protocols and traffic congestion.
 
Disparate form factors, capabilities and requirements across the broad range of mobile devices that exist today add further challenges to delivering a great mobile experience.
 
On average, the end-user experience on mobile is roughly four times slower than on the desktop. This represents a significant lost opportunity for e-payment providers, as studies have shown that 71% of mobile users feel sites should be as responsive on their mobile devices as on their desktops, and 74% refuse to wait more than five seconds for a mobile site to load.
 
To overcome this hurdle, Malaysian organisations must invest in solutions that can make real-time web experience optimisation decisions based on the situational requirements of device, network, location and browser.
 
Such solutions can enable organisations to deliver a superior user experience by quickly and reliably delivering applications and content over mobile networks, and drive the use of mobile commerce and payments among Malaysian consumers.
 
Furthermore, using a solution that improves web experience over existing networks reduces the cost and time to market of providing mobile commerce and mobile payment services.
 
In addition, organisations can also improve service availability to users located in areas with reduced network coverage while delivering a satisfactory user experience.
 
Ensuring security

For mobile commerce and electronic banking to deliver its benefits across Malaysia, delivering a secure mobile experience, regardless of device and network, is a must.
 
As more and more business critical applications and financial services adopt the public or private cloud, it has become essential to protect organisations and users from criminal efforts to steal data or conduct financial malfeasance.
 
Mobile devices are now being targeted because they may serve as a back-channel into a network, thus making a network-centric security approach inadequate for an increasingly mobile-based economy.
 
To protect data regardless of its location – on any mobile device, on any mobile network – Malaysian organisations must also adopt security policies that are contextually aware and data-centric. These policies need to be delivered beyond the organisation’s network boundaries and to all mobile devices within their distributed ecosystem.
 
Security within a mobile commerce ecosystem needs to be intelligence-driven and provide the flexibility and scalability to adapt to dynamic requirements.
 
According to Nielsen and PayPal, there has been RM1.82 billion (US$564 million) of mobile commerce transactions processed in Malaysia in 2013. This is nearly half of Malaysia’s total e-commerce market size of RM3.65 billion (US$1.13 billion), and represents a nine-fold growth since 2010 in the share of online commerce being done on mobile devices.
 
The market, regulators and technology partners are all aligned, and it is now the time for financial services and merchants in Malaysia to embrace innovation, opportunity and growth through mobile commerce.
 
Varun Jaitly is Asia Pacific product marketing manager of web performance solutions at Akamai Technologies.
 
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