Shares of mobile banking software developer Monitise Plc (LON:MONI) (OTCMKTS:MONIF) have been more than cut in half in 2014, and recent news that Visa Inc (NYSE:V) was moving its mobile payment development in-house hasn’t helped. Further confusion over the impact of Apple’s mobile payment system has further cast doubt on the company’s future.

Monitise has the resources to create their own mobile banking technology

However, concerns that Monitise is going to be squeezed out by larger payment processing companies that have the resources to create their own mobile banking technology and payments systems are overblown, says BTIG analyst Mark Palmer.

In a research note, Palmer considers the bear case against Monitise Plc (LON:MONI) (OTCMKTS:MONIF), which it had labeled a “buy,” and determines if there is merit as the stock had dropped from a high near $80 per share earlier in the year to $29 today. His conclusion: No.

Monitise

Palmer tackles Apple Pay, which has teamed up with Bank of America Corp (NYSE:BAC), Citigroup Inc (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Co (NYSE:WFC) – in other words the big banks that financial insiders say typically control the financial system with an iron fist.  He notes that Apple Pay not only represents a small relative market share – near 11.7 percent – but that it performs a different function than does Monitise. Apple Pay is a consumer payment method, like a credit card, whereas Monitise Plc (LON:MONI) (OTCMKTS:MONIF) provides mobile bank software solutions to banks.  Different target markets.

Palmer also tackles the most significant concern for the stock: is Visa Inc (NYSE:V) developing a payment system in house a real threat?  Again, his answer is no.

The key here is target market.

Small banks the real target for Monitise sales

While the big banks are an interesting and high profile target audience for Monitise sales – and many big banks who could afford to develop the technology in house still prefer to outsource – the real target are small and mid-sized banks who can’t afford to independently compete with the dominate larger banks.

Smaller banks are concerned they will be left behind in the mobile payments revolution, the report points out, quoting a small bank CEO. There are 7,000 such small banks in the U.S. alone and more globally, the report points out. This target audience is not the one that makes headlines, but it is the one that needs the service – and desperately so in order to compete with large banks. This target audience has limited options and building an in-house system is not one of them.

As such, BTIG remains consistent with its buy rating on Monitise Plc (LON:MONI) (OTCMKTS:MONIF).