How Mobile Money is Changing the World
The way we manage our money and pay for goods and services is changing. Apple Pay, Google Wallet, Square, PayPal and Zapp are just a few names to emerge as leaders in the mobile money space, but in truth, the market is being saturated with hundreds of startups giving it a shot in the payment sector each week. Furthermore banks, retailers and financial service agents are also embracing the new technology.
It’s becoming clear that mobile payment technology has staying power, however technologies like near-field communication, have been around for many years without gaining huge traction, so what has broken down the barrier to entry? What has changed making mobile payment a viable solution for everybody?
The smartphone, of course, is at the heart of this evolution. In this regard, personalized and real-time marketing and virtual wallets are not just the future of big business. They are already a viable proposition, and one that looks set to blossom in the near future.
But while mobile banking and payments may be getting more and more ingrained in consumers’ lives, as well as the business models of banks and vendors, monetizing mobile money is still proving to be a difficult task. In this article, we consider three pillars of mobile money on smart phones: personalized, localized and timely mobile marketing; the rise of the digital wallet; and the various business models that are emerging that will influence where the mobile money market is heading.
For some, it may be an uncomfortable thought that every movement, purchase and communication they make on their mobile phone leaves behind a data trail that is being analysed by various industry participants, such as banks or specialist providers, to unlock new business potential.
Your searching and spending habits are viewable for all to see and this level of data transparency comes at a time when the card industry’s margins are under pressure, especially in the U.S., where market forces and incoming regulation have impacted interchange fees. This led banks to cut back on their loyalty schemes, as most card issuers used to fund these schemes from the card fees they charged. This does not mean that competition has scaled back, however.
What may be bad news for card issuers has created market opportunities for others. Vendors that can act as a gateway between the merchant and issuer, or who can aggregate and analyze transaction data to enable the merchant and bank to offer personalized, relevant and timely offers to card users, have been growing their business of late. Whichever model is used – the consumer will have to opt in to the service, meaning pushy marketing campaigns become irrelevant. This issue is also linked to regulation about information access and data management.
Mobile vs. digital wallets
Although sometimes used interchangeably, there is a difference between mobile and digital wallets. This interchangeability often comes from the fact that a digital wallet can also be downloaded as an app to be used as a mobile wallet. The main difference between the two, however, is that digital wallets are pitched as making online shopping easier as the shopper’s card details are saved on the wallet and do not need to be typed in on to a website when purchasing something. These digital wallets, which appear as an icon at the checkout process, also make use of cloud computing and thus enable access to the wallet on any internet-connected device.
As digital wallets only require the user to register their card details once, they should ease consumers’ worries about how secure it is to make online transactions. Put simply, the more people trust and use digital wallets, the more transactions will happen and thus, the more money the business merchants will make.
Industry giants Visa and MasterCard, among others, are working on their propriety digital wallets, however there are also a plethora of startup tech ventures, which are giving them a run for their money. In an increasingly trusting marketplace, there is nothing to say it isn’t a startup that takes the top spot over and above a well-known brand.
The rise of the digital wallet
When it comes to digital wallets, the market, just like that of mobile wallets, is still in infancy. Big brand names such as Google, Visa and MasterCard have been talking about mobile wallets for a while. But this year, they launched their digital wallets, a development in the market that will has marked a significant step in the evolution of how consumers pay.
Banks, too, have rolled out wallets with a greater focus on banking, as opposed to just payments. All these developments mean, however, that there will be a number of different wallets to choose from.
The winning combination has not yet been found. In the mobile wallet space, it is the telephone and mobile network operators as well as financial services firms that dominate the market. Start-ups are coming to the fore, and while these tend to focus on niche services that cannot match the scale of the existing big brand names, their market developments are shaking the industry.
The development of mobile payments is primarily driven not by demand from potential clients, but by the search for reduced costs or increased revenue that it can offer the payment system operator. In this regard, it is not yet clear what the leading solutions or business models will be, but investments into the sector continue, and some business models are starting to emerge, such as special merchant deals.
In some cases, the mobile phone is turned into a payments terminal, the point of sale (POS). Examples include Square in the U.S. and iZettle in Europe. Typically, there are two models for this business proposition: the mobile phone as a POS where a merchant is typically swiping a card though a mobile device such as Square; and the mobile phone at a POS where the consumer uses their mobile device to pay.
It is hard to quantify a market that has potential but has not yet reached mass adoption. To take just one example, NFC technology has for some time been almost synonymous with mobile payments. It has also been around in Japan and South Korea for years. While these countries are ahead of the curve when it comes to NFC adoption, even in innovation and technology-driven Asia, NFC has not gained traction.
NFC adoption may seem to be making slow progress compared with the speed of other technology-related devices or systems, but when banks, network operators, today’s start-ups and others have worked out the business models that work for them, the future of mobile money will be clearer.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.