How are mobile payments changing traditional banking?

The e-money wallet is on the brink of becoming a viable technology in the Hong Kong. Mobile network operator Everything Everywhere will roll out the HK's first mobile phone payment systems later this year.

But as mobile network operators dabble with handling consumer transactions without a retail bank partner, how will banks need to adapt to the emergence of mobile payments in the HK?

Shift in traditional banking

Retail banks will need to adapt. Longer term it will no doubt cause a shift in the traditional model of banking - but that is for retail banks to adapt to.

But mobile operators are looking at creating systems for mobile payments using near field communication (NFC) technology. Telecom company is applying for an e-money licence for NFC payments this year from the Financial Services Authority (FSA) so it can hold money from customers and facilitate transactions.

Android and iPhone leap ahead

Several NFC-enabled handsets were announced at the Mobile World Congress in Barcelona in February, including devices from Google, Nokia and Samsung.

Rachel Hunt, EMEA banking research director at IDC financial insights, also believes the availability of NFC handsets will cause disruption.

As Apple and Google are considering NFC as part of their offering, they might get a score of applications that leverage that. This is an area where the bank cannot compete as it cannot act quick enough. Start-ups will be quicker to create apps.

The biggest issue for banks is knowing what value mobile payments provide for customers. If they don't think about how this is going to be used and how it will benefit customers, then they're doomed to failure.

It is believes that mobile payment systems need to leverage existing payment schemes and infrastructure rather than build new ones.

Banks are extending its services with mobile banking, manufacturers are launching NFC handsets and mobile operators are readying to facilitate customer transactions without retail bank partners. Mobile phone technology has, and will continue to, change banking in the UK. How the different parties will work together to provide mobile payment systems is yet to be fully realised.