Banks are not as aggressive as the many technology startups competing to dominate the mobile payments market, but their slow pace is justified, a new report says.

Banks have to move slowly because they have more at stake and a reputation on the line with new products, says Nathalie Reinelt, retail banking analyst for Aite Group. And banks have an advantage because of the longstanding consumer relationships and trust they have, she adds.

Reinelt interviewed more than 20 executives and product managers in the financial technology industry earlier this year for her May report on mobile money.

"A lot of payment startups are sexy, but look at what happened to the LifeLock Wallet this week," Reinelt says. LifeLock pulled its app from the Apple, Amazon and Google app stores after concluding that the mobile wallet may not have complied with the Payment Card Industry data security standard, which describes how companies must protect any card account data they handle.

"Their whole business model is to prevent identity theft, but they are a great example of what can happen [with mobile wallets]," Reinelt says.

Banks also move slower with mobile payments because they have to develop a system that works with their existing rewards programs, Reinelt says. And it's harder for a bank to attract tech talent. Silicon Valley startups can easily woo the most talented developers, but it's "not as sexy to go to work at a bank as a developer," she says.

Companies like CardFree and Paydiant, which are focused on providing white-label mobile payment applications, have the best handle on how to combine technology with the needed incentives, Reinelt says.

Even though it has not revealed a lot of details about its eventual product, the Merchant Customer Exchange (MCX) is on the right track with its plan to provide a common consumer experience, merchant offers and loyalty while keeping control of transaction data, Reinelt says.

Many companies will try to emulate the popular Starbucks mobile payment system, but forget about the strong loyalty aspect, Reinelt says. Companies that can't inspire consumer adoption "are not solving a problem," she adds.

Mobile money is entering a critical stage, Reinelt says. The next 12 months could shape mobile's future, and "a lot of what will happen hinges on what Apple does," she adds. Financial institutions and merchants are hesitant to invest too heavily into Near Field Communication technology because only half of the smartphones in the market are NFC-compatible, Reinelt says.

Apple has never offered an iPhone with NFC built in, but it is reportedly planning an NFC wallet with China UnionPay.

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