Pity the Regulator. The Financial Conduct Authority has published its interim report into the regulation of Mobile Banking, with the aim of protecting consumers, banks and other market participants from fraud, theft, money laundering etc. The final document will be published in mid 2014, two years after the initial research. During this time, the market for mobile banking may have more than doubled, scores of new services will have been launched and millions of customers recruited. With such rapid growth, finding a correct and meaningful course to steer will be particularly difficult and for the next year at least, the industry will have to find its own way.
Trust in mobile banking is still fragile, for example many people are still wary about sending account details over the mobile network or using it for meaningful transactions and this will delay its wider and deeper acceptance. At the same time, as companies enter the market and build customer numbers there is a risk that some may downplay complex authentication and check-out procedures in favour of ease of use and customer experience. This would provide opportunities to skilled and well-resourced cyber-fraudsters and money launderers, especially where the mobile banking service is not linked to the customer’s current account.
Even so, banks probably have the most to lose. They will have to bear the brunt of the regulator’s zeal in terms of the implementation of controls and consequent system re-design and a loss of trust in mobile banking could erode their existing brand. They have to ensure that standards are high and that there is no massive leak of data, money or confidence as the industry develops. Herein lies the challenge and opportunity for the UK IT industry.