While mobile banking is now widely accepted as part of the mainstream, other mobile technology offerings such as mobile payments and m-commerce are largely considered more hype than reality. This is all set to change.

It is estimated that around 61% of the world's population has a mobile phone and as technology in the field moves on at a pace, more and more companies are investing in mobile solutions - focusing on making banking and payments easier for clients and their stakeholders.

The potential returns from such investment are clear - a recent survey predicts that the value of payments from mobiles is set to surpass $500 billion by 2015. This increase will be brought about by technological advances in two main areas - mobile money transfers (set to rise to a value of $202 billion) and m-commerce (set to rise to $147 billion).

The use of mobile technology in money transfers is becoming more and more important. Predictably, given the increasing global migration of people, cross-border remittances play a big part in this. Indeed, the World Bank estimates that the remittance market was worth around $420 billion in 2009, and with 200 million migrants around the world there is a major opportunity to provide transfer services for foreign workers sending money home.

Until now, the remittance market has been dominated by money transfer companies. No longer. By supplying consumers with an efficient and affordable way to send money back to their country of origin, financial institutions are able to compete. And given the fact that only around one billion people in the world have bank accounts yet four billion own a mobile phone, there is the potential for financial institutions to tap into a vast new revenue stream. By leveraging this channel, much-demanded financial services can be offered to the "unbanked" population. 

Unsurprisingly, much of the initial thirst for mobile payments technology has come from the emerging markets. Yet this is not to say that it will not become more prevalent in more developed economies - experts indeed suggest that Asia and western Europe will represent over 60% of the global mobile payment gross transaction value by 2013.

And banks with a strong payments bias are constructing offerings to tap into this potential market. For example, in March 2009 Deutsche Bank began to offer cross-border mobile payment services to its banking and corporate customers. The service - provided via a partnership with Luup, a European-based payments provider - will be rolled out to the bank's clients across 80 countries in Europe, the Middle East and Asia. 

While most assume mobile payments to be dominated by offerings in the consumer market, there is also an interesting business-to-business play. Many transactions that occur between businesses are still driven by cash or cheque, often resulting in problems of slow payment as well as risk of fraud or theft. Mobile technology can rectify these problems through its ability to conduct instant money transfers or alternatively act as an authorisation device for payment initiation. There are also opportunities to link mobile payments to supply chain management applications like EIPP.

On the m-commerce side, the market is growing quickly with consumers looking for convenient ways to buy digital goods like ringtones, music and applications for their mobile phones. By providing their customers with a ‘mobile wallet', banks can provide a fast and guaranteed payment option for these lower value online payments. Furthermore, at the Point-of-Sale there is the promise of mobile payments based on Near Field Technology (NFC). NFC chips can be installed inside mobiles and then be read while in close proximity to a point-of-sale-device (replacing the ‘swipe' or ‘dip' with a ‘tap' experience). The transaction can then be processed, potentially without the need for the consumer to enter a PIN and wait for authorisation. The introduction of contact-less payments thus introduces a wide range of benefits including faster transaction times (‘tap-and-go'), lower operation costs and penetration into the cash payment market.  

The technology underpinning such a system has been widely proven, having been used by major transport networks such as Transport for London and the Mass Transit Railway in Hong Kong. Installing the technology in mobile phones is the next logical step. Indeed, even the British government has announced its aspirations to use the advancements to enable contact-less mobile payments and e-tickets as an integral part of the ticketing arrangements for the 2012 London Olympics. 

The use of mobile technology also provides users with huge functionality - enabling them to see what happens to their money in a much more involved way than through other channels. Subsequently, mobiles can offer such services as expenditure tracking to aid budgeting and control.

However, notwithstanding these benefits, security is still a major issue for the mobile payments industry. A legitimate concern is the possibility of fraudsters remotely accessing consumers' bank details via NFC readers to clone accounts and make payments. Ideally, the readers only access information at a distance of two to five centimetres, but it has been suggested that they could be modified to extend their range to up to 30 centimetres - more than enough to access someone's mobile in a busy bar or train. Consequently, the success of m-commerce relies on phones being configured to prevent this.

And the innovations in security do appear promising. For example, one such security measure forces the mobile phone making the payment to be screened by the point-of-sale device at the time of its first use, producing a unique master fingerprint based on factors such as the devices own unique identification number, as well as less easily accessible details such as hardware profile. The master fingerprint is then automatically associated with the user's information for future reference. When the device is next used, it is again screened by the seller and the fingerprint automatically compared with the original to ensure that the device is still associated with the correct user information. Any mismatch would indicate that the bank details have been cloned and transferred to a new device and the transaction would be terminated. 

However, while the technology is largely available already, m-commerce itself is still at a primitive stage of development, to such an extent that all stakeholders are yet to be identified. Business models and relationships are still being established and it is still unclear as to how all the players in the value chain will interact.

Yet the future bodes well. And it is the convenience factor that will drive the mobile's success. People have their mobile phones with them at all times, and the notion of not having to carry cash or a credit card - knowing your mobile phone can keep you in touch, keep you entertained and also check account balances, make cross-border payments and pay for lunch - is compelling. BT

Ron van Wezel is director of Deutsche Bank's emerging payment streams