Royal Bank of Scotland Groups(LSE: RBS)country-wide system failure during 2012, followed by a glitch that affected as many as 600,000 payments across the network last week, has made it clear that RBSs computer system is in severe need of an update.
However, its not just RBS that is suffering.
Several years agoSantanderhad a reputation for constantly changing its computer systems, which affected customer accounts and payments. While the majority of the UKs building societies are also struggling to build a sustainable IT infrastructure.
Even the Prudential Regulation Authority has weighed in on the issue. The regulator has come out recently and said that it hasuncovered a number of deficiencies in the IT systems of UK banks with many struggling to improve antiquated IT systems.
And this is whereMonitise(LSE: MONI) comes in.
Monitise has been working hard to build a strong relationship with big banks and other non-financial institutions since it was founded. As a result, the group has several big deals with these financial institutions and in some cases, the group has become a key partner.
So, as banks look to create new payment processing networks and renew their IT infrastructure, they could call on Monitise to assist them.
In addition, Monitise has a valuable partnership with global tech giantIBM.
The combination of IBM and Monitise could be too hard for some banks to pass up.
Indeed, the duoprovidesa number of key services that the financial services industry is increasingly seeking to implement as part of its quest to modernise, reduce costs and learn more about customers.
IBM is known for its big-data capabilities, something thats becoming increasingly important to the banking industry.
By using big data, financial institutions are able to gain access to data analytics to offer customers targeted services such as in-store engagement and location-based offerings.
Moreover, by working with Monitise, banks and other financial institutions will be able to deploy new digital and mobile money solutions while reducing costs and driving new revenue streams.
The value of mobile payments to and from banks is set to increase from $249bn worldwide in 2012 to $460 billion in 2022.
So, banks really have no choice but to upgrade their systems to deal with this increase.
Despite the companys troubles, Monitises business is already taking off this year.
Year to date, the company has signed deals with an unnamed top-ten US financial institution, an unnamed European financial firm, Santander,Trk Ekonomi Bankas and has partnered with IBM to deliver mobile banking solutions for Socit Gnrale.
Still, despite all of the above deals Monitises shares have recently slipped to a five-year low. And one of the key reasons why Monitises shares have fallen to new lows is the lack of trust between the company and its shareholders.
With a trail of disappointments behind it, Monitise has to prove to investors that it can be trusted once again and meet its own lofty growth targets. Monitise is targeting 200m active users by 2018.
Only time will tell if it can meet this target.
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