Brett King

Posts Tagged ‘iPhone’

Customers will never use Facebook to login to their bank!

In Engagement Banking, Future of Banking, Groundswell, Mobile Payments, Social Networking, Twitter on December 7, 2011 at 07:16

We’re experiencing a massive shift in consumer behavior right now with the explosion of Facebook, Twitter, YouTube, and other community collaboration and social media platforms. A world where Facebook has 800 million inhabitants and a President who is a college dropout (albeit Harvard).

We’re seeing the global domination of mobile across the entire world, where before long every person on the planet will have a mobile phone – and soon that phone will be a wallet. Smartphone owners will be the majority in just a few years as smartphones are virtually free on contract, and unlimited data is bundled free. Already the average smartphone user spends more time using Apps than they do using an Internet browser on their computer.

The traditional players amongst us say that such things don’t really change the fundamentals, that “it will take time for people to trust these new mechanisms”.

I’ll never login with Facebook to my bank.

I won’t pay with my mobile phone unless I understand how secure it is. This NFC technology is too new and there’s no common standard.

Huh?

The same people who said this probably said…

I’ll never use email, there’s nothing like calling someone or a face-to-face discussion to solve a problem

I’ll never use an ATM machine, I don’t trust a machine to give me money.

I’ll never get a cell phone – I don’t want people to be able to call me whenever and wherever I am.

I will never put my credit card details on a website online – are you crazy?

I’ll never bank online. Not in my lifetime…

I’ll never need a Facebook account – it’s a waste of time, it’s just for college students.

Really?

If you are saying you won’t do something that millions of other people are already doing, that’s a sure sign that it’s going to disrupt the hell out of your business and you’re in trouble.

If you’re not planning to work differently, if you’re not thinking differently, then you’re just out of touch, you’re just one step away from irrelevance. You’re fighting the flow upstream and getting pushed towards disaster.

The one constant of the internet-enabled world is that you have to be ready to change constantly. Resistence is not only futile, it’s stupid and very costly in the long run. It’s cheap and easy to be social right now, same for mobile – it won’t be in the future.

Right now you have two choices.

Start experimenting with how to adapt to these new methods

Start figuring out what people want to talk about on social media. When they’re using their phones at a store, for searching on products, when they check-in, tweet or update their facebook status.

Start talking to them. Start sharing content that isn’t marketing messages pushed down their throat, but helps them.

Start trusting consumers to talk to you about your brand, your products and about what they want from their bank or services provider. Understand you can’t control the conversation, but you can and should participate in it.

Open up new products and services based on social media. Get consumers to give voice to their needs and help you form those ideas. OCBC, DBS, First Direct, ASB, Comm Bank are all trying different types of crowdsourcing to develop better relationships with their customer base.

OR… Ignore the obvious, get ready to be displaced

Our customers don’t feel safe using Facebook for login!

But some of them might… how long before most of them will? How do you meet your KYC requirements and keep customers safe when allowing them to do this? Are you going to wait till everyone else is doing it, or are you going to learn how to do it properly and securely now. Are you asking your compliance teams to find ways of figuring out how to do this stuff safely?

It will take years for the mobile wallet and NFC to take off!

Right now Google and Apple are eating your lunch and you don’t even know it. You are getting ready to write off the one device that is most critical for connections and context with your customers in the later part of this decade. Someone else is going to own your customers, and as banks we’re going to be paying the likes of Google to include our branded card in their wallet, or our products and services and messages on their platform.

We already have to ask permission from Google and Apple to give our customers our App.

Don’t want to change! You will…

The fact is most of the last two decades we’ve been facing constant change, and no one organization has been able to resist the shift because customers decide how and when you’ll engage with them.

Customers have already decided they want their mobile device to be their bank. They’ve already decided that they want to discuss your brand and your service capability in the open community of social media.

Now it’s time for you to decide that you want to stay relevant to your customers. Or ignore the obvious and go away.

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When your Telco becomes a Bank

In Customer Experience, Economics, Future of Banking, Mobile Banking, Mobile Payments on September 8, 2011 at 16:46

The announcement that the Canadian carrier Rogers Telecom has applied for a banking license should hardly come as a shock to the retail banking fraternity. There is already a plethera of mobile carriers fully engaged in mobile payments right now, from Safaricom in Kenya, Orange (with Barclays) in the UK, the ISIS collaboration in the US, LG Telecom in South Korea, and the list goes on. Everywhere you look right now, there are carriers trying to muscle in on the mobile wallet and payments space.

Should Banks be Worried?

They should be terrified.

The fact is that it makes perfect sense for mobile operators to start thinking about offering banking products and services as we dispense with plastic and start using our mobile phones as payment devices. Increasingly, banks are being detached from the end consumer by a technology layer. Let me prove it.

PayPal reinvented the customer experience layer around payments, and in doing so set the benchmark by which Peer-to-Peer payments are made. Sure there are banks at the back-end of PayPal, but today I can take out my phone or get online and send you money and all I need to know is your email address or your mobile phone number. This is compared with the average wire transfer which requires account number, account name, bank name, bank address, SWIFT Code/ABA Routing Number or IBAN, etc, etc. Now we’re all wondering why it’s simpler, and in many cases cheaper, to use PayPal than a wire transfer through our traditional bank. Why go back to complexity and friction?

Today, if a bank wants to allow their customers access to Mobile Banking they have to go through a layer of technology called an App Store (or Marketplace). Sure, there is HTML5 and mini-browser mobile sites, but the fact is that if you want best-in-class interaction and engagement, you need to go App. So today, a bank must ask Google, Apple or RIM for permission to have clients access their bank via a smartphone.

Mobile Carriers are a significant threat to day-to-day banking

Are Telcos a Threat to the High Street Bank?

Well, yes and no.

If you look at broader offerings of financial service products, then mobile operators really don’t want to play in that arena. What most of the mobile operators are looking to do is play in the payments space, taking control of the wallet on your phone or offering pre-paid debit card type services.

In 2008 about 17% of the US mobile subscriber base were on prepaid deals, but since the GFC (Global Financial Crisis) approximately 65% of net new subscribers are prepaid users. In emerging markets like India and China 90%+ of the subscriber base is prepaid, and the same counts for sub-Saharan Africa, and broadly across Eastern Europe and Asia. So what does this have to do with banking?

Prepaid subscribers for mobile phones generally speaking are more likely to be at the lower end of the scale for retail banking (less profitable, underbanked) or even in the unbanked segments. These are customers who don’t have extensive multi-bank relationships, and who increasingly are moving to products like prepaid debit cards to facilitate their day-to-day banking needs.

So guess what happens when you combine a prepaid debit card with a prepaid mobile phone? It’s a marriage made in heaven! What’s the difference between making a telephone call, an ATM withdrawal or a debit card transaction at a merchant – they are all just transactions from a value store.

It’s likely that as Telcos figure this ‘secret’ out that they will be aggressively going after that marginal layer of customers that are underbanked, and promising utility that a bank can’t provide in the payments space. The combination of prepaid phone deal with a prepaid debit card will likely result in the loss of around 10% of the retail banking consumer market in developed economies in the next 5 years in my opinion, as they migrate to this type of modality.

So What? We can Afford to Lose a Few Marginal Customers!

This will be the justification for lack of action from many retail banks; that the loss of these less profitable customers is not a bad thing. There’s two problems with that logic.

Firstly, this shift will create momentum behind changing payments behavior that will fragment day-to-day banking for many customers. Increasingly even your best, most profitable customers will be abandoning the old ways of payments to go for the utility of a combined mobile phone and payment device. Once I am managing your day-to-day spending activity, I can start to influence your decisions, spending and choices for more complex financial products too.

Secondly, the fact is that even these ‘marginal customers will likely be extremely profitable for Telcos, because to them it is just new revenue, and they don’t have all the expensive infrastructure that banks have around the very traditional (some would say antiquated) retail banking system.

The implications for banks is that they lose touch day-to-day with customers, and the day-to-day retail front-end of banking becomes owned by telcos, App stores, social networks and marketing organizations. The bank becomes the back-end manager of risk and the product manufacturer, with the lowest margin of the whole value chain.

How Steve Jobs Killed the Branch…

In Customer Experience, Future of Banking on August 25, 2011 at 04:37

As the news of Steve Jobs’ resignation rocks the world today, it’s almost like we’re reading his obituary rather than the news that a Fortune 50 CEO has moved on. The impact of Steve’s resignation will be felt hard on Apple’s share price no doubt, and even potentially hit the very fragile US market at a time of uncertainty. Although Apple’s leader has had a question mark over his health for some time, the eventuality of the departure of such an iconic leader was always going to hurt.

When we look back at the amazing career of Jobs, the creation of Apple, his messianic return to Apple in 1997, the 200 patents filed under his name (although he has no formal engineering qualifications) and the meteoric rise of Apple Stock – from $7 a share in 2003 to around $400 today – we see the evidence of something amazing. But how has Steve Jobs influenced financial services, and how will his legacy continue to influence the sector?

The Graphical User Interface through to Multi-Touch

Although largely attributed to the team at Zerox PARC (Palo Alto Research Center), Apple was the first company to commercialize the Graphical User Interface. The GUI led to the modern computing interface, the creation of the mouse, and the concepts of human computer interaction and usability that are so widespread today. These are at the very core of our understanding of the way individuals interact with devices today.

For almost 10 years (1988-1997), Microsoft and Apple were locked in a legal battle over the apparent IP infringement of “Windows” in respect to the LISA and Apple Macintosh GUIs. Regardless of the eventual outcomes of this battle (which ended in a private settlment between MSFT and APPL in 97) the fact is Jobs’ team (that included much of the PARC team) were credited with the first mass market GUI implementation. Since then the GUI has been a basic element of our computing. The VT-220 green-screens of old have long ago disappeared, thankfully!

However, Apple totally upped the ante in 2007 with the introduction of multi-touch. Combined with Nintendo Wii launch in 2006, multi-touch saw the emergence of a range of direct input innovations. Microsoft followed soon after with Kinect, incorporating gesture based control. Multi-touch was the first incorporation of human control that was direct input, as opposed to a mouse and a keyboard. Even the Wii was an evolution of the input device – multi-touch eliminated an input device all together. This development has forever changed our expectations of device interaction.

Steve Jobs - Branch Killer, Innovator and Visionary (Photo Credit: Apple)

Of course, as banks we’re already massive deploying iPhone, iPad and Android Apps for mobile banking, but we’re also incorporating other direct input methods such as gesture recognition and biometrics into the experience. Recently bank branches have started deploying touch screens, media walls, Microsoft surface tables and even facial recognition in signage displays. Itau bank in Brazil has developed an ATM that uses gestures and 3D to control interactions. But the biggest change was not around input, but a shift in the value of the bank in our day to day life.

Detaching Banking from the Bank

This is not the sole legacy of Steve Jobs and the team at Apple, but when we look back on banking in 10-20 years time when branches have disappeared, we will attribute the destruction of the traditional value chain of banking to the death of the ‘store’. Not all stores are destroyed, of course, but where you have goods or services that can be easily digitized or where distribution does not absolutely require physicality, then the value chain is disrupted. The two big upsets in this evolution of the store were really Amazon’s destruction of the book store, and iTunes destruction of video and music stores.

iTunes was the more significant disruptor for banking, because the “App” has disrupted the retail financial services distribution platform by changing ownership of the customer experience. Today banks who want customers to have access to their banking through a mobile “App”, no longer have direct access to customers. Customers download the ‘bank’ from Apple or from Google, and banks need to meet the criteria of the ‘store’ before customers can get access to that functionality.

In the future the destruction of the physicality of banking from branches, cheques, cards and cash will all be attributed to the emergence of the iPhone. The smartphone with Apps, supported by an App store in the initial instance was the trigger for a whole evolution of interaction on-the-move. Then the mobile wallet and distributed, pervasive, engaged banking through a device that enables payments and connects customers with their bank everyday, will eliminate the need for “the bank”, but not banking products and services.

Gone, but not forgotten

When historians look back at the massive shift in banking and the rapid decline in branch activity, the death of cheques, plastic and cash – the inflection point will be the creation of the App Phone. This is perhaps Steve Jobs’ greatest legacy for banking today.

He has changed the way our customers behave, he’s changed the way we think, and the way we demand service. Thanks to Steve Jobs’ vision – banking of the future will be about banking embedded everyday into our life, a true utility, and no longer a place you go.

In the end when the dust settles, there will still be banks at the backend owning the wires, payments networks and carrying the risk, but they won’t own the customer. The customer will hardly notice banking embedded in their daily life as they go shopping with their phone, as they buy a new car or home, or as they travel overseas or send their kids off to college. It will just be a part of our everyday life, and my kids won’t even remember the days when you used to have to go to a building before you could do this stuff.

Why Apple’s iPhone5 must have NFC capability

In Bank Innovation, Customer Experience, Mobile Payments on May 9, 2011 at 05:36

On 14th of March 2011, The Independent newspaper from the UK published an article suggesting that the iPhone 5 would not include Near-Field Communication (NFC) capability. A few days later on the 17 March, Forbes rebutted the Guardian’s article quoting a source that said NFC was a sure thing. Who’s right, and will Apple delay their NFC launch to better perfect the tech?

The Independent article was surprising as it was hot off the heals of Google already launching their Nexus-S handset with NFC capability and a host of other manufacturers were flocking to utilize Android’s new OS codenamed Gingerbread. Of course, having an NFC chip in a handset doesn’t automatically mean that you can use it in a constructive manner for stuff like payments, coupon redemption and interactions at the point-of-sale. Then again, if you don’t have an NFC chip that’s basically a guarantee that you can’t do all that sexy contactless stuff (unless you use tags for example).

The sexiest NFC application coming is obviously payments, but it isn’t the only one. We’ve already seen Google trialing some pretty cool marketing capabilities with one-touch discounts, and other types of applications like NFC bump.

Now that LG, RIM, Nokia, Google, and Samsung have all launched an NFC-enabled phone, Apple really has no choice, but to go one step better. I can’t see Steve Jobs, who has made a trademark of the ‘this changes everything’ banter, deciding to give up on NFC until the next generation of iPhone in 2012. Imagine Apple launching the iPhone 5 and trying to position it as ‘changing everything again’ without NFC…not going to happen. The iPhone 5 has to go one step better than Google, RIM and all the others. Catching the competitors isn’t going to be enough for Apple.

You can't "change everything again" unless you catch up to NFC-capable competitors

The loss of POS

The mobile payments space is rapidly heating up. In recent times Square was attacked pretty vigorously by the likes of Verifone over their mobile merchant approach. Accusations were flying that the square dongle was little more than a card-skimming device. With Visa recently acquiring a stake in Square, it certainly appears that the smartphone-based POS terminal has hit mainstream.

Certainly it’s not hard to see why Verifone and other POS manufacturers were ramping up the scaremongering over Square’s clever approach. Verifone went so far as demanding a recall of the square hardware, which they claimed could be used for card skimming. The beauty of Square’s approach was not just the simplicity of the hardware, of course, but the real beauty was in simplifying merchant onboarding. Register online, download the app, plug-in the dongle and go…

The ongoing trick to protecting payments networks like Visa and Mastercard, is the ability to leverage off merchants at the point-of-sale. If conceivably most phones within the next 2-years gain NFC capability, each one of those can become a mobile POS-terminal as well as a payment device. Theoretically, circumventing existing payments networks would be possible via the cloud, so card issuers need to rapidly move to providing an economical and interoperable network that is not worth bypassing. POS hardware isn’t necessarily a barrier to entry. As the ISIS collaborative recently found out, however, creating a new payments network is tougher than it appears.

One of the main issues is that you might be able to launch a new NFC or Mobile-powered payments network locally in the US, but take your NFC phone offshore to the EU or Asia, and it could be worthless. Thus, you need global reach, a ready user base and a strong user experience play to take ground in this space. That leaves PayPal, Google, Apple and maybe Facebook with enough grunt globally to create a new payments paradigm.

The payments imperative

With so much happening in the payments space then, the iPhone 5 needs to come out swinging. When the 5 launches it needs to be much more than just NFC-enabled, Apple needs to ‘change everything’ again and the only viable way of doing this is taking a first mover payments capability. That’s tougher than what it appears.

Launching NFC payments out of the gate for the iPhone 5 means one of two things. Either Apple needs to come out with either their own payment network based somehow around the iTunes store account as the backbone, or they need to provide seamless integration into existing payments networks provided by the likes of Visa and Mastercard.

Regardless of which of those two outcomes Apple chooses to go with, if they want to change everything it’s their only possible choice. It’s either that, or let Google change everything and rethink your iPhone branding strategy:

iPhone 5 – not changing everything, but upgrade anyway…

That’s the biggest reason to expect the iPhone 5 not only to have NFC, but to come out of the gate with a swinging payments capability. Get ready to upgrade your life.

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” – Wikipedia.org

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!