Past studies published by the Central Bank of Malta and the European Central Bank have consistently highlighted that the Maltese are stubborn users of cash, surpassing other Euro-Med countries to top the list of EU countries for the largest percentage of cash transactions.
However, the trend is changing slowly with the evolution of more convenient banking channels, stronger education and a generation that is increasingly conversant with technology. Will the smartphone provide a sufficiently compelling proposition for change?
As alternative payment methods to cash and cheques, the Maltese are quite comfortable with using debit cards and credit cards at point of sales, ATMs and online. However, these payment instruments will eventually become a thing of the past as they make way for mobile payments – and the transition has already started.
The technology is available and it is more convenient and secure than tapping and swiping plastic cards and inputting PINs on ePOS terminals. Smartphones have taken fixed-line conventional telephones by the storm, elbowed away the tablet and replaced desktop computers and laptops for straightforward day-to-day tasks.
Internet banking still outpaces mobile banking in most countries including Malta but the latter lends itself exceptionally well for essentially simple banking tasks while on the go. Through our mobile phones, we read the news, check our social media feeds, send messages, take photos of everything under the sun, move money and effect payments.
There is simply no longer the need to wait to get home to our PCs to make a payment, monitor our account balances or to top up our kids’ mobile account. Credit card payments and other trivial transactions can be carried out in an instant during a TV commercial or while waiting for a friend to turn up. And these kind of transactions constitute the vast majority of personal finance requirements.
Mobile devices are the game-changers. They are the future. And yes, they have the potential to change the stubborn cash mentality that we have lived by for many years
The trends are clear – once consumers experience the simplicity and immediacy of mobile banking, they do not switch back to other channels for simple transactions.
Mobile card payment is one of the latest trends in this revolution. It is not solely the convenience of not taking the plastic card out of your wallet, but enhanced security of tokenisation increases its appeal. With tokenisation, the sensitive information relating to the customer’s card is replaced by a non-sensitive identifier referred to as a ‘token’.
It is this token that passes through the shopkeeper’s terminal and validated as opposed to the card details of the customer. And it is virtually impossible to reverse the process and steal card details from a token. This process carries significantly less risk from giving one’s card details online or inputting the physical card and PIN at ePOS terminals.
The future of 5G mobile technology going mainstream promises a significantly faster network than what we enjoy today and this will accelerate the adoption of mobile services and the diffusion of wearable technology. Other exciting ongoing developments are mobile wallets, Mobile App ATM withdrawals, Voice Banking and increased portfolio integration across different financial institutions.
Smartphone devices and wearable technology play a critical role in the era of digital banking. They find their way in consumer’s pockets from their teenage years, irrespective of status and level of education reached. The younger generations are very comfortable with mobile technology and they expect the same immediacy for banking services as for other services.
Mobile devices are the game-changers. They are the future. And yes, they have the potential to change the stubborn cash mentality that we have lived by for many years.
Daniel Magrin is an IT graduate and a business management graduate and maintains a keen interest in business strategy, research and data analytics. He works for Bank of Valletta in the Market Intelligence Unit.
Any views, assumptions or opinions expressed in this article are those of the author. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of any information, opinions or conclusions expressed herein.