The new study, “Money in Mobile – European Transactions,” focused on the banked and unbanked sectors, as well as mobile payments, mobile banking, remittance and Near Field Communication-based mobile payments. Frost & Sullivan predicts that NFC will be a major money-maker.

“Transaction costs and ease of use will drive money transfers and person-to-person transactions,” said Sharifah Amirah, principal analyst at Frost & Sullivan, London. “Success stories to date reveal that no one solution fits all, for example M-PESA will not work in India.

“Services have to be customized to suit the culture, regulation and competitive landscape,” she said.

Frost & Sullivan is a worldwide research company specializing driving growth for companies.

Putting trust in mobile
Ms. Amirah said that the gap between financial institutions and carriers is beginning to narrow.  However, there is still need for greater education both on the supply and demand side before mobile money can really take off in Europe.

Because of the worldwide financial crisis, Ms. Amirah said that banks are now in search of a new source of revenue, leading them to mobile.

“Although the whole concept of mobile money has been discussed for nearly a decade, the next two-to-three years will witness greater traction, particularly in international remittance and the unbanked market,” Ms. Amirah said.

According to Frost & Sullivan, NFC payments are being held back by the hardware costs and SMS-payments will drive mobile money growth.

Frost & Sullivan said that five key concerns remain.

They include security issues, regulation of mobile transactions, quality of service, high cost of services and the limited collaboration between different participants.

“There is great risk in the industry that point that solutions in particular are not scalable or suitable for wide-scale deployments,” Ms Amirah said. “Some applications seem too niche, i.e. a solution looking for a problem, and will have to evolve to succeed.”

To date, Frost & Sullivan said that much of the success of mobile money services has been in the servicing of the unbanked mobile subscriber.

Frost & Sullivan’s research finds that the global ratio of mobile-phone users to bank accounts is about four to one-and-a-half.

The sending of money to pay for merchandise or services between specific markets, for example, Philippines to Hong Kong and India to the United Arab Emirates, have been popular.

However, in the developed world, it is about getting users comfortable with mobile money services, such as checking balances and portfolio performances.

Carriers and banks still need to build trust in consumers before mobile money transfers and bill payments on mobile really take off.

Ms. Amirah said that banks and carriers need to start making a plan.

“Solutions targeting the developed world require a long-term strategy,” Ms. Amirah said. “Providers will need to find a viable solution for retail payments.

“Partnerships are key to building sustainable business models,” she said. “Solutions need to be adaptable to existing transactions.”