Tahir Sheikh

ITM 707
RBC Mobile Wallet
Ryerson University
Issues:

RBC is currently facing a dilemma. They have a choice of two paths to

pursue. RBC can either go ahead with the current industry standard; a SIM card
solution which stores user information on the chip which is supported by most
telecom companies or to center their attention towards a cloud-based solution.

Analysis:

As a strategy to attract the maximum number of customers, banks typically

offer similar service rates as their competitors. Banks also try to differentiate
themselves by offering unique services to clients. This strategy would fall under
the differentiation category as the first bank operates mobile wallet, aimed to
draw customers from competing banks to switch over to RBC. Being the first
mover in the industry gives RBC a competitive advantage. Since smart phones
have now become a common commodity in present day society, using them to
make mobile payments could have a great on traditional payment systems.
Furthermore, Customers being able to switch from bank to bank in most cases,
consumers would intuitively be considered to have medium-high consumer
power.

In terms of making a payment using a mobile device, the chip-based and

cloud-based solutions have some similarities. However, both also have the own
distinctive strengths and weaknesses.

The chip-based solution is financially demanding throughout the life of the

operation. Banks have to constantly compete for limited chip storage space and
also compensate telecom companies for renting storage on the SIM. The
advantage of the chip-based solution is the tokenization system which allows
customers to perform transactions without delay by tapping their phone leading
to greater customer satisfaction. Moreover, RBC would be the first bank to offer a
mobile payment service because of faster execution of a chip-based solution.
 In contrast, the cloud-based solution will take more time to develop as it is
an application developed in-house. It requires a bigger initial investment but will
pay off in the not-too-distant future because contracts with telecom companies
will not be necessary. This solution is also more secure as it is stored on a private
cloud and does not give telecom companies unlimited access to consumer data.

Recommendation:

In the short run, the chip-based solution is ideal as it gives RBC a

competitive advantage as it will enter the mobile payment market before any
other bank. This business strategy is in alignment with organizational strategy
which is essential for any business to stay afloat in todays market.

Thinking long term, the cloud-based solution carries more benefits. RBC
will save on cost for renting limited amounts of space on SIMs and confidential
user data will only be available to RBC. This data can also be used in the future
to predict consumer behaviour to target different segments of the market. For
example, different cohorts have diverse preferences. If mobile wallet users are
dominantly of a younger cohort, RBC may be able to offer students special offers
such as cashback each time they use their mobile wallet.

The best solution for RBC would be one that is hybrid. The IT infrastructure
already exists with SIMs being used by mobile devices and data would be secure
with a cloud solution. Another option exists, which would be to create a
debit/credit card that has a chip with the capability of communicating with servers
to makes payments with a tap.