Tag Archives: eric dunstan

How can a remote control for credit cards create value for consumers and banks?

Last week I attended FinovateSpring in San Jose. I was excited to see the latest innovations around mobile payment technology from companies including Loop, Quisk, WePay and Red Giant. However, I was most intrigued by what Ondot presented and the value the technology provides to consumers and to financial institutions. Their technology was so well received last week that Ondot won a Best of Show award.

Screen Shot 2014-05-09 at 10.48.15 AMYes, there has been a lot of activity within the digital wallet space to improve card security or reduce the number of cards one needs to carry. Coin, for example, enables users to consolidate all their credit and debit cards on to one “smart” credit card. Think Swiss Army Knife…but just for your cards. The user selects which card to use by activating it on the Coin device…with the other cards remaining turned off. FinovateSpring presenter, Red Giant hopes to replace all the cards in consumer’s wallet with a “smart” card that can be turned on to make purchases…to then be turned off when not in use or if it’s not in the close proximity of the userI think what Ondot presented takes the card management and security technology features and benefits one step further in meeting the needs of the consumer AND the financial institutions. Ondot launched its Mobile Card Services…or putting it simply, it launched a technology that enables a user to remotely turn on or off a payment card from a mobile device.   There is no need to carry around another device or card. Ondot is controlled by the one item weall carry with us….our phones. The implications of this technology are HUGE for consumers and for banks.

Consumers now have the opportunity to control when, where and how a debit or credit card is used. Thinking this through a bit, this technology in effect helps prevent fraud or spending abuse before it even has a chance to happen. It puts the cardholder in total control of all cards in the purse or wallet! That is GREAT!!!!!

For example, let’s say your wallet or purse (or Coin device!) falls out of your hands and all your credit cards are now in control of a nefarious individual. The Ondot solution can be used to sense that your card is no where near you and turns off the cards before the potential criminal is able to run to Best Buy and buy a TV. Or, let’s say you give a credit card to a son or daughter attending college and you want to limit the type of spending to just books and school supplies…and not to spending at bars and restaurants. If your child tries to charge a $100 round of drinks on Friday night the card will be denied for payment. Sigh…hopefully your child is good at washing glasses to pay the bar tab!

Ondot benefits for banks are equally as exciting. For example, offering this remote control feature will be a big point of differentiation for card issuing banks. I can’t think of any bank within the SF Bay Area that provides this feature….without having to actually cancel the card. Secondly, the technology helps consumers reduce exposure to fraud…which in turn helps banks and card issuers reduce charge backs. Lastly, if integrated correctly on the bank’s website or mobile app, the solution creates another touch point with consumers who regularly manage and check their cards. There will be A LOT of opportunities for the card issuing bank to learn about spending patterns and to cross sell these users to other banking products. This feature could get customers to return daily to the branded mobile app to manage their credit cards.

The big challenge for Ondot will be how easily will these features be integrated within a financial institution’s current online and mobile banking platforms. Ondot will no doubt be exploring strategic partnerships with the platform providers to help springboard distribution and adoption. The Ondot product team will also be looking into how the solution can be integrated through APIs…which will be a key requirement for the mid and lower tier financial institutions.

Ondot will be one to watch!


FinTech fun had by all at FinovateSpring

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I had a great time last week at FinovateSpring live blogging for Money Summit.   There were so many great technology demos presented and a lot of great networking was had by all. This was my fifth Finovate event and it was great to see many familiar denizens of FinTech and to meet many new innovators. According to the Finovate team, this event was the most attended ever with over 1,200 people fitting into the City Nation Civic in San Jose.  Hopefully my co-blogger, Brad Leimer and I were able to provide insightful comments and perspective to what was presented during those two days. Please feel free to Tweet questions to Brad (@leimer) or to me (@ericdunstan) and we will do our best to respond as quickly as possible.

Congratulations to the FinovateSpring Best of Show winners

  • EyeVerify
  • Loop
  • Interactions
  • Motif Investing
  • Ondot
  • PrivatBank
  • SaveUp

Personally, I was most excited by what was presented in the mobile payments, virtual CRM, and digital banking technology verticals. Look for future posts for my perspective on presenting companies in each vertical.FinovatePic

As far as the Best of Show winners go, I was very impressed by what EyeVerify, Loop, Ondot and PrivatBank presented.

I will continue to contribute to the Money Summit blog. I will post links to content I produce. Or, better yet, add Money Summit to your “FinTech” news feed on Feedly or Flipboard.

I hope everyone had a safe and easy trip home and is having a productive week.


It’s time to get things started at the Finovate show!

I have a strong background in theater arts that has always influenced how I deliver presentations or evaluate events that I attend. Some presentations and events have flash and sizzle (think CES)…while others are snooze festivals sponsored by Sleep Train. I can’t help think how a CEO’s presentation could be more impactful if someone played the “I am Mighty Mouse and I here to save the day!” theme before he or she walked on stage to deliver the new turn around strategy. He he.

Mostly these musings are simple forms of cerebral entertainment to keep me awake during long meetings. Face it, we all dread going to long presentations that we tune out after the first hour as we regularly login to check email on our laptops. It’s a delicate balance between getting the message across and creating a level of entertainment that engages the audience to receive the message.

The show gets started tomorrow for FinovateSpring in San Jose. Finovate is one of (if not THE) leading FinTech innovation shows in North America and Europe. Like many show attendees, I’ve been to several Finovate shows and love the excitement and energy the format creates and seeing innovators get up there and sell sell sell their innovation. Obviously there is a great deal of networking that goes on their too as innovators seek the right strategic partner to grow the business, technology and customer audience.

I wonder what would happen if the Finovate team started the next event in a slightly different manner. Instead of the standard welcoming remarks and sponsor thank yous, could Finovate be opened with a musical number to energize the crowd and alleviate the tension of the presenters?

I always enjoyed the opening song (or “number”) of The Muppet Show that introduced their host and kicked off a series of great skits. Could a similar song and musical number be done for Finovate? Would Statler and Waldorf like it? Would the audience boo and hisssss?  I think it’s worth a shot.  Afterall, we are together for two days and have a lot of ground to cover!  Let’s have some fun!

The Finovate Show Theme Song

(Drum Roll)

It’s the FinovateSpring Show with our Very Special Host, Eric Mattson

It’s time to play the music

It’s time to light the lights

It’s time to meet the FinTech Innovators on the Finovate Show tonight.

It’s time to put on makeup

It’s time to dress up right

It’s time to raise the curtain on the Finovate Show tonight.

Why do we always come here?

I guess we’ll never know

It’s like a kind of torture

To have to watch the show

And now let’s get things started

Why don’t you get things started?

It’s time to get things started

On the most sensational innovational inspirational Finovational

This is what we call the Finovate Show!

I am very excited to attend the event tomorrow as a guest blogger for the newly launched Money SScreen Shot 2014-04-28 at 1.55.33 PMummit blog produced by MoneyDesktop. I will be providing commentary with fellow Fintechy, Bradley Leimer throughout the two day event. In keeping with the Muppets theme, Brad and I will be a MUCH kinder and more professional version of Statler and Waldorf of sorts.  We are looking forward to a great event!


Avoiding the boom-chickaboom clubs at Finovate in San Jose

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.

Screen Shot 2014-04-18 at 11.59.10 AMSan 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.

Screen Shot 2014-04-18 at 12.00.19 PMAs 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.

Restaurants

Nick’s

Cin Cin

The Lexington House

Bars

Carry Nations

C.B. Hannegan’s

The Black Watch

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.


Mobile payments innovators must eat more fast food

Like a good citizen of the FinTech community, I downloaded the major payments apps to my iPhone including PayPal, Square and Dwolla. I also searched for opportunities to add loyalty cards to my phone’s Passbook. I deposited a small amount in each payments app and added my Starbucks card to Passbook eager to make a payment with my mobile device. Unfortunately, each of these payments apps and features remain unopened after a year from downloading. I have not been successful in finding stores in my local area that accept payments from Square or PayPal or have a loyalty card compatible with Passbook, aside from Starbucks.   To make matters worse, I typically just open up the Starbucks app directly and avoid Passbook all together!  Clearly the mobile payments or wallet value chain is broken and innovators are struggling with defining how customers and businesses want to use the mobile device to drive their purchases.

Screen Shot 2014-03-31 at 3.45.39 PMThose of us who follow FinTech closely are well aware of the struggle for defining the mobile wallet correctly. “Wallet” is a loose term these days.  Most people believe payment apps are wallets even though a wallet typically includes feature or cards beyond just payment tools.  If this wallet perception is true, then why are apps like Square and PayPal NOT the driver of mobile wallet ubiquity? I think getting closer to the correct definition of the mobile wallet requires us to pay close attention to what’s happening at retail…specifically at the fast food franchise level.

National fast food chains such as Burger King and Wendy’s are launching mobile apps that enable customers to order and pay for food using a credit card.  These apps are retailer specific mobile wallets that will enable the brands to build deep customer relationships by understanding buying patterns to then reward customers with specials offers and discounts. Frankly, I’m a little surprised it has taken the fast food guys so long to build and launch these apps. Starbucks has been doing this for over two years. Over the past few years Starbucks has clearly won my loyalty as they guide my purchasing through bonus star offerings. There are significant implications for mobile payments innovators if the Burger King and Wendy’s apps are widely adopted and are successful in generating more revenue and creating deeper customer relationships.

First of all, consumers are saying they want brand specific apps that enable them to pay and reward their loyalty. Think the Starbucks app.  These mobile applications are essentially loyalty cards.Screen Shot 2014-03-31 at 3.44.39 PM Secondly, consumers are also saying they are willing to pay with their credit card through the application…and don’t need a new payment platform. For example, the Burger King and Wendy’s applications require the consumer to enter in credit card information upon sign up to make purchases. The consumer makes purchases on the same Visa, Mastercard or AMEX platform used to make all their online and offline payments. These mobile payments will also be covered by the policies defined by each credit card to protect against fraud. Given the entrenched credit card payments system and fraud protections, there is really no consumer need to sign up and manage another payment platform.

Brands and retailers will be monitoring closely the success of these fast food applications. If these applications continue to be effective payment empowered loyalty cards, what role does the mobile device play?  Similar to a real wallet, the mobile device is the holder of the many branded loyalty and payments apps.  Does this put the mobile devise in a unique position should these retail brand specific apps be successful?  Yes, for the mobile device IS now the mobile wallet.  No one should have a heart attack and die from digesting this concept.  It’s nothing new and is a recurring theme a several mobile payments conferences.  Daniel Mattes, the CEO and founder of Jumio, articulated his vision for the mobile device as a wallet at Money2020.

However, there has been such focus around the mobile wallet being an individual application that many people think of Square and a few others as being wallet innovators.  This is starting to change as people digest what Apple may be doing in the payments space.  Thinking this through, Steve Jobs may have had a similar vision. Passbook is a feature to store tickets and loyalty cards. It’s not a stretch to envision storing encrypted credit card information and ID on the device. I think it’s safe to assume that Apple will not be entering just the payments business….but will most likely be defining and enabling the iPhone to be a true digital wallet. Expect Samsung to follow a similar strategic path.

The big question will be how long it will take for the mobile payments vertical to evolve to this point. A lot of money has been invested in Square, Flint and PayPal to invent another platform. However, Visa and Mastercard will be active and well funded suppliers in the mobile payments war. It will be a matter of time until the right mobile device features emerge that enable the major credit cards to easily plug themselves in to mobile transactions. Once the right device feature emerges, the mobile payments vertical will be locked up quickly.  Unfortunately, this means many payments apps will become part of those “hey, do you remember….” so common at cocktail parties.


Why the Moven MoneyDesktop partnership is now a hot tango

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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.

MoneyDesktopMoneyDesktop 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.


Banks, make account opening easy from a mobile device and win customers

SimpleFinancial technology bloggers have written a lot recently about the implications of BBVA’s acquisition of Simple and Facebook’s acquistion of WhatsApp.  I know, what does the WhatsApp acquisition have to do with FinTech?  Industry pundit, Jim Marous, points out that the WhatsApp acquisition points to an ENORMOUS industry trend that sends a huge warning signal to all financial institutions.   That trend, and this should be no surprise, is the significant shift for consumers from the desktop to the mobile device in not only social media, but in banking too.  The warning signal? Consumers want to engage with their bank through the mobile device as the primary channel of engagement.  Banks need to get their mobile house in order or customers are headed out the door, through the windows and maybe even through the ATM.  The most salient mobile app feature that banks must get right to address this trend is account creation.  Banks who make account creation easy from the mobile device will turn the tide …and will attract more customers away from banks who do not embarce mobile.

Marous sites, “While Facebook was built for the desktop and migrated to mobile, WhatsApp was built for mobile first, giving the network an advantage in today’s marketplace.”  Similar to Facebook, a bank’s consumer products and user experience has been desktop based and is gaining momentum to migrate to mobile devices.  I am a Wells Fargo user and have downloaded the mobile app that offers a snapshot into my bank account online.  Aside from remote deposit capture, the application offers very little additional value that leverages the power of my mobile device.  As I’ve mentioned in previous blog posts, there are many FinTech innovators who are creating banks and banking technology that put mobile first.  GoBank, Moven and Simple are prime examples.

The most significant opportunity to drive mobile banking adoption is to fully leverage the camera feature on a  smartphone.  Yes, most banks do utilize the camera by enabling mobile deposit capture and photo bill pay.  However, the camera needs to be enabled for a much more significant  functionality: The ability to capture the PII needed to open a bank account without asking the consumer to key it in using a device key pad.   Without this feature, the mobile channel will always be secondary to the online banking channel where consumers create and manage banking relationships.

Jumio Netswipe

Financial technology innovators Jumio and Mitek  are making great strides in leveraging the device camera to capture customer data. Jumio recently launched at FinovateEurope a technology that uses the device camera to scan an ID and extract the needed PII to open up a banking account. The technology then “deposits” this needed data into a bank account registration form.  Wow.  Cool. The technology addresses the significant consumer pain point of using a tiny device keyboard to open up an account ….which is a process filled with typos, frustration, and high abandon rates.   The Jumio platform makes opening a bank account fast and easy.

 

The mobile camera ID scanning technology sounds great…however, from the consumer perspective I can identify several potential hurdles or concerns that have to be addressed.  Where does the picture of the scanned ID go?  Is the image in my device photo stream?  If I lost my phone, could the thief see this data? If the ID image lives in a cloud, who’s cloud is it?  What happens if the cloud provider is breached?  There are so many questions here that need to be addressed!  One thing is for sure, innovators need to have the data security technology locked down and messaging at the ready to educate customers on why this ID verification technology is safe.  After all, consumers don’t readily distribute copies of their ID to just anyone offline…and it’s no different in the online world.


Finally! Innovation attacks the mortgage lending process with GoRefi!

We recently refinanced our house to take advantage of a rate one point lower than our current mortgage.  Wow, that’s a big chunk of money each month. However, the process to realize that savings was PAINFUL!  We worked through a broker, Finet Mortgage, who we’ve used for several transactions.  The team at Finet does a great job finding the best rate and is very helpful in managing the laborious document submission process.  Unfortunately, despite Finet’s best efforts, the refinance process is still not pleasant due to the lender’s processes, document requirements and lack of communication… that results in frequent rush requests to find certain pieces of paper.  All the back and forth frequently results in a longer time to close…and frequently in increased fees to get the work done.

There is so much room for improvement here.  EVERYONE has similar painful experiences.  There has got to be a better way!

GoRefiThere IS a better way and the innovation is coming from GoRefi.  I spent some time with their leadership and learned more about their product and value proposition.  Banks, be ware, GoRefi is well positioned to turn the mortgage lending process on its head…and can pass savings off to consumers at a lower interest rate.

GoRefi takes the friction out of the mortgage lending process by focusing on the major frustration points my wife and I complain about: poor lender communication, long times to close and elimination of exorbitant fees. GoRefi positions itself to:

  • Provide an interest rate .25% lower than most banks
  • Provide a 30% savings on closing costs
  • Close the transaction in 14 days…instead of the industry 60

Wow, this sounds great.  So, why did we use our broker and NOT GoRefi?

My wife and I have managed between us over 10 real estate transactions and I have to admit I’m a little hesitant to use GoRefi.  I’m sure many others experienced and inexperienced people may be hesitant as well.  I think the hesitancy can be appeased if GoRefi:

  • Articulates their legitimacy as a lender. I’d like to know if GoRefi is the loan originator…or if they also shop around to other lenders for the best rate. If they do make the loan, where does the money come from?  Where do their rate quotes come from?
  • Communicates their stability as a company.  Most people don’t care who originates the loan.  However, I personally find it frustrating when our loan is resold…and resold…and resold.  This is concerning for it means we need to revise our bank’s bill pay tool to submit payment.
  • Defines how they treat and protect all the data submitted.  At this point GoRefi does not clearly define what precautions they take to protect our identities and PII.  How do we know GoRefi is not a lead gen site that resells the information provided to legitimate and not-so-legitimate companies?  Yes, GoRefi does provide this information on a Security and Privacy page…but the links are in the breadcrumbs at the bottom of the home page.  This information needs to be FRONT AND CENTER.

Having met these guys it is clear they will have responses and processes in place to address each of my reasons for hesitancy.  However, consumers will not ASSUME this and need to be directly informed….or “spoon fed” this information.

Now assuming these concerns are addressed and a consumer does apply for a loan refinance, GoRefi must treat any customer like the Queen of England. GoRefi closes their refinance process definition with a bold statement:

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I think this is where GoRefi will win (and win BIG) customers or will crash.  As soon as the customer starts submitting the required documents, a GoRefi rep must become the customer’s best friend.  The rep must be available to answer any questions and must keep the customer informed of where they are in the process…at all times.  GoRefi must over communicate.  If not, consumer trust in GoRefi will quickly erode and lender will seem like all the others.

The big question that pops into my mind is can GoRefi afford the headcount needed to bring on these high touch reps? These reps are important hires and they each need to deliver an exemplary customer experience.  After all, GoRefi is striving to transform the lending process with consumers…and I think they are well positioned to do so.


Can Apple Benefit from a Strategic Partnership with PayPal?

The fact that Tim Cook hinted that Apple might be getting into payments is no surprise.  It’s more of a “duh.” Apple has the user accounts, consumer credit cards on file, and millions of iPads and iPhones in market.  The launch of Touch ID and the iBeacon sensor only connect the dots even further.

Apple’s Passbook paves the way for expanding the wallet beyond loyalty cards and into the ability to make online and offline payments. The launch of the Touch ID addresses security concerns and helps prevent unauthorized payments should the phone, or “wallet”, be lost.

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In the online world, it’s not a far stretch to imagine a consumer using their Apple ID to authorize a charge to their credit card for a purchase made on an e-commerce site.  However, competitive pressures from Visa, MasterCard, and PayPal may make convincing e-commerce sites to accept Apple payments that much harder.  One recent article points to Apple making payments as part of the iOS developer kit…which would easily provide code needed for a developer to add a payment feature to their mobile commerce app.

However, the opportunity for Apple gets more challenging in the offline retail world.  Yes, iBeacon creates a network to enable mobile payments through detecting and authenticating a mobile device.  Cool. However, Apple faces the challenge of convincing merchants to adopt the payment processing hardware, dongles, etc.  Google, Stripe, Square, and Dwolla also face this problem, among others. Even with its big brand recognition and marketing strength, Google was not able to grow offline retail adoption of its wallet.

So what are the opportunities for Apple moving forward?  Apple could build its payments business through acquisitions, or strategic partnerships.  Square has been a leading innovator in the payments space, is building merchant adoption and has a strong focus on UI/design given their recent hardware release.  While a Square acquisition may be expensive, Apple would quickly acquire payments processing technology, a growing user base of merchants and a design focused group of developers.  Bloggers have also identified Stripe as a potential, less expensive acquisition.

I think Apple can benefit the most, however, from a strategic partnership with PayPal.  Recently a LOT has been written about PayPal feeling the heat from Apple and pitching to help build out their payment network.  Some people see this as a signal PayPal is feeling threatened.  Yes, the competitive threat is there.  However, PayPal has many elements that Apple needs to be a leader in this category.  I think together, PayPal and Apple can create a break through wallet that defines the mobile wallet.

First of all, PayPal has addressed many of the cross-boarder (currency) trade challenges that Apple will eventually face.  Remember, Apple products are ubiquitous and they face hurdles in every new market they enter. We all know that Apple will not want to limit payments to the US market.

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Secondly, PayPal has a merchant program in place and is regularly improving the product feature set. This in market learning will only improve PayPal’s ability to deliver a solution merchants actually want and can easily adopt.  PayPal is also co-marketing with merchants to drive consumer adoption.

Lastly, PayPal is seen as the “most trusted” mobile wallet brand as defined by a 2013 Javelin study. Why is this important?  In light of the recent data breaches, mobile security will be a big factor for not only consumers, but for merchants.  Yes, Apple’s fingerprint ID is fantastic to access the device and authorize transactions.  However, there is a lot happening in the payment processing back-end that PayPal has focused on securing for almost 20 years. A partnership with PayPal will enable Apple to address this hurdle and avoid a dreaded data breach.  Should the unthinkable actually happen, culpability would most likely NOT fall squarely on the shoulders of the world’s number one brand.


Banks, are you paying attention to what T-mobile just announced?

 

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.

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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. 🙂


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