Jim Ghiglieri, the senior vice president of corporate communications at EFT provider Shazam, recently said that financial institutions have numerous advantages over tech companies in the payments business.
Ghiglieri, a community banker for 32 years and a former chairman of the Independent Community Bankers of America, said as tech companies move into the payments space, financial institutions are pressured to innovate.
He added, however, that financial institutions have “one traditional and potentially powerful weapon”—the checking account.
“Current mobile payments offerings that have enjoyed a great deal of success have generally involved payments services tied to a consumer’s checking account,” Ghiglieri said in the Pennsylvania Association of Community Bankers’ February 2014 newsletter. “In short, mobile technology needs financial institutions, as they provide the checking account that consumers use to fund their mobile payments transactions.”
Ghiglieri said financial institutions’ ownership and management of the PIN authentication—“today’s consumers’ most secure form of authentication”—positions the institutions as strong competitors.
He pointed to a recent survey that found most consumers are interested in using an FI-sponsored person-to-person payments service.
“Financial institutions’ unique combination of consumer trust, checking account offerings, payments industry knowledge and the existing payments infrastructure make it clear that mobile technology needs FIs to propel mobile payments into the mainstream,” Ghighlieri said. “As mobile commerce eventually reaches critical mass, consumers will most likely pick a provider and stick with them. Hopefully, the nation’s community financial institutions will be properly positioned to be the provider of choice when that time comes.”