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TELECOMS AND SOFTWARE NEWS
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Should retail banks be thinking about Single Wire Protocol?
Alex Kwiatkowski
Should retail banks be thinking about Single Wire Protocol?
Discussions over Single Wire Protocol (SWP) have largely been confined to technical forums frequented by those from the mobile community, be they device manufacturers or service providers. However, judging by recent enquiries from some of Ovum's clients, banks are also beginning to show interest in SWP. They are mainly focused on gaining insight into the effect SWP would have on their strategic roadmaps for transactional mobile services, and understanding if it's the magic ingredient needed for mobile banking to achieve its full market potential. Institutions are right to be inquisitive, but a paucity of contactless-enabled devices is restricting the usefulness of SWP.
SWP and NFC: getting behind the acronyms
If this is the first you've heard of SWP, and you're worrying that you're somehow at a competitive disadvantage to those already in the know, don't panic. SWP is essentially a standard which establishes uniform technical criteria for making the connection between a SIM card and a near-field communications (NFC) chip within a mobile device. Stand-alone NFC chips are already being used to perform a range of proximity-based tasks, and have been embedded into different form factors for different purposes. The Oyster and Octopus cards, used to increase the speed of passenger flow across London and Hong Kong's mass transit networks, are two prominent examples of NFC in action: passengers tap their cards rather than inserting paper tickets into a barrier. Barclaycard's OnePulse credit card contains both an Oyster card chip and a (separate) contactless payment chip (using Visa's PayWave technology). NFC chips can also be used in mobile devices, although debate rages over the most appropriate method. An NFC-enabled handset could enable stored content (e.g. photos) to be transferred by holding the device near a screen, or open a locked door without the need for a key. And, most relevantly in the context of banking technology, it gives handsets contactless payment capabilities. Let's have a reality check. While increasing numbers of contactless-enabled plastic cards are in circulation, adoption among consumers remains low. Outside of vendor R&D labs, payments made in the real world by NFC-equipped mobile devices (where the NFC chip is linked to the SIM) are even rarer. Certainly there have been trials orchestrated by various parties, and announcements made regarding the launch of new devices - but there have been device withdrawals too. At this stage, our feeling is that the widespread commercial rollout of contactless-enabled handsets remains a long way off. And of course, deployment can never be interpreted as guaranteeing actual usage.So where are the phones?
What exactly is so important about connecting a SIM card and NFC chip together with SWP? As far as banks are concerned, our answer is “it's not important for you to worry about, at least not yet.” However, for others interested in getting in on the contactless payments action - most notably, mobile operators - SWP does have greater prominence, as it potentially gives them the ability to own part of the value chain. On first reading, this could give banks cause for alarm. Having seen PayPal grow corpulent by gorging itself on the banks' lunch (and supper too), concern over losing revenue to another non-traditional new entrant coming into the payments business is entirely understandable. However, this fear is misplaced.If operators are to realize the aforementioned potential and become players in the value chain, this is wholly dependent on the availability of appropriate devices for consumers to actually make mobile payments with. This is a major problem for operators. There is a paucity of NFC-enabled handsets on the market, and those which are capable of using SWP are almost non-existent, bar the Samsung Star (which was used in a contactless payments trial at the 2010 Mobile World Congress to demonstrate the concept to attendees). Nokia pulled the plug on its 6216 SWP handset in February 2010, less than 12 months after it was revealed to the world, citing the current state of both the NFC ecosystem and the technical components required to build SWP into devices as factors in its decision. Interestingly, Nokia also felt that the quality of the consumer experience was not good enough.Ovum believes banks should keep a watching brief at this stage. Re-drawing the mobile banking strategic roadmap is not currently required.
About:
This article is an extract taken from Ovum's Straight Talk service. This daily email bulletin provides our expert's views and opinions on important news and events in global IT and telecoms. If you have a comment or question regarding this article then please submit your details here:
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