Archive for August, 2011

Google Wallet: It Is Not About Payment

August 30, 2011 in Uncategorized | Comments (1)

In late May, Google announced its mobile wallet—an Android application that lets people with Android phones equipped with near-field communication (NFC) technology pay for goods by simply tapping their handset on a special payment terminal. Field tests are underway in New York and San Francisco.

Initially, the app only works with a prepaid Citbank MasterCard at merchants that have the MasterCard PayPass terminals, (it’s a fairly big list), though eventually Google promises it will turn into the kind of open platform the company loves so well, working with any card or payment network.

Sounds a lot like what we keep hearing from Isis, the joint venture between AT&T, T-Mobile and Verizon to launch NFC payments in the U.S. But here’s the difference: at the end of the day, I don’t think this initiative is going to have anything to do with payment. We already have a lot of payment methods, and Google has already brought in MasterCard to handle that part.

If Not Payment, Then What?
Rather, Google Wallet will be about creating an ecosystem to enable location-based marketing in the form of promotions, vouchers and coupons. You can bet the wallet be integrated with social networking in some way (surely the forthcoming Google+, first and foremost). When you walk into a Macy’s, or past a Starbucks, those retailers will be able deliver offers straight to your phone: 10 percent off socks! Buy one Trenta, get the second free!

In other words, it’s mobile CRM. Google is about personalization, about profiling customers and delivering targeted ads. That’s why this is such an interesting play. Google wallet is big because we’re looking at a whole different level of advertising, a new breed of player starting to enter the mobile spectrum.

Cooperating Operators
I mentioned above that the payment part of Google Wallet—tapping your NFC phone to an NFC terminal at the point of sale—sounds a lot like what we’ve been hearing about from Isis. As anyone in this industry will testify, it’s hard to get the operators to work together. They are seriously competitive with each other, and we’re seeing that play out now, as the way the big three have been presenting Isis has continued to change since the initial announcement. The reality is that every one of those operators has its own, independent payments initiative as well. In the end, I don’t believe that Isis will result in anything more than a proof-of-concept.

What we eventually need—in every country—is to bring the banks, operators and retailers together to create a mobile payments ecosystem. Now, if anyone can do that in the U.S., it’s Google. They have the dollars and the market reach.

Added Value
At Sybase, our position has always been that with mobile payments in developed markets, there needs to be more value than just the payment mechanism, because we already have credit cards, direct debit, etc., and those methods work well. To change consumer behavior, there has to be a compelling reason. You have to get something more. A great example of that is the paybox system in Austria. It provides added value with services that go above and beyond. When you use paybox to pay for parking, for example, you get an SMS 10 minutes before your meter expires so you can top it up again if you like. A paybox-enabled vending machine uses the phone to identify the buyer’s age as well as to extract payment.

Google Wallet doesn’t deliver added value now, but I believe it will—and soon. Their web site promises that eventually the wallet will hold “loyalty cards, gift cards, receipts, boarding passes, tickets, even your keys.” (We’ll have to wait and see about the keys.)

Banking on Social Media

August 1, 2011 in Uncategorized | Comments (0)

Banks are looking to get in on the worldwide social media party, and find ways to promote their online and mobile banking products at the same time. As happens in the early phase of any new medium, there are a bunch of experiments going on right now.

The recent partnership between American Express and Foursquare is a prime example. Foursquare is a social networking service where members “check in” at their locations using a mobile phone to earn points and find friends. The deal rewards American Express cardholders with discounts when they check in via Foursquare at participating merchants. First piloted in Austin, Texas, the offering went nationwide at the end of June, with retailers H&M, Sports Authority and Union Square Hospitality Group, a holding company that owns various New York City restaurants. This offering is particularly interesting because it combines a financial service, location-based advertising, social media and mobility. That’s four birds with one stone.

Another example is here in Singapore. One of the local banks launched a Wish List application, where you enter the things you’re saving up for (your “wishes”), and then apply funds to each item as your savings grows. You can link it to Facebook to tell your friends what you’re saving for and when you have enough to make the purchase. This is a really fun, innovative development that taps into people’s drive to achieve personal goals. It marks a departure from the standard advertisement of offers, job postings and company announcements that most banks are doing on Facebook.

We’re also hearing that banks are working on developing person-to-person (P2P) payment mechanisms that integrate with social media.

Twitter is a different medium, allowing “tweets” of 140 characters or less, and though global financial institutions are using Twitter as a customer service and product promotion channel, most banks are still resisting it. (Studies show up to 60 percent.)

Understanding the Limits
Banks understand that consumers aren’t going to seek out the bank’s web site or application in large numbers. Instead, they’re seeing social media as a gateway, a virtual marketplace where the next generation wants to conduct all of its activities. Given the more personal nature of social media, it could help banks build community and connect with consumers in a more direct way.

Here’s a question: How will the Facebooks, Twitters and Foursquares of the world create APIs that make it possible for banks (and other enterprises) to seamlessly integrate social media into their own consumer environments?

Social media is changing the way every industry engages with customers right now, and the financial industry is no different, though security is something to think about. That’s obviously one of the reasons that banks have historically been slow to adopt new media, including the Internet and mobile technology. With the rise of mobile banking in recent years, we know that consumers are ready to conduct transactions, not just look at their account balances. Of course, incorporating mobile banking, with all its security considerations, in to a Facebook or Foursquare, becomes a whole new game, with an extra level of challenges.