M-Commerce: Revolution, Risk Management and Reward

By Gerry Penfold, Risk Consulting Partner, KPMG

David Sexton made an interesting point in his recent article in the Evening Standard: Smart phones turn their owners into zombies. Sexton laments the “semi-autonomous” state of London’s commuter population, half-distracted from reality by the digital world clutched in the palms of their hands. But, from my perspective, this is further evidence that smart-phone technology is rapidly changing the way we think, act, and do business. Such progressive opportunities however, open up complex risks.  So what are the] risk implications and opportunities for businesses?


A smart-phone is more than a source of instant news; it is a quantum leap in convenience. In this new age of digital acceleration it is possible to browse, compare prices, and buy a world of online shops while you’re on the train, sitting in a coffee shop or indeed wherever. Why waste precious time queuing for the till or booting up an ancient PC? There is huge potential as mobile innovations are rapidly capturing the imagination of consumers and changing the business model for retailers. Mobile commerce isn’t just about influencing the customer at the point of sale: it brings the point of sale to the customer.


The somewhat surprising findings of our fifth Consumer and Convergence Survey suggest that this business revolution has already started in earnest. 58% of firms around the world in financial services, technology, telecoms and retail already have a mobile payments strategy and American mobile payments totalled around $100 billion last year.


And, as a recent BBC article shows, the UK is embracing M-commerce technology at a faster pace than many other countries. 75% of shoppers prefer to buy goods like CDs, DVDs, books and video games online. Combine this with the 33% of customers who use their mobile device to in store to access and redeem coupons and this suggests immeasurable potential for enterprises to expand their market reach, provide better service and reduce costs. Brand awareness will grow, customer relationships will be managed more dynamically, faster and more closely targeted product changes will occur.


Such rapid change does, however, create new risks as well as opportunities. Despite the fact that 60% of the 9,600 respondents say they would be willing to allow their online usage and personal profile to be tracked, provided this leads to lower costs and more tailored services, 90% voiced concerns about the security of their Personal Identifiable Information (PII) . Security and privacy continues to be the biggest barrier to the adoption of new business models. 


The age of M-commerce has already begun and with this comes a need for integrated, advanced risk management. Security in the M-commerce era will be more highly automated, backed by more sophisticated tools to support employee compliance and decision making. Data analytics will move centre stage.


Businesses have a choice: wait or anticipate. The question is not whether to join in, but how, and how much. Impartial, expert, across-the board guidance will be crucial to success.

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