Brett King

Archive for January, 2011|Monthly archive page

Starbucks Mobile – the Shape of Things to Come

In Customer Experience, Mobile Banking, Retail Banking, Technology Innovation on January 27, 2011 at 17:07

On Wednesday 26th of January 2011, Michael Degnan (of SapientNitro and Engagement Banking fame) and myself headed down to the Starbucks at One Penn Plaza in New York City with the objective of recording our experience of processing a mobile payment using the Starbucks App for the iPhone. The App links your phone to your pre-paid Starbucks card to process payments using a QR code on the screen, which can be scanned by a small reader connected to the cash register. The experience was, in a word, engaging…

Check out the video:

So here are my observations. Firstly, this is very simple. It is at least as fast as getting cash out of my wallet to pay, receiving change and then putting my wallet back in my pocket, in fact, probably faster. The whole transaction you see here took just moments.

The second observation is that the Starbucks Barista was well versed in the new payment technology and was not phased at all by either the request for us to film the payment, or the payment itself. You can see the Barista adjusting the phone so the scanner quickly picked up the QR code off the screen. No fuss, efficient and simple.

The final observation is that this is far superior to a current interaction using cash or a card for a number of reasons. This gives us a glimpse of what the cashless society will be like, it isn’t risky, it isn’t subject to fraud or theft, it is safe, secure and fast. The App is super easy to use, which encourages you to use it again. Personally, I doubt that I will ever pay for a Starbucks using cash again. The only issue could be data connectivity problems. However, with Gilder’s Law in effect, this is an ever reducing issue.

Gilder’s Law: Bandwidth grows at least three times faster than computer power.
Source: Article, “Programming” –

But one of the key benefits of this transaction was the transaction visibility. I know what my balance is. I can see my payment history at the touch of a button. I see the balance updated in real-time, and I don’t have to carry around paper receipts. This is far superior than my check book, debit card or credit card from an interaction perspective. I know exactly where I am in respect to my balance available, and the transactions I’ve made. Jack Dorsey, one of the founders of Twitter, figured out this differentiation already and has built a great receipt capability into the Square platform that he launched last year.

“I made the purchase at 8:47 this morning and the receipt was immediately emailed to me in the form of a link to a Square page. On this page is a receipt featuring the logo of the vendor, their email address, and their Twitter handle. Below that, it shows the amount and the exact time of purchase. And below that is a Google Map of where the transaction was made and your signature.”
What A Square Receipt Actually Looks Like, MG Siegler, via Washington Post, Dec 1, 2009

So what does Starbucks Mobile Payments mean for the future?

For those of you who still doubt the power of NFC and mobile payments to change behavior around cash and cheques (checks) watch this video again. The benefits of mobile payments are plenty:

1. Safe (more secure than plastic or cash)
2. Speed
3. Easier than cash (less fuss)
4. Great feedback on transactions
5. Better deals – Starbucks give a 50 cent discount using the card

The modality shift will happen far quicker than banks, card issuers and others can comprehend. This is extremely dangerous ground for retail banks still enamored with transactional banking based on cheques/checks, cash and card transactions.

Banks beware – if by July this year you are still issuing plastic cards, or still opening checking accounts – you are about to be in a world of hurt!

Too much content…dealing with the flood

In Customer Experience, Economics, Media, Social Networking, Technology Innovation on January 17, 2011 at 05:00

There has been much discussion about the impact of the so-called “information age”. Prior to 2003 it has been said that throughout history mankind had generated a sum total of 5 Exabyte’s of content up to that year. Today it is estimated we generate this amount of content measured in days.

“Between the birth of the world and 2003, there were five exabytes of information created. We [now] create five exabytes every two days. See why it’s so painful to operate in information markets?”
Eric Schmidt, CEO, Google

So what impact does all that content have on our society? How do we value ‘things’ when knowledge is pervasive, when money is digital, and when you can no longer protect an idea or concept legally because information scarcity no longer applies? The level and rate of change that we are experiencing today is likely to accelerate over the next 50-100 years. We will be undergoing periods of constant disruption this coming century, and the disruption we face every 10-15 years, may be something our forebears only have had to deal with during their entire lifetime.

Where is it all coming from?

Will all this content overwhelm us?

Geographically, in 2010, the majority of email users were located in Asia/Pacific (47%). Europe accounts for about 23% of all users, North America has about 14%, and the Rest of the World has around 16% of all users. In 2010, the typical corporate user sent and received about 110 messages daily. Roughly 18% of emails received were spam, comprising both actual spam and “graymail” (i.e. unwanted newsletters, alerts, etc.)

According to Facebook, more than 30 Billion (no that’s not a typo) pieces of content are shared on Facebook each month. Facebook users also install more than 20 million applications, and link through to more than 250,000 external websites every day. The average number of friends is 130 per user. With close to 600 million actives users, 50% of whom are logging on daily, the amount of content FB alone generates is staggering.

As of September 2010, Twitter has 170m users and is growing at the rate of approximately 350,000 new users a day. This results in a staggering 95m tweets per day. Twitter’s search engine is now receiving close to 1 Billion search queries per day. To put their growth into perspective they had 105m registered users in April 2010, and by September that had grown to 170m users.

LinkedIn, considered the premier business social network of today, already has close to 100m users, with a new LinkedIn member joining every second. LinkedIn has empowered users to find new jobs, raise startup funding, secure new business and deals, support charity efforts, and to find new staff – all through content generated on the site.

Now let’s talk about YouTube. Depending on whom you ask YouTube is now considered either the most popular search engine on the web, or the second most popular. YouTube users upload more than 24 hours of video to YouTube every minute of every day. More video is uploaded to YouTube in 60 days, than the 3 major TV networks in the US have created in the last 60 years. YouTube gets over 100 million views per day.

The impressive thing about YouTube, Facebook, Twitter and LinkedIn, who between them now have access to almost a billion people, is that these businesses didn’t exist 10 years ago. Nor did their content.

Mobile Messaging and SMS
2010 finished out the year with around 6.5 Trillion SMS messages worldwide. That’s a lot of content. Considering that most people didn’t start using the Short-Message-Service until 2002, this is tremendous growth. In the US in 2011 more than 200 Billion messages will be sent monthly.

All of this talk about trillions got me thinking – how much is 1 trillion? 1 trillion seconds = 32,000 years. Another way of looking at 1 trillion is that 1 trillion SMS messages is approximately 32,000 messages per second for every second of 1 year. And the world is up to just over 3 trillion for the 1st half of 2010.
William Dudley, Sybase 365

Increasingly, however, Y-Gens and digital natives are using mobile instant messaging, Facebook messages and other non-SMS mobile messaging platforms. Email use is on the decline for this demographic also. That doesn’t mean content proliferation is decreasing, it just means that these groups are finding more efficient mechanisms to communicate, and their communication is becoming more contextual.

The Big Filter
With all of this content, the big business in the future will be the ability to manage this flow of information and content. Increasingly, we’ll see Google, Apple, handset manufacturers, and developers looking to build better filtering mechanisms or systems that learn about the content we like and utilize, and prioritize this.

Google has already deployed their Priority InBox mechanism, designed to filter your most important messages and communications. App developers like My6Sense are using techniques like Digital Intuition or Dimensionality Reduction to prioritize streams of RSS content based on blending, semantics, correlation and other techniques.

In the future this will be big business. If you are in business today and you are regularly communicating with customers, you need to start thinking about creating a dashboard for customers to configure when and how you will communicate information about your relationship with them. It’s no longer enough to assume they will open your envelope, read your email, receive your SMS, or accept your unsolicited phone call to their mobile phone. You need to start seeking permission for the communications you have with your customers, and allowing customers to choose how and when they receive them. If not, very soon they’ll start to filter you out of the conversation.

Banks still don’t get mobile, but neither do researchers…

In Customer Experience, Engagement Banking, Mobile Banking, Retail Banking, Social Networking on January 4, 2011 at 01:04

I read with interest a post pointed out to me by @JenRBoyd posted on Mobile Commerce Daily highlighting a recent Celent report comparing US and EU investment in multi-channel. The problem here is that the conclusions of the report are correct, but even the report itself suffers from an old-school view of the banking arena, that is, we are still asking the wrong questions…

Celent/Oliver Wyman - Channel Priorities EU vs US

The Generational Gap in Management
If you’ve read my posts previously, or my book BANK 2.0, you’ll know that I’m particularly critical of the branch-centric organization structures that dominate retail banking still today. The shift to ‘multi-channel’ has been a long and hard road, and is far from over at this stage.

The problem intellectually is that it is fundamentally, virtually impossible to get a banker of 30-40 years experience to think in truly innovative ways about reinventing the way we engage customers in banking. We see this embedded in banking from terminology, to metrics, to budgets, to organization structure, to philosophy. Many banks still call their multi-channel practice “Alternative Channels” – indicative of the fact that most bankers still view multi-channel as an alternative to the branch, i.e. the ‘real’ bank. The problem with that strategy is customers just don’t think like that.

If you had a Y-Gen or Millennial on the board of the bank today, his or her first three priorities in channel investments would be in the arena of mobile payments, social media and mobile banking. In Celent’s report (link above) indicative of the generational gap, even prevalent in the research, is that we aren’t even asking the right questions yet. Celent’s report doesn’t even include the areas of mobile payments and social media engagement as ‘channel priorities’.

Re-imagining the organization
So in an ideal bank of today, what would the channel priorities and organization chart look like?

Here’s a few key elements:

1. Complete Channel Agnostic Approach
The first thing that needs to happen is losing the bias in the organizational structure toward branch, from a budget perspective, from a leadership perspective, and from a philosophical view. It would help to create a Head of Channels that manages branch, internet, mobile, self-service (ATM, etc), and other channels together. There should be an acceptance that all channels are created equal in respect to their ability to engage customers from a revenue and service perspective.

2. Seed strategy teams with Y-Gen/Millennials
You can’t change the way that old banker’s think. Remember the joke…

Old Banker’s never die – they just lose interest.

Seriously, we need aggressive new thinking, and we aren’t going to get that from those who’ve been brought up on a staple diet of traditional approaches to banking. We need to create energy for new initiatives. Most commonly when I propose this to banker’s they say “But, we need people with banking experience!” I cringe at that…you can’t inject new blood and thinking into the system if you insist on only using those who are already preconditioned to the world of banking.

If you must, use the kids and grandkids of the board members themselves so you can keep it in the family. But get some new thinking into the organization ASAP.

3. Customer Dynamics and Engagement Banking
We need to start thinking about re-inventing the role of banking in the lives of our customers. This is not just building new Apps, new websites, or sticking up a page on Facebook – this is thinking about the contextual use of banking, and how to reduce friction for our customers.

Realistically if we think about the way banking works today, usually it is a ‘wait for the customer to come to you’ scenario. We assume that when a customer needs a loan, a new bank account, or to invest some money, that he’ll come to the bank. If we understand the context of those products or services, we’d see that if we could take those elements to the customer, and better engage them, that banking would truly become a service, instead of just a function. The organization chart of the future will have a customer engagement team that dominates the marketing and product functions of the bank, both from a retail and wholesale banking perspective. This is because we are going to have to reinvent the way we engage customers with our products or services, taking banking to the customer.

We have to start asking the right questions. Those questions start with how is the behavior of our customers changing, how can we better engage them, and how and when does that engagement occur? Patently, the use of mobile, social media, contactless payment technology built into the handset, geo-location capability, targeted 1-to-1 marketing offer management (beyond groupon), and other such capabilities should be an absolute priority for bankers today – but we aren’t even talking about that stuff properly yet…