Tag Archives: mobile banking

Banks think Apple Pay is so money..and Apple totally knows it

WellsFargoApplePayI was glued to my computer on September 9th to watch the live stream of Apple’s BIG announcements. As a fin tech guy, I was particularly interested in what Apple would announce around mobile payments and their creation of a true mobile wallet. I had my fingers crossed that the stream would not freeze during that part!  They did not disappoint with the launch of Apple Pay and the announcement of the several major banks and retailers that are participating in the network. Apple did it right…again. These bank and retailer partnerships are key to quickly driving adoption. Consumers do not need to change how they pay for things, download any apps or struggle to find retailers who accept a certain form of payment. The only “hurdle” to participate in this payments network is for consumers to buy the iPhone 6.

The major banks started aggressively promoting their participation with Apple Pay the day after the big announcement. As a matter of fact, I received an email from Wells Fargo the following morning informing me of the many features and benefits of Apple Pay. I also noticed similar messaging on Wells Fargo’s ATMs that day as well. Wow, major banks see Apple Pay as a benefit for the current customer audience. It will be interesting to see if Wells Fargo, and the other major banks, lead with Apple Pay messaging as part of a customer acquisition or switch marketing program.

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The aggressive promotion by banks and retailers also helps Apple too. Keep in mind that while the iPhone 6 was available on Friday, Sept 19 with HUGE lines outside Apple stores, 75% of all handset users worldwide run the Android operating system. Hmmm….will the creation of a secure mobile wallet be enough to cause Android toting bank customers worldwide to switch to an iPhone? Or will Android users be patient to see what payment platform Samsung and Loopts come up with in the months to come? The intensity and reach of the awareness messaging just might cause some Android users to shift…assuming the iPhone 6 and Apple Pay are AMAZING. Time will tell.  The race to create the leading mobile wallet is ON.  It is so on.

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On a side note, it is truly amazing that Apple has such strong brand power that powerful, multi-billion dollar market cap financial institutions have taken notice and forged partnerships. Yes, Apple is THE LEADING worldwide brand.  These partnerships also echo a common theme within the financial technology industry; technology innovation will happen outside the financial institution. So true. Apple, you are so money.*

* I’ve sprinkled many “Easter Eggs” through out my posts to make reading more fun. These eggs include cultural references from the ‘80s, ‘90s and present day. If you get the reference, send me a tweet (@ericdunstan) with the answer.

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Now hear me out,the Apple/IBM partnership is BIG for mobile payments

Apple IBM PartnershipI 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.

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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.


eBay cyber attack highlights value of card on/off tools

eBayEbay is yet another giant consumer brand that has fallen victim to a cyber attack. Like many of us, I raced to change my password when I heard the news break early Wednesday morning. Of course the news media and many eBay users assumed the worst had happened and that personal and financial information had been breached. Fortunately, the attack was limited to a corporate network and only a small amount of employee login credentials were breached. EBay’s PayPal business unit did not show evidence of user personal or financial information being exposed. Few.

Given the frequency of these high profile breaches, it seems like only a matter of time before hackers are able to break into the networks of the most trusted consumer brands and financial institutions. Target experienced a massive breach late last year that many consumers are still dealing with today.   High-end retailer Neiman Marcus experienced a breach as well. Larry Ponemon, chairman and founder of the Ponemon Institute, which specializes in data-security issues, said “It shows that even the best of Internet sites are vulnerable to cyber attacks … you can’t stop this tidal wave.”

Yikes! What are consumers to do?! Even the perceived most secure websites, businesses and financial institutions are vulnerable to cyber attack. I think the best form of protection is to empower consumers to control when, how and where their credit or debit card data is used. If consumers can limit the use of, “turn off” or block the use of a card, they are empowered to protect themselves from any resulting damages from these cyber attacks.

Ondot Systems provides one of the most compelling solutions to help consumers take control of their payment cards.  The Ondot solution lets consumers…

  • Turn a credit card on or off
  • Limit the use of a card to a specific retailer or spend category
  • Limit card use to an area near them or to a specific geographic region

Ondot SolutionsThe eBay cyber attack highlights the consumer value of Ondot solution    Imagine that you were a victim of a data breach and that your credit card information may have been sold on the black market. Sadly, this is the case for millions of US consumers. The Ondot solution empowers you to prevent any fraudulent transactions should a fraudster purchase your data and attempt to buy things on or offline. For example, upon hearing about the breach you could easily turn off the card immediately giving you extra time to determine if it’s necessary to cancel the card. Or, if you limit card use by geo proximity to you, use of the card will be denied to any cyber criminal across the world attempting to purchase items. You are empowered to protect yourself from fraudulent payments BEFORE they even happen. That’s cool.

Ondot Systems does not provide a direct to consumer solution. They are actively pursuing relationships with the major payment processors and financial institutions to white label the technology. I’m wondering though if this technology is relevant enough that consumers could actually ask their bank card providers for it….or be willing to switch to a card provider who has this technology deployed already. The Ondot solution could prove to be a strong differentiator that may attract many new customers to a bank’s credit card offering.   With the increase in data breaches, I’m hoping my bank will provide this functionality soon. If not, I am open to learning more about who does offer this technology.

Ondot has the wind at its back now. However, this technology is not new and competitors have built similar solutions. From what I understand from my patent attorney friends, this technology is not particularly defensible for there are many ways to skin that technology cat.  Meow.  Ondot must build strategic partnerships with the largest payment processors first to grow market share…and do it quickly.  These processors will pave the way to deploying to small and mid tier banks.  Ondot’s big hurdle will be in how easily the solution is deployed at the bank.  As we know, these smaller banks get heartburn if a solution integration requires a big internal commitment.  However, it appears they have addressed this hurdle with seamless integration into the universally accepted payment standard and with deployment support. Once deployed, Ondot’s next challenge will be in how well they engage these banks in co-marketing the solution to the consumer.  Many mid and lower tier banks run lean on marketing so the key here will be how to take advantage of current marketing channels to drive adoption.  However, I have a feeling consumer word of mouth may be the most effective channel.

Ondot is a formidable competitor and is well positioned to be the market leader.  Now it’s about how well they execute.


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.


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