One of UK’s leading retailers projected that this Christmas, one in five orders for their products would be done on a smartphone. That’s amazing – for an industry that was slow to get into mobile, this forecast shows just how far things have come. The retailer in question here is Tesco and their virtual store actually looks pretty cool.
It makes sense, especially when I look at how natural it is now for me to order something from the Internet that mobile is the next logical step. I must confess that I have already used my iPad to order McDonalds on the way home from the airport for the kids and myself, so I guess I am already doing mobile commerce.
Of course, it is not the retailers that have driven this adoption, but is it us – the consumers. As much as we do not mind queuing behind 10 people, whom all seem to be paying with a credit/debit card that requires 10 seconds to process, and another 10 seconds for that person to pick up a pen and sign, or ‘remember’ their pin, the idea of ordering and picking up the product without this process certainly appeals more to me. If you combine that with the ‘nightmare’ of Christmas shopping, then I can see why people would want to order and pay using their mobile phones instead. I would too.
Undeniably, the ability to place an order through my mobile phone is a good step in the right direction of mobile commerce for retailers, but it is not a full offering. For me, it is not only about ordering, but getting a discount coupon, accumulating loyalty points and then paying for the said items on my phone. To top all that, if I could get it delivered as well, then it completes the whole buying experience.
I wonder if retail outlets will become nothing more than a place for you to view the products in real life, assuming the virtual experience is not good enough for you.
While online shopping has come along in leaps and bounds, I think that mobile shopping will develop even faster. I am now placing most of my ‘online’ orders through my iPad, so this is mobile shopping to me for now.
Retailers need to embrace this technology, and as I said, add more value to consumers like me, than just a place or channel to view the items. Give me details on the special deals or sales for that day before I get to the store, and which store is offering what promotions.
I had high hopes that the iPhone 5 would come equipped with NFC technology, since the market was adrift with rumors, clues and the usual ‘patent’ applications that hinted at it. Sadly, I was disappointed. However, I don’t think my disappointment will last too long- probably only until iPhone 6 is next launched, and perhaps even before that.
I had recently upgraded my iPhone to iOS6. Obviously, the new ‘feature’ that I need spend some time getting used to, is the new Passbook. This for me, is the smoking gun that Apple plans its world domination of mobile commerce- the same way they pretty much destroyed my CD collection (which is somewhere in storage gathering dust). I am of course referring to the fact that I no longer place a CD into the player to listen to my Elvis songs.Instead, I simply plug one of my ‘i’ devices into one of my speakers and hit play. Truth is, I am not even sure I have a CD player, other than the one under my TV, which I still watch my movies from (which sits next to my Apple TV, of course).
So what is Passbook all about? Well from what I can tell, it’s a nice ‘place’ to store things like boarding cards, store cards and coupons. That to me is essentially a mobile wallet. Clearly, Apple is now witnessing what a lot of mobile players have seen for a while- that Mobile Commerce is here and people are using their phones to pay for goods and services. Personally, I like the idea of having all these ‘pieces of paper or plastic’ in an electronic form and stored in one secure place. My iPhone is fine for me.
While no real details are available as to which partners or merchants Apple will bring into this, for example,airlines, stores, etc, it is clear that Apple is looking at taking a large slice of the mCommerce pie. Obviously, they will have to tread carefully. If they end up charging too high a transaction fee to consumers like myself, or their partners, then I think their world domination plan for Mobile Commerce will come to a quick demise. If they are sensible, then perhaps they could launch a useful service, pretty much the way they did with digital music. Close loop systems of course typically don’t make it past the ‘good idea’ stage. So Apple will need to play into the existing ecosystem and payment systems for this to work.
Well let’s see, Apple typically likes to do things their way; but consumers ultimately want value. And their mentality is such that “if we don’t get it, we move on”. Brand loyalty only goes so far if you bite the hand that feeds you!
I read an article last week that said the Commbank Kaching application has had over 500,000 downloads, and in general, the app has attracted more than 3.5 million downloads.
That’s success if you ask me, especially in a market of just over 20 million. The Kaching application is pretty simple – which is key to the success of mobile, even though many banks do not see this obvious fact – you can pay to any mobile phone, through Facebook, email and even at NFC terminals.
This is quite comprehensive when you look at what it can do, and how easy it is to use. Many people have often asked me about mobile payments, and if there is really any money in it. The short answer is yes, but to be successful, you need to understand two key factors: why would the consumer use the mobile for this payment, and why would the retailer want him to?
While it could be obvious to some, it is hard for many banks to work out as they are still obsessed with their plastic cards. I currently hold gold, platinum and this week I am the proud owner of a black card. Frankly, this means I am all out of colours now so what can the bank offer me next? Maybe Kaching would suit me nicely, as I do not have to care about the colour, and I can ‘flaunt’ it with my new iPhone 5, plus I can carry a lot less in my pocket.
Assuming an application like Kaching makes me happy as a consumer, what does it do for the bank?
Well, this is where the future of transactional revenue for the banks lies, and they (the banks) should wake up to it. Take Kaching for example, in less than a year it has attracted500,000 users. While many of these might not be active users – as some people simply like ‘collecting’ apps – they have transacted over AUD1 billion collectively.
So what you may ask? Well, if you really want to know how much money is in mobile banking, consider AUD1 billion at an average transaction fee of 1.5% – that translates to a transactional revenue of AUD15 million. Not bad for an app on your iPhone. You can see why Commbank is investing into the mobile channel. I think a lot of banks could be looking at this and realising that they are leaving a lot of revenue on the table, let alone not looking into to the future.
Mobile payments and revenue is there, and as bank you should be looking at these examples as proof. It is not just a trend anymore.
Mobile technology more than anything has evolved to benefit us, making our life more convenient, providing consumers with choice and increasing productivity at work.
When thinking about breakthrough mobile technologies, mobile phones and their many capabilities are often top of mind. Because of cutting-edge developer software, enhanced browser capabilities and other mobile technologies, mobile commerce has evolved into a larger than life concept, similar to that of e-banking only a few short years ago.
When given a broader span of choices, consumers become more active and in charge – an experience every retailer is trying to tap into. Advancements in mCommerce empower consumers and give them the freedom to make buying decisions without being confined to a departmental store.
New technologies such as QR codes, NFC and social banking are taking mCommerce to another level. These tools are now capable of streamlining numerous aspects of consumers’ everyday lives and are giving retailers the opportunity to make the buying experience as personal and easy as possible. The common element, however still remains the consumer.
To put the significance of mobile commerce into perspective, online giant Ebay recorded that consumers purchased $5 billion worth of merchandise through mobile alone in 2011.
According to a Computerworld article, 60 per cent of brands have already implemented some type of mobile initiative. Enforcing this is the fact that Australia is ranked among the top 5 mobile markets for smartphones, with the latest ones being released with NFC. In Southeast Asia, research company GfK reports that Singapore and Malaysia are markets with deepest smartphone penetration, reaching a high of 88 per cent, translating to almost nine out of every 10 in the general population being a smartphone user. Of all the countries in the region, Indonesia is touted as showing the most growth potential. While it may be in the shade of markets like China, Japan and Korea, Southeast Asia accounts for one tenth of the world’s population, with Indonesia’s population alone some 240 million.
Widespread adoption of mobile platforms is what’s changing the consumers’ approach to commerce. Subsequently, the distinction between shopping on a handheld device and in a physical store is disappearing. Instead, the two channels are converging and individual purchases are becoming simpler than ever before.
This is not a passing fad either – mCommerce looks to continue its exponential growth for years to come. Estimates from Forrester Research stated that 53 per cent of mobile customers increased their mobile spending budgets in 2011. Based on sales and projections the world over, many analysts and other industry professionals agree that mCommerce is here to stay and will continue to thrive.
For retailers to capaitalise on the ongoing mCommerce boom, they need to stop relying only on in-store sales and take point-of-sale activity to mobile handheld devices. One recent example of a retail giant already making waves with this paradigm shift in mCommerce is Australian supermarket, Woolworths – or “Woolies”, as the locals call it.
What may appear to be a big gamble in the retail space is being thoroughly tested with a heavy analytic-based retail experience by Woolies. Moving outside the four walls of its physical stores, Woolies like many other retail giants have already introduced the next buzzword…e-tail! Woolies set up billboards across major junctions in the city that contain images and barcodes of products for mobile phone scanning. The Woolies mobile app allows customers walking by the billboards to browse, scan, order and pay for products via their mobile device and have them delivered to a chosen destination. Driven by analytical insight from consumer purchase behaviors, location-based data and contextual history, one can only imagine where this calculated risk will take Woolies in the retail and e-tail space.
Viewing mobile commerce only as a tool for payments is a common mistake that retailers and marketers can make. Combined with analytics, real-time management and supported by NFC and other mobile technologies, mCommerce is capable of unleashing a much more significant power. But does this mean that with such an integrated and seamless e-tail experience, there will be no more room for window shopping and mannequins? Only time will tell…
Social media is taking consumers, governments and businesses to new conversations and real-time customer management- a concept considered unimaginable not more than a year ago.
It has become an important tool to measure customer sentiment, engage customers and potential consumers with your brand and improve the customer service experience before they are escalated to other channels. But being such a sensitive industry with job cuts and interest rate rises, the big question is: are banks ready to make this big leap?
With social banking comes real time customer management, big data and a huge shift in how banks use social media to interact with customers!
The Australian and New Zealand banking and finance industry is starting to harness social media and the subsequent value of Big Data to improve client relations and customer satisfaction. An internal survey* conducted within the banking and finance sector recently states that 44 percent of respondents see social media channels such as Facebook and Twitter to be the biggest contributor to unstructured Big Data. However, it is the analysis of these channels that 68 percent believe can provide better insights into customer behavior.
Contrary to the above, Ovum’s latest report, ‘the impact of social CRM on retail banking’, indicated some 60 per cent of the world’s retail banks have no plans to use social media, with only six per cent of retail banks currently using social media for customer queries.
One of the banks to take social media to a new level and translate it into social banking is Australia’s Commonwealth Bank, the world’s seventh largest bank. Being the first of its kind available within the Australian banking sector, the bank recently launched a new mobile app, which allows their customers to transfer funds to friends via their Facebook accounts or mobile device. This app is a perfect tool to provide services in real-time and to its mobile audience. But will banks be able to keep up with this shift to social banking and more importantly, will this come at a price for transaction banks?
A relatively novel concept, the opportunity for transaction banks that deal with banking procedures like payments, settlements and lendings is huge in developing and further utilising the principles of social banking. Transaction social banking comes with higher levels of customer convenience and has a wider appeal through social media channels, enabling customers to now add conventional banking services and integrating them with the real world.
Being fairly premature though, social banking could also bring with it challenges through subsequent issues including privacy, security and real-time customer management, but will this be shadowed by what Commonwealth Bank has already achieved? Only time will tell…won’t it?
*Sybase Technology Trends in Capital Markets Survey
The Indonesian archipelago has been an important trade region since at least the 7th century, so it’s somewhat unsurprising that its people are enthusiastically embracing the mobile channel for payments, remittance and banking.
Indonesia consists of 17,508 islands, about 6,000 of which are inhabited. 58% of the population lives on Java, the world’s most populous island. Other major islands include Sumatra, parts of Borneo, parts of New Guinea, and Sulawesi.
Indonesia has a mobile penetration rate of 90%, equating 235.8 million mobile subscribers, while only 50 – 60 million have bank accounts. An astonishing 30 million cell phones are sold in Indonesia each year, and active SIM cards are growing by 30 – 40% per annum.
As Indonesians embrace mobile technologies, one of the largest banks in Indonesia, PT Bank CIMB Niaga, has added mobile banking to its capabilities http://www.sybase.com/detail?id=1096328. Built on Sybase technology, CIMB Niaga customers are now able to transfer funds, access loan statements and check account information. In addition to banking services, customers can access their online bill payment service via their mobile phone to pay utilities and other bills right from their online bank accounts.
To illustrate why the mobile channel is so powerful, look no further than neighboring Philippines, one of the world’s leading adopters of mobile commerce. According to the Asian Development Bank, 35% of Filipinos have mobile phones, while 95% of the rest have access to a mobile device through friends or family. Even remote, and traditionally inaccessible areas increasingly have mobile phone coverage. It’s been estimated that basic mobile phone banking services provided by rural banks are valued at P12 billion ($250 million) in the past five years.
Both countries are island nations, challenged with unique geographies, which mobile technologies ideally address. Both have a large populace under the poverty line, resulting in the under or unbanked currently being excluded from financial participation. Last but not least, both have young populations, with aspirations and entrepreneurial spirit. It doesn’t take much imagination to see Indonesia’s mCommerce market follow and eventually even exceed the success in the Philippines. Watch this space.
KYC is a challenge for many organisations operating in the mCommerce space. Regulators, like operators, banks, and government bodies, generally have limited experience in mobile payments and simply rely on industry movement and existing rules for older types of transactions. However, as the line blurs between typical operator services and those that are considered to be more a part of the financial services industry, operators need to make sure they understand exactly what Know Your Customer (KYC) really means and have an effective KYC system in place.
KYC doesn’t just mean fraud prevention; it also encompasses other key aspects of financial security, including; anti-money laundering, combating the financing of terrorism and preventing identity theft – All equally important reasons why your KYC processes need to be effective. There is no global standard for KYC regulations yet, but in many developed countries, most of the population has already been through some form of KYC (whether they’re aware of it or not!).
Mobile operators need to work with regulators to implement a KYC process that works for their country. Many mobile operators are required to perform KYC, however the KYC they perform is not necessarily up to the same standard as a standard bank KYC process.
Many operators, banks and even central banks have had to really look at different ways to implement KYC for mobile commerce, as they simply cannot follow rules that may be in place for a “banked” customer. While most people who have a history of banking, paying bills, driving and so on typically end up on databases that attest to attributes such as their creditworthiness, there are significant obstacles in identifying customers who are not in this category.
People who don’t use online billing or are not documented via trusted credit-reporting sources, make it harder to find reliable data about them. This makes it even more important for mobile commerce service providers to ensure that their KYC process is thorough and that they truly do “know your customers.”
As mobile operators in emerging markets have grown, so has their agent base. Many of the strict trading rules and regulations that govern retail in the established economies are still not present in the emerging markets. It is not uncommon for a high percentage of fraud to take place in the emerging markets, as the retail network itself is still in its infancy.
Hence, it is very important that the agent network is capable of performing the KYC process correctly and that the service provider minimises the risk of rogue agents poorly performing a KYC— or worse, performing outright fraud.
Perhaps your KYC implementation will consist simply of a photograph or a signature taken on a mobile device and stored in a database—or it could be a points system that requires some compliance; either way, it is a crucial step in the mobile commerce process. Time and care should be taken to reach out to regulators before you finalise your mobile commerce plan.
For more information, or to download the Sybase Mobile Commerce Guide 2012 – click here: http://www.sybase.com/mobilecommerceguide
While traditional, ‘bricks & mortar’ retailers are bracing themselves for a tough Christmas, online and mobile channels are experiencing unprecedented growth.
The proliferation of smartphones and tablets as well as more ubiquitous 3G coverage combined with demographic and lifestyle factors, means consumers are increasingly willing to do their Christmas shopping on a mobile device.
This presents a significant increase compared with a similar Sybase 365 survey a year ago, when only 32% of respondents said that mobile incentives would encourage them to make a purchase on their device.
While smartphone penetration in Asia Pacific as a whole is behind the US and Europe (Nielsen puts it at just under 20%), there is a lot of interest in upgrading, especially with Android devices bringing smartphones and tablets into the reach of Asia’s aspirational middle class.
It is also important to remember that Asia Pacific is a region of great diversity – some markets such as Singapore and Australia already have some of the highest smart device penetration rates in the world, making them an ideal test bed for mobile commerce and mobile marketing.
Mobile Ad network InMobi found in its recent Mobile Insights Report a strong correlation between mobile web browsing and consumers’ willingness to buy goods and services on their mobile. According to the report, a whopping 80 percent of Asian mobile Internet users already indulge in mobile shopping.
The report identified music/movies/games (43%), consumer electronics (24%), travel (12%), and apparel (11%) as the most popular products already being purchased from mobile devices.
Mobiles are also great for comparing prices, and finding places to buy. And as a recent PayPal study highlighted, a quick and easy purchase from a work computer or mobile phone can often be preferable to using your lunch break to visit the shops (You might want to use your personal mobile if you have a large family to shop for. Three quarters of companies monitor Internet use at work.)
Undoubtedly shoppers are ready, but what about retailers? Unfortunately, when it comes to actually completing a purchase, mobile is usually not the easiest option. All too often mobile payment options are not yet available, insecure or inconvenient to use.
To truly harness the power of mobile commerce, more needs to be done to create a smooth shopping experience that encompasses the entire purchasing lifecycle from browsing, selecting and paying for goods and services regardless of device type or carrier.
On a more personal note, thanks for reading my blog this year. Any comments, ideas, feedback would be appreciated. Above all, I wish you all a merry Christmas and a Happy New Year!
India is set to become the world’s most populous country in 2030. Currently second only to China in population – the South Asian nation grew by 18m in the past decade alone. With 1.21b people, India’s population is now nearly equal to the combined populations of the United States, Indonesia, Brazil, Japan, Bangladesh, and Pakistan.
According to Boston Consulting Group, there are already 771m mobile subscribers in India, with 548m considered to be active, compared with the 240m people holding bank accounts. Most of the people in urban India have bank accounts but 90-95% still mostly use cash for their day to day needs.
While mobile commerce might be still nascent in the country, there is a tremendous opportunity in servicing both urban elites and the large numbers of the un- and under-banked in rural India via the mobile channel.
BCG’s analysis suggested mobile payment and banking transactions would reach $350bn by 2015, measured against approximately $235bn of credit and debit card purchases at present. Peer-to-peer remittances are expected to deliver $70bn by 2015, mostly as people in metropolitan hubs transferring funds to their families in rural areas.
Transaction volumes and fees might be small, but anticipated economies of scale have triggered a wave of notable alliances between banks and telco operators in India. (WARC noted the following recent partnerships: Bharti Airtel with the State Bank of India, Vodafone and ICICI Bank, Idea Cellular and Axis Bank.)
Another company that is keen to get a piece of the pie is Nokia. The handset manufacturer has started shipping mobile phones in India preloaded with its banking application, based on the Obopay mobile payment platform, in a deal with the Union Bank of India.
Considering India’s sheer seize as well as geographic and cultural diversity, it’s hard to imagine a national mobile payment scheme in India any time soon as we find in smaller countries like Austria today.
I would rather expect a number of payment ecosystems to co-exist for a significant period of time, until regional leaders emerge, possibly along historical and cultural fault lines.
It’ll be also interesting to see if any home grown players founded by India’s well educated and entrepreneurially minded IT community will be able to capture significant market share.
One thing is certain: As India cements its position as an economic powerhouse on the world stage, greater financial inclusion via the mobile channel will have a positive flow on effect on productivity, innovation and living standards.
What are your predictions for India’s mobile payment and banking market for 2012 and beyond?
The Commonwealth Bank of Australia made headlines with its recent launch of Kaching. Kaching combines peer-to-peer payments via the phone’s contacts and email addresses, and in a world-first; social payments via a user’s Facebook friends along with NFC contactless technology. While the app is initially only available for the iPhone (and requires an NFC enabled case as the iPhone 4S still features no NFC support), the project undoubtedly oozes ambition.
Over at Australian competitor St George Bank, executives told The Australian newspaper that customers using mobile devices for financial transactions already equal the activity level of 112 physical branches.
These examples highlight once again how much of a driving force the banks are for mobile commerce in Australia. In contrast to countries like Austria, Qatar or Malaysia, where telecommunications operators have taken on a pioneering role, banks have been setting the scene down under for a number of years now.
A recent SAP-Sybase 365 poll among banking and finance professionals in Australia showed more than half (54%) of respondents believe mobile payment services will be solely run by the banks.
The survey also indicated that Google’s push into the mobile payments space with NFC support is seen as the biggest competitive threat to the banks’ dominance in the market (28%), followed by over the top payments providers such as PayPal (20%) and iTunes’ proprietary music and apps payment service (16%). Twelve percent view credit card schemes as a competitive threat, and only 2 percent see mobile operators playing a leading role in this market.
More than a quarter (26%) of respondents stated that their organization already offers some form of banking services for mobile phones, while 40 percent are planning to introduce mobile payments services in the next 12 months. Existing services encompass bill payment via mobile phones (19%), as well as payment services for real world goods and services and NFC ready person-to-person payments (18 % respectively).
While there’s no doubt that banks are willing to invest in technology and marketing to defend their payment stronghold against the Google’s and Apple’s of the world, a successful mobile commerce ecosystem requires an advanced level of coordination between key stakeholders, such as financial institutions, merchants, mobile operators and handset manufacturers. This sentiment was shared widely among the survey respondents, of whom 69% identified the lack of coordination between stakeholders and incompleteness of the mCommerce ecosystem as the main inhibitors of greater mobile payments uptake in Australia.
What do you think? Can the banks go it alone or do we need more collaboration in Australia?