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B of A emerging payments VP says mobile is at tipping point

John Thomas talks about the future of mobile financial services.

November 15, 2011 by James Wester — Editor 1, Mobile Payments Today

According to John Thomas, senior vice president for emerging and electronic payments at Bank of America, mobile financial services are reaching an important tipping point. From now on, Thomas said, mobile banking solutions need to be even more focused on what customers really want.

"The days of 'if you build it, they will come' is over," said Thomas referring to online tools for mobile financial services.

Thomas was a keynote speaker on Monday at the Emerging Payments Conference in San Diego, Calif. The event is being held from November 14 – 16 and brings together leaders from payment networks and financial institutions to discuss mobile and emerging payment methods.

Thomas oversees the bank's mobile banking and payment efforts. He said the challenge for the mobile payment market at this point is understanding what customers want and providing them with the products they want.

"We need to deliver solutions well beyond traditional banking," Thomas said, adding that customers want financial institutions to deliver innovative mobile products. "Our customers are telling us 'We want you to go places you've never been,'" he said.

Thomas pointed out that the numbers regarding the penetration of mobile devices worldwide is creating a momentum for mobile financial services that banks can no longer ignore. He observed that there are 1 billion people worldwide who are unbanked but own phones, and that five babies are born every second compared to 30 mobile phones being sold every second.

According to Thomas, he believes mobile payments will reach critical mass within three to five years. However, Thomas said the adoption of mobile payments will be greatly influenced by the ability of merchants to provide benefits to their customers such as discounts and offers.

"Product security and price used to be the biggest concerns (of mobile financial service customers)," Thomas said. "Now it's 'Help me save money when I shop.'"

Thomas observed the desire to save money was not peculiar to lower income customers either. He said that while it may seem counterintuitive, as affluence goes up, so does the wish to save money when shopping.

Thomas concluded his keynote remarks by saying consumer expectations, and the increasing use of mobile financial tools, made it key for financial institutions to address their mobile strategies as soon as possible.

"I don't think it's as important how you organize your payment strategy so much as that you do organize your payment strategy," Thomas said.

But Thomas warned that mobile isn't just about the technology, it's about addressing consumer needs.

"Don't get into mobile payments because it's cool," Thomas said, "do it because you need to. Don't get enamored with the technology for the sake of the technology."

Thomas also warned that mobile payments as an industry still has a long way to go before it is ready for wider consumer acceptance.

"We need a lot of work on infrastructure to prepare for adoption," Thomas said. "Plastic is not broken." Thomas also said that currently, half of all customer deposits still take place through ATMs.

Thomas said that banks are still trusted by consumers for financial services, but that's not enough to get customers to adopt mobile financial solutions if they don't think the right standards are in place.

"If customers feel like it's the wild wild west, we've got problems," Thomas said.

For more information on this topic, visit our mobile banking research center.