The UK regulator’s ongoing review of mobile banking and payments identifies five areas that are relevant to whether firms are delivering good outcomes for consumers. The ‘thematic review’ by the Financial Conduct Authority (FCA) has, however, deprioritised fraud and money laundering risks since its interim report, published in August last year, because it is satisfied that firms are addressing those issues.
The FCA says it did not find cases of ‘crystalised consumer harm’, but it urges firms to consider how they can ensure consumers’ sensitive personal data and funds are secure, and that their technology is sufficiently robust to cope with changes in consumer behaviour when making payments.
The FCA said that there have been instances where banks’ mobile services have suffered outages as a result of an inability to cater for large transaction volumes. It also observed that banks that monitor consumer behaviour – such as logging in time, frequency of use – were more likely to ensure sufficient capacity was available.
It also draws attention to the question of how firms retain oversight of third-party and outsourced service providers. “To ensure the effective delivery of products and services it is important that everyone involved in the delivery chain understands their responsibilities to each other and to the end consumer,” the FCA said.
The diagram below illustrates potential third parties involved in a mobile payment transaction.
- How easy it is for consumers to understand their legal rights and obligations when using mobile banking products, and what firms are doing to aid consumer education.
- How firms ensure that the knowledge and understanding of key decision-makers in the business keeps up with the pace of innovation. “Our work showed that senior management needed to retain sufficient knowledge and understanding of their products and services to ensure they are right for consumers and are delivered in the right way,” the FCA said.
- How new entrants in mobile payments ensure they have adequate knowledge and understanding of the regulatory framework.
The FCA's thematic review TR14/15 Mobile Banking and Payments can be downloaded by clicking here.