Archive for November, 2011

Mobile Consumers Trust in Banks

November 30, 2011 in Uncategorized | Comments (0)

Even with the Occupy movement throughout the United States that began in September, and its Bank Transfer Day on November 5th, which have resulted in at least 650,000 customers shifting more than $4.5 billion from big banks to credit unions, it appears that consumers in the United States still do have trust in their banks—at least where mobile money is concerned.

The Mobile Marketing Association (MMA) and Sybase 365 recently conducted a joint survey to gauge U.S. consumers’ shopping trends and behaviors this holiday season. Of those surveyed, 45% said they’d be encouraged to use their mobile devices to make payments for their holiday shopping. That alone is big news.

When asked what kind of solution would encourage them, 25% of respondents chose a solution created and enabled by their own bank. A solution like PayPal garnered a 22% positive response, followed by a solution from a credit card company (18%), a mobile operator (16%), the U.S. government (15%), or social media (9%).

Though trust in banks may be lower than it was five or 10 years ago, people still trust banks more than other mobile payment players, and PayPal ranks a close second. The U.S. Government is second-to-last in the list: most likely a measure of consumers’ confidence in the governments’ technological savvy. Social media landed at the bottom of the heap—perhaps due to security and privacy concerns?

With Isis and Google and other industry players, the mobile wallet is getting lots of airtime right now. Our survey numbers also show that more U.S. consumers are aware of mobile payments than ever before. Almost two-thirds of respondents, 62%, said that they’d make a purchase on their mobile device if encouraged by coupons, discount offers, gift cards, text or email alerts or loyalty points. Compare that to the only 32% positive response to the same question last year.

That’s swift progress for sure. However, we still have a way to go from willingness to widespread adoption, no matter which entity comes out with the best solution, and no matter which one consumers choose to use. The major advances in the mobile commerce platform can only happen when all the players—banks, operators, merchants, and the PayPals of the world—achieve interoperability by determining a business model that fosters a thriving mobile ecosystem.

Who Will Own NFC?

November 15, 2011 in Uncategorized | Comments (0)

Google officially launched Google Wallet, “the app that makes your phone your wallet,” at the end of September (for Sprint customers with a Nexus S 4G phone). Hot on its heels was the announcement from Isis, the AT&T, T-Mobile and Verizon consortium, that a number of handset-makers (HTC, LG, Motorola, RIM, Samsung and Sony Ericsson) have committed to make NFC-enabled devices that use the Isis standard, and so will Device Fidelity, maker of microSD cards that bring NFC functionality to devices that don’t have it.

Let the games begin.

I’ve already blogged about the roles I think Google and the mobile network operators will play when it comes to NFC. (See my August 30th post, Google Wallet: It’s Not About Payment.) Now, I want to talk about banks and merchants. How do they fit into the NFC picture?

Citibank is the only bank participating in Google Wallet right now, though Visa, Discover and American Express have made plans to be added to future versions of Google Wallet.

I think that the only reason they’ve joined up is that they think they have to be there. They want to be a part of the experiment. They want to be seen as forward thinking. At the same time, they’re working on their own initiatives. They’re participating in Google Wallet. They’ll participate in Isis, but they’re also hedging their bets with their own strategies.

Around the world, banks have been behind the majority of pilot programs for proximity payments like NFC. Very few have actually launched full-fledged services with NFC, because what’s in it for merchants and consumers is still questionable, and the distribution of the transaction revenue is still a challenge as there are more “mouths” at the table.

Obviously with Google’s involvement around CRM opportunities, looping in discount offers, location and loyalty etc, it does make NFC more interesting, but there are still some big hurdles to overcome, apart from just the handsets and readers.

The jury is still out on what will be successful about these early NFC services, and who will be successful, but I don’t think we’re going to see banks rushing to roll out services, or merchants standing in line to sign up for services anytime soon.

What do you think?

BYOB: Be Your Own Bank

November 2, 2011 in Uncategorized | Comments (1)

The recent announcement from Canadian mobile operator Rogers Wireless—that it applied to the Minister of Finance to become a bank—confirms that we’re seeing a new trend. Rogers says it has no plans to “become a full-service deposit-taking financial institution,” but is “actively looking at the mobile payment category.”

By applying for bank status, Rogers is serious about being part of the mobile payments space. Becoming a bank requires a huge commitment, and the company obviously feels that it can be successful in the market.

Rogers and other mobile operators clearly have a part to play in the mobile financial services game. Exactly what role that will be is still undecided. Right now, operators are the ones that have the customer base and a brand, and the fact that they aren’t banks has really been the major stumbling block precluding them from getting in farther, faster. Operators have historically looked to partner with financial institutions, such as the Telefónica joint venture announcement with Mastercard for the Latin American market, and the ICICI Bank and Vodafone Essar partnership for financial inclusion in India, but Rogers is now one of a few that have started down the do-it-yourself path.

China Mobile is another. Just last year, we saw that company acquire a 20 percent stake in Shanghai Pudong Development Bank, in a move to offer mobile financial services. Another is O2 (a Telefónica subsidiary) applying for an electronic money license in the UK to offer mobile money transfers and contactless payments.

Once again, however, the real key to making a payment system work is interoperability. The popular paybox mobile payment system that has been running in Austria for 8+ years has already taught us this lesson. The payment platform must work for everyone and be totally interoperable: Merchants, consumers, corporates, no matter which operator they use, no matter which bank, should all have access.

Mobile operators buying or becoming banks isn’t going to solve that issue. In fact, it might take them farther away from interoperability, if you take their cutthroat competitiveness into account.

Rogers becoming a bank won’t solve the interoperability issue, but they could lead the way in bringing the Canadian operators together.

Rogers isn’t new to the mobile payments space. It joined with fellow Canadian mobile operators Bell Mobility and Telus in 2009 to form EnStream and launch the Zoompass mobile wallet in June 2009. Zoompass is available to all subscribers across all Canadian mobile carriers, including prepaid phone users.

At the end of the day, it’s great to launch mobile financial services, but if there’s no interoperability, it’s still going to be a long, hard, uphill battle to get merchants to accept it and consumers to use it, unless it becomes dominant like a PayPal. Let’s hope this is the plan for Rogers.

How about you? Do you think we’ll continue to see mobile operators moving into the financial services business? Will operators’ do-it-yourself banking speed mobile payment adoption?