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Jouko Ahvenainen

Transaction fintech at MWC

Fintech is definitely one of the most important new technology areas that is disrupting the finance industry. Fintech can be divided into two categories: 1) finance transaction solutions and services, and 2) finance services and instruments. Fintech’s role at MWC is also emerging, although it is still very much focusing on some transaction solutions.

Transaction services means, for example, payments, money transfers and authentication of transactions. It doesn’t include any real money management or instrument services, like accounts for money, investments, lending or financial instruments that are also more regulated areas. Finance services and instruments in fintech therefore include crowdfunding, p2p lending and robo-advisor type services.

At MWC the best-represented fintech area was payments. Several companies had their own components or solutions for mobile payments. Mastercard and Visa were there to tell about their payment solutions, and also how to make payments more secure, authenticate and monitor transactions by mobile. Generally those companies didn’t offer anything new, some banks have had similar solutions - such as the ability to follow credit card transactions by mobile app - for some time. They also offer mobile tools to follow and manage personal finance.

Samsung announced that its Samsung Pay that launched last year in South Korea and the US has got 5 million users and processed a total of $500 million in transactions. The company didn’t disclose how many of those consumers use it regularly. Samsung plans to launch several new countries in this year, including China just after Apple launches Apple Pay there. It also plans to support London Transport payment system where Apple Pay can be already used. One could say Samsung just wants to follow and copy Apple Pay. Apple and Google don’t participate in MWC.

Some carriers had their mobile finance solutions. For example, Orange, has solutions for money transfer and mobile point-of-sale, POS. Orange Money is a solution for international money transfers in Africa and the Middle-East.  It already supports 14 countries. Orange has had its POS solutions for a couple of years already and demonstrated the latest version for mobile and tablets at MWC16.

Gemalto is also active in the payment and payment security area. For example, they demonstrated in the show mobile dynamic code verification. Gemalto says mobile DCV replaces the static security number traditionally used for completing online transactions with a continuously evolving code and make copying and skimming more difficult. Also several other companies offered solutions and chips for NFC based payment transactions.

Then there were solutions and ideas regarding how mobile payments can go through the phone bill. This is an idea that has been promoted at least 15 years, but it hasn’t really taken off. In practice carriers haven’t been able to compete with credit card companies and banks to handle these transactions. Carrier billing can have niche markets, e.g. for small transactions in developing countries, but without more evidence it is hard to believe it has a significant future.

There were a few companies that went beyond the transactions at MWC16. TagPay offers banking solutions especially based on mobile to developing countries, especially to Africa. Crowd Valley, a digital finance back office company, published its API for mobile developers and also data and analytics services at MWC16. And at the 4YFN startup event Crowdcube was speaking about startup crowdfunding that’s a special small niche for the finance sector, but relevant for startups. I assume in the future we see more of these kinds of finance instrument companies at MWC too.

At MWC16 fintech solutions were very much hardware or ‘lower level’ software to handle simple transactions. It is an important emerging business area, but it is still very fragmented market with hundreds of different payment solutions. Not even Google or Apple have been able to get significant volume and contactless cards are more important than mobile payment. They are nevertheless creating the basis for more advanced finance service for mobile that first happen in the alternative finance area like Crowd Valley’s back office and developing countries like TagPay’s banking solutions, but sooner or later it will bring digital finance and banking really to mobile and compete with traditional banks and personal finance services. Maybe already in the next year we see much more.