Opinion: Telcos need to think inside the handset to realise future growth

 

By Andy McDonald, Vice President, Merchant Retail at ACI Worldwide

Mobile phone usage is soaring and with up to 65 percent of Western Europeans estimated to own smartphones in 2017, it is fairly safe to conclude that digitally-connected consumers are a strong and growing group.

The truth is, however, that while consumers are spending more time and money on their mobile devices than on their desktops and in stores, telcos – the facilitators of this movement – are actually only billing three percent of consumer spend.

Add to this the increasing number of new market entrants, in particular OTT players, who are threatening the traditional bread and butter revenue streams of telcos, and it is clear that mobile operators and MVNOs need to consider how to carve out a profitable, sustainable path for the future.

According to analysis carried out by telco experts at ACI Worldwide and Red Dawn Consulting, the mobile payments market is set to double over the next five years, and telcos have a towering opportunity to increase their mobile payments revenue at least fourfold by 2022.

However, this €13 billion opportunity can only be realised by those telcos who are willing to think outside the box – or rather inside the handset.

They need to examine how they can deliver against consumer demand for speed, convenience and security, and make their businesses a mobile-enabled hub for the digital marketplace.

Consumers are now spending an average of two hours per day online on their mobiles and have a growing appetite for on-demand, search driven and instantly fulfilled services.

By building strategic relationships with merchants, consumers and technology platforms, major disruptive players, such as Uber, Apple and PayPal, deliver frictionless, real-time payments to their customers.

We believe that telcos have a unique opportunity to drive mobile payments, by taking payments, data management and seamless fulfilment to the next level.

Fraud and security breaches pose a serious threat to the shift towards mobile spend.

In addition, poor user experience throughout the payments process leads up to 58 percent of consumers to abandon mobile purchases.

Telcos will need to address these issues to succeed.

They should start by examining their existing relationships with customers; what role they are playing, what services they are offering, and what added value could be delivered to garner customer loyalty and increase revenues.

After all, consumers are increasingly living their lives on-the-go and using their mobile devices every day to shop, transact and communicate.

Effectively, telcos are already placed at the centre of a transformational consumer trend.

They have a billing relationship with their customers and profile data, which is a good starting point for building out and transforming their business model.

By leveraging this position, telcos can facilitate more payments, and increase their share of wallet by aggregating products and making their mobile payments process more attractive than that of their competitors.

They also stand to own more of the value chain by partnering with players who have broader access to consumers, merchants and payment enablers.

There is an opportunity to use these partnerships to shift consumers’ perception of telcos from that of operator to digital marketplace.