I remember being swept up in the early Foursquare craze. I raced around my little town checking in at my local Starbucks and favorite lunch spots to become The Mayor. I worked hard to keep it by doing drive by check ins as I was stuck at traffic lights. I know, I’m hyper competitive on certain things. Friends and I would compete on who could win the most badges too! I quickly earned the “jet setter” badge with frequent flights from SJC to SNA. Other friends won the “crunked” badge with late night shenanigans. Ahh to be a DINK again. All for what? For pure competition and Facebook feed bragging rights!
At a deeper level, I hoped that eventually I’d receive relevant geographically based alerts and rewards on my phone as I walked by a restaurant or store. Unfortunately, many of these rewards required an AMEX card subscription (creating a HUGE hurdle) or were nothing more than a free drink at check in. Big whoop. Sigh…it was very clear that geo based local marketing had not made the jump from great concepts to effective execution. However, this is all changing quickly with the launch of mobile payment solutions like Apple Pay and well designed retail loyalty mobile apps. Real customer value can be delivered at the right time. Banks can also make HUGE strides in building more meaningful customer relationships beyond checking accounts. FINALLY!!!!!
My family and I are loyal Safeway customers for the majority of our food. The loyalty was solidified by Safeway launching a program that contained several weekly coupons and special offers based on shopping activity. A key component of the loyalty program is the Safeway mobile app which serves as the main touch point for how offers are communicated to consumers. Just recently, Safeway has pushed daily offers that appear on the front scream of my mobile device. Last week I made a special trip into Safeway’s deli to take advantage of a sandwich offer that was delivered to my phone that morning. Cool. There are several other retail apps, Starbucks for example, that deliver this customer value in a similar way. All of these apps have a way to go on using geo fencing technology to send me offers as I’m nearby or actually in store. Clearly this will be coming!
I mentioned in a previous post that I recently completed my first Apple Pay transaction at Sports Authority. It took me 6 months to actually do this after I loaded all of my cards. Honestly, I forgot to use Apple Pay and struggled with finding locations that use it. I opine in my last post that Apple Pay must do a lot more to remind users that “Apple Pay is Accepted Here” to drive adoption. Steps are being taken to do so for I saw an Apple Pay logo appear on a Walmart payment terminal as I purchased Easter cards.
So where do banks fit in creating greater customer value? Apple Pay requires that customers enter in debit cards and credit cards to make payment. Banks provide these cards. Banks frequently offer rewards programs and provide an incentive to shop a designated retail location. By not actively engaging in this payments ecosystem, banks are LOSING OUT BIG TIME on engaging with customers in a meaningful way with relevant, geo targeted offers.
For example, let’s say a consumer is using a Wells Fargo bank card for Apple Pay. The consumer pays for items at Walmart that is a member of Well’s Earn More Mall program. The consumer is then informed that they receive double points and are reminded of other Earn More Mall retailers that may be geographically close by. How powerful is that for Wells to influence consumer purchase decision and drive usage of its cards?!
Unfortunately, this type of consumer influence will not be available to banks through Apple Pay. Apple has decided to not share consumer purchase data with card providers/banks. Clearly Apple is looking to own the consumer relationship AND control the valuable behavioral data. However, given the amount of marketing activity driven by banks, especially Wells Fargo, this seems a little one-sided of Apple…giving room for a competitive payment platform that helps consumers AND banks. Banks need to use their power to guide the creation of a payments ecosystem that builds deeper customer relationships.
As we all know, Android OS based Samsung announced the acquisition of LoopPay as their digital payments platform and competitive solution. It would not be surprising if the Android OS based Samsung phones enable banks to access purchasing data to banks and provide the channel to communicate special offers. For a fee, of course. Apple and Samsung need to be reminded of the power banks have in the transaction process. Banks provide the cards! Strangely, BANKS need to be reminded of the power THEY have in influencing the payment ecosystem. The larger banks like Bank of America and Wells Fargo, have enormous power. At the current moment, banks are willing to draft on the success of Apple Pay. Wells Fargo even promotes their Apple Pay features in TV commercials. Cleary banks see value in positioning themselves as “cutting edge.” However, this affiliation is purely brand driven and not consumer value drive. If a bank can be promised greater access to consumer data AND direct access to consumers through the device, banks will drive great consumer value while promoting new technology. Because of the consumer value focus, banks will promote one payments solution over another…and mean it.
I have worn many hats working in the financial technology vertical including business development, product, marketing and partnership development. In fact, I managed the IBM partnership for a PFM technology provider I joined in 2010. IBM played an important role for the PFM technology provider for it opened access to many of the financial institutions that run on the IBM technology to support core, online and mobile banking systems. Specifically, the PFM solution ran on IBM’s Websphere mobile software and on the IBM DB2 data base software. The software compatibility proved to be a strong selling point during business development discussions with banks that ran core legacy banking systems on Big Blue.
I learned fairly quickly that one of the biggest objections from mid-tier and larger banking executives was, “love your technology….but it MUST run on our legacy core and online banking systems.” Fortunately for us, we overcame this objection by playing the “we run on IBM” card to continue conversations. Unfortunately for IBM, these legacy limitations prevent many financial institutions from launching new tools and features that help consumers access their money through a mobile device. As we fintechers all know, these mid-tier and large banks are losing customers to the more sophisticated, innovative and mobile centric financial institutions…like Moven, Simple or GoBank. An April 2013 Forrester study found that nearly 50% of respondents said they would be willing to switch to a bank with a better mobile experience.
The recently announced partnership between Apple and IBM could fix this and will position both companies very well for continued growth in the mobile banking and payments verticals..even with Millennials. I know, this is shocking …but in the words of Kevin Nealon, “now hear me out.”
As part of this partnership, IBM will be launching roughly 100 native mobile apps developed specifically for iOS. These apps are part of the MobileFirst platform IBM launched earlier this year and will adhere to the security, backup and data movement capabilities IBM is known for across the high technology industry. These capabilities are what keep banking IT executives coming back to Big Blue and a few of these iOS apps will strategically address the specific needs of the banking vertical.
The collaboration between IBM and Apple to build these apps will allow legacy systems written in Assembler or COBOL to run on the iPhones and iPads. Penny Crosmen at American Banker states, “Making existing mainframe applications usable on iPads could help banks bring mobility to old technology.” This is HUGE for it helps banks easily engage with customers within the branch, through merchants or at home through a mobile device without having to make heavy investments in new technology or go through the lengthy process of selecting a clunky third party provider. For example, a bank will no longer need to license mobile platform technology from a Kony or mFoundry for their IBM partnership will open up mobile functionality through iOS sitting on top of legacy software. This is cool for the banks…but SCARY for mobile platform providers.
The biggest use cases for the IBM/Apple mobile technology marriage can be seen at the branch and merchant levels. I can easily envision a wealth management representative having an in-branch investment conversation with a client using an iPad. The representative easily accesses a client’s core banking information from the mobile device and displays current balances, checking account activity and recommended investment opportunities right on the tablet. Taking this one step closer to the consumer, I envision the consumer later that evening going back to the banking application and sharing the investment recommendations with his/her spouse. Together the couple reviews the recommended investments, discusses financial goals and asks for further detail from their adviser directly from the iOS application. Tadaaaaaah! The mobile/table user experience is helping the bank build deeper customer relationships through helping consumers manage their money…leveraging a channel the consumer prefers.
The second benefit of this marriage comes at the business banking level. This relationship should make payment providers pause…and maybe even shit. Imagine a small retail merchant opens a business banking account that includes the “rental” of a payments tool like a card reader. The Apple/IBM relationship enables the bank to provide payments tools, card processors, etc. through already widely adopted iOS products. The bank may even function as a third party retailer for the iOS hardware and will save money by phasing out those clunky counter top card processors. Banks will take away a key competitive advantages from payment providers who boast about the ease of use and mobility of collecting payments. Additional benefits for the bank are the ability for business bankers to track small business activity and recommend lower cost banking products, loan savings opportunities based on the specific business activity and transactions. Banks can also FINALLY find the right channel to provide those ever so sought after (and never well executed) locally targeted special offers and discounts to consumers.
For those of you keeping score at home, the consumer will also benefit from the IBM/Apple partnership. The iOS loving consumer will now be part of the same payment ecosystem merchants have with their banks. The iOS system now includes Passbook and it is no far leap to envision this evolving into a wallet that holds bank provided payment cards. This is “duh” obvious. Given that merchants, banks and consumers are all part of the same iOs payment system, consumers can easily continue using their long held VISA and Mastercards on their mobile device. Continued adoption of the same payment ecosystem may provide opportunities for lower processing fees for all involved. Unfortunately, at this point the mobile payment providers are now banking on lower fees as their main value proposition. However, if banks are able to provide an easily adopted mobile wallet with many iOS supported merchants accepting these payments, even lower fees may be a moot point. Consumers will be able to FINALLY use their mobile wallets at the merchants and service providers they have always used.
Wow, way to go Apple. You created a true mobile wallet.
I have attended several Finovate events over the past few years in their exotic 🙂 locals of San Francisco, New York, London and Singapore. As a denizen of the south end of the San Francisco Bay Area, I was surprised and excited to see that the next FinovateSpring event will be hosted in San Jose at the City National Civic.
San Jose is roughly 50 miles south of San Francisco and has long time positioned itself as the capital of the famous (if not infamous) Silicon Valley. San Jose is home to many tech giants including eBay/PayPal and Cisco. Apple, Google, Yahoo and Facebook are located in cities just 20 minutes up the 101 or 85 freeways. San Jose is also home to the San Jose Sharks who are snapping at the heals of the LA Kings in divisional play offs.
Even though the San Jose area is home to many world famous brands, technologies and teams, it is NOT a booming cultural mecca of historical sites, tourist attractions and a bustling night life. In fact, the downtown San Jose area rolls up the sidewalks after work hours and most restaurants close down around 9pm. Unfortunately, any nightlife is limited to the standard “boom-chickaboom” type clubs that blare “Rhythm of the Night” on a speaker turned up to 11. Yes, I’m aware that I’m mashing together several pop culture references here.
So where to go and what to do when we all descend on San Jose for FinovateSpring on April 29 and 30? For starters, I’ve listed below a series of local restaurants that are great to host business dinners at and are within walking distance of the Civic.
Original Joe’s – Does not accept reservations and good for smaller parties.
Il Fornaio – Accepts reservations and hosts larger parties.
The Grill – Accepts reservations and hosts larger parties.
Firehouse – Accepts reservations and hosts larger parties.
There are a few options for after dinner entertainment…but they are limited. The San Jose Sharks will be in Los Angeles unfortunately. However, there may be something happening at the SAP Center worth attending. The nearby Hotel De Anza and the Fairmont Hotel hosts jazz musicians in their lobbies most nights for something more low key. However, avoid the bars and club scene in downtown San Jose. There was a fatal stabbing at a bar just last week…and it even happened on a night early in the week.
As a resident of the south bay area, I recommend visiting the nearby town of Los Gatos. Los Gatos is a small town tucked to the side (map) of the Sillicon Valley and is a 15 min drive or cab ride South/West of San Jose. There are several great restaurants in the downtown area and many interesting bars for after dinner drinks and strategy sessions. “Rhythm of the Night” is seldom heard.
I’ve listed my favorites based on personal experience. I recommend making reservations at all restaurants for each is well known in the area.
Cabs can be hard to find in the area so ask the restaurant/bar host to call one for your party. Keep in mind that Los Gatos is also a great town to just walk around in too. If you are into exotic cars, the Los Gatos Luxury Cars dealership has a store on Main St where one can drool over Aston Martins, Bentleys and Lamborghinis. There are also several gift shops and clothes boutiques to purchase a peace offering for the home front. There is an Apple store too in case you forgot your iPhone charger at home.
I hope you enjoy FinovateSpring and have a chance to explore the Silicon Valley.
Last week Moven announced an expanded strategic partnership with MoneyDesktop. The two companies have been dancing together for a while. However, this recent move changes their dance from a waltz to a passionate tango. To refresh memories, Moven is a disruptive and leading innovator in the mobile banking space. MoneyDesktop is a cutting edge developer of personal finance management (PFM) tools and eye-popping UI. Together, Moven and MoneyDesktop bring unique and compatible assets that when combined will ignite the FinTech “dance floor.” Vavoom.
The recently announcedpartnership is focused less on providing a dazzling user interface and more on a back-end feature that will make the Moven value proposition even more relevant for consumers. Moven will use MoneyDesktop to aggregate financial information from external accounts. Conversely, MoneyDesktop will gain access to a growing consumer audience who is willing to leave their current bank for a financial institution that provides a better mobile banking experience.
MoneyDesktop continues to win awards at several FinTech conferences for their innovative solutions and clean functional user interface design. The primary buyer groups of their technology are online banking executives at mid and small tiered financial institutions. MoneyDesktop is boasting that over 400 financial institutions and 29 online banking, core and payment network providers use their technology. However, each of their clients is an “old school” FI striving to update their online and mobile banking experience to avoid losing customers. A relationship with Moven enables them to partner with an innovator who is proactive in acquiring new customers by building a strong mobile banking experience from the ground up. MoneyDesktop is well positioned to benefit from the mobile banking revolution.
Moven also continues to win awards and provide groundbreaking mobile banking technology and services. Moven’s solution is driven from the mobile device and offers features of major banks….without the fees. However, like the other mobile bank innovators, like GoBank, they face the hurdle of acquiring enough users to scale their business. Let’s face it, all of us have accounts with the major banks. Telling a customer to drop any current banking relationships they have to join a mobile driven bank is a tough sell. Moven’s partnership with MoneyDekstop helps address this hurdle.
MoneyDesktop’s aggregation technology is as much a product feature improvement as a customer acquisition tool for Moven. Consumers can now join Moven and use the solution to track their banking activity with all financial institutions. Moven becomes the financial hub. Well-planned cross-sell marketing from Moven will inform users of other great features and tools. Eventually, the consumer will start to fall in love with the Moven solution and will depend on it more as a primary banking tool. Well, at least that is the goal.
The key for this strategic partnership will be how well both parties can execute and take advantage of the open opportunities to deliver customer value. If they do it right, their tango will catch the attention of the millions of unsatisfied big bank customers. I hope Moven and MoneyDesktop have a big dance floor.
T-mobile just announced that they plan to provide mobile banking services to their customer base. These services include a pre-paid debit card, a mobile banking app, and a basic checking account.
Clearly T-mobile is continuing to offer value to their customer base that has signed up for a phone using a pre-paid contract…. and it’s working. T-mobile is quickly winning customers in the coveted 18 – 35 target market…the segment that is most likely to engage with mobile banking.
T-mobile is partnering with The Bancorp Bank to provide this customer value. Sprint was the first carrier to partner with Boost Mobile to provide similar banking features to its customers. These strategic partnerships provide a great deal of value to both partners in the mobile and banking verticals. Many T-mobile and Sprint customers have pre-paid contracts so it’s not a far leap to understand this segment would also see value in a pre-paid debit card and low fee banking products. The banks providing these services gain access to a mobile savvy customer base that is not being well served by the Top 100 banks.
These strategic partnerships should raise the neck hairs of executives at the remaining mobile carriers and at the Top 100 banks. Yes, Verizon and AT&T are big guerillas. However, similar to bank sentiment, mobile carrier sentiment is low too. Consumers are tired of paying high fees for mobile service. However, by providing additional value to a high life time value audience, these carriers can attract customers away from the larger carriers…even if it’s a slow and steady rate. Remember the tale of the tortoise and the hare? AT&T and Verizon should consider opportunities that may be available with yet “un-wed” mobile banking providers like GoBank, Moven or Simple. I’m wonder if the pay as you go mobile provider, Ting, is talking with any of these similarly minded banking providers? There could be an interesting partnership there.
From the banking perspective, executives are aware that it’s all about mobile. Contrary to recent articles touting that top banks are aware of the importance of mobile, it’s well understood that most banking technology innovation will occur OUTSIDE of the banking industry. I’ve heard this big bank mobile focus described as a mobile arms race. However, I think banks may need to buy their “arms” from outside the banking industry providers, to continue the metaphor.
Over time, maybe within just 5 years, a young and frustrated segment of customers will be evaluating and switching to banking providers who meet their needs in the most cost effective way through a channel that is most convenient. It’s no secret that this channel is mobile.
Banking executives must quickly evaluate how they can meet the needs of customers beyond banking and providing special offers that can be found already in a Penny Saver. Because of the negative sentiment towards banks, financial institutions may consider being an unbranded, silent partner where they provide the banking back end and rely on a partner to provide the branded consumer facing front end. However, could a big financial institution that is used to being the “alpha male” in a relationship be open to playing a more balanced role with an innovative partner? Over time, the bank’s future as a leading financial institution may depend on this as the coveted 18-30 population ages and mobile banking becomes more ubiquitous. *
* The use of the word “ubiquitous” is brought to you by Starbucks, a brand with retail locations everywhere. 🙂
My family and I received several checks from family members as gifts and as payback for gifts purchased. My wife typically handles the day-to-day checking account and generally handles making deposits at the nearest Wells Fargo ATM. I suggested that she try using the mobile deposit feature on the Wells Fargo mobile application. Being the wife of someone who works in FinTech, she agreed to try out the feature….despite all the negative feedback about the application. Unfortunately, she successfully validated the negative comments splattered across iTunes.
The biggest disappointment came through the application crashing after each attempt to deposit a check using the mobile deposit feature. What I found most interesting were my wife’s comments after the 3rd attempt. “Well, Wells Fargo, I guess you REALLY don’t want me to use this feature,” was the first comment. The second comment was “What happened to the pics of the checks I took before the app crashed? Are they stuck in the app or are they with Wells? Can someone steal the money?”
Three interesting thoughts came to mind as I digested her valid complains. One, when it comes to getting customers to try new features that involve their money, banks better be sure the feature works for the customer the first time. Yes, app crashes can happen for many reasons. Unfortunately, several reviews reflected the same frustration and experience my wife had…which implies that improvements need to be made to the application. From my wife’s point of view, Wells Fargo implicitly told her mobile deposit is not ready for prime time and to keep using the ATM. Wells needs to track that these customers are and target them with a “mea culpa” CRM program to win back their trust with new technology. After all, according to a recent study, 49% of consumers will change banks for a better mobile experience.
Secondly, I think my wife’s concerns about where the check pictures have gone after the application crashes point to an engrained reaction that stems from frequent e-commerce transactions. I think similar “where’s my money now?” concerns come up when a consumer enters in a credit card number online, presses submit and the site crashes. “Did my credit card go through? Do I need to re-enter my credit card? If I do, will I get double charged? Is my card number safe?” All are common questions following an e-commerce site crash. I think it’s only natural for my wife to ask similar questions after a mobile banking application fails. In-application messaging must be delivered immediately to consumers to quell their anxiety when things don’t go as planned.
Lastly, the low application star rating and poor review indicate that mobile is NOT a big priority for Wells Fargo. In an effort to win customers, I would imagine that the mobile team would quickly iterate and redeploy an application as quickly as possible. Unfortunately, Wells Fargo is not the only major bank that appears less focused on winning customers through mobile. Chase and Bank of America have similarly low rated mobile applications. If these major banks do not step up their focus on mobile, the door will remain WIDE OPEN for innovative mobile banks like GoBank and Simple to entice customers through compelling mobile banking experiences.