The mobile near field communication (NFC) ecosystem already recognizes the need for multiple trusted service managers (TSM) to communicate with one another. Different players in this ecosystem require different TSM functionality in order to support their individual business focuses, be it as a mobile network operator (MNO), handset provider, a third party broker or as a service provider (SP) directly connecting to the ecosystem.
In the mobile NFC ecosystem there are both Root-TSMs – responsible for managing access and allocation of space and privileges on secure elements (SE) e.g. for an MNO – and SP-TSMs which provide application content to load on to the SE. In most markets this results in each Trusted Service Manager participating in multiple relationships with other TSMs. Service providers such as banks and transit operators can either implement their own SP-TSM capability or outsource to a third party SP-TSM.
Here are five key reasons why banks are fundamental to the convergence of the mobile payments and services landscape, and why they should seriously consider undertaking the role of being their own SP TSM.
1) Management of relationships and customer engagement
Finance is a highly competitive industry, so banks need to be in control of their relationships with partners and consumers in order to keep ahead of their competitors (traditional and emerging).
Not only do banks need to be in direct control of who they are working with, when and on what terms, but they also want to benefit from the data which consumers feedback. This level of information can assist product development in bringing new services to market which truly meet the needs of their existing and prospective customers. When a bank outsources its TSM services it can be confined to the role of payments processor, with little or no control over third party mobile product development and timescales. The bank is then limited to whatever customer MI data it is willing to buy, and can be supplied by its TSM.
2) Flexibility, scalability and time to market
Being in full control of the system allows banks to adjust aspects of the offering immediately and efficiently, rather than having to liaise with their third party TSM provider and negotiate a renewed service level agreement. The ability to do this significantly reduces product time to market, allowing banks to react to the market and keep both partners and customers happy.
3) Simple IT integration and ownership
Where a bank already has, or plans to have, both a card business and mobile/internet banking services it doesn’t necessarily make sense to outsource the bridging activities for mobile NFC payments. Acting as its own SP TSM allows banks to simply integrate the new mobile technology with their own legacy systems and manage everything as one entity, streamlining processes and potentially reducing the resources required. Using an outsourced model could mean that additional, external (mobile) systems are running in parallel with existing internal (card) systems.
Security is at the core of any banking activity – the need to protect data in secure locations is fundamental. Replicating card/account information to be held and processed outside this remit would need careful and assured management, as it involves additional costs and certification.
5) Value added services
By managing their own mobile payment services, banks have the opportunity to quickly and easily expand and enrich their mobile offering. This is especially relevant for supporting affinity, cobranding and other relationships (such as retailer acquiring). For example, providing mobile loyalty and reward schemes may be important to both the partner relationship and the bank customer’s satisfaction and retention. This can also off-set the cost of infrastructure implementation and offer an additional source of revenue to the program.
Ultimately, a bank becoming its own Trusted Service Manager is about control. Bell ID’s TSM software solutions enable our existing and future banking customers to integrate TSM/OTA and EMV services, as well as manage multiple value added services easily. Being vendor and supplier neutral enables us to work with anyone on any project in the TSM ecosystem. This makes it easy to meet our customer requirements, rather than trying to get them to fit into a predefined offering.
To find out more about becoming a Trusted Service Manager, watch our 90 second TSM animation.