I 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.
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.
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.
I have to admit that I was GLUED to my computer screen this morning during the Apple announcement. It still blows my mind that technology and bandwidth can’t deliver a smooth online feed to a live event. What was up with the live translation feeds being clearly audible to online viewers? ANNOYING! Fortunately the live stream technical team saw the multiple tweets and fixed the problem. Unfortunately my viewing experience was very choppy and I got word of the announcement in real time more from Twitter.
As predicted, Apple entered BIG into payments with Apple Pay and into wearables too with Apple Watch too. Apple’s recent announcements around partnerships with Visa, Amex, MasterCard etc were clear leading indicators of the entry into payments. I am very excited about Apple’s payment system and how it will help drive mass consumer adoption of a true mobile wallet. Yean! However, we are a ways away from Apple driving mass adoption of their wallet.
Apple Pay will be available on the iPhone 6 and Apple Watch devices for it requires technology included only in this hardware. Yes, the iPhone 6 and Apple Watch will set sales records and proliferation will be fast across the globe. However, Apple Pay will not be available on legacy devices that will slow down the adoption rate. Additionally, Apple Pay will be limited to major retailers including Whole Foods, Macy’s and Toys R Us. Yes, over 200,000 stores will be accepting contactless payments through Apple Pay. I’m sure Apple is busy negotiating partnerships with several other major retailers as well and the footprint will grow even more.
Apple Pay will not be available to stores outside of this Apple negotiated big box retailer network. Consumers will not be able to truly leave their wallet at home. Apple’s partnership with IBM, though, will help Apple Pay expand its footprint to more business….but it will take time. As I mentioned in a previous post, the IBM partnership provides Apple access to many banks and financial institutions. These FIs have business banking customers and frequently provide merchants with POS payment systems. Now that the iPhone 6 includes the NFC chip, Apple will be hot to engage IBM on pushing the distribution of NFC enabled payment terminals to their banking customers. Only until NFC enabled payment terminals are more widely distributed will Apple gain ownership of the mobile wallet.
Clearly Apple has the hardware, technology and strategic partnerships to create the closed loop necessary to build a ubiquitous payment system. It’s a matter of time before this happens. However, NFC technology and devices are not Apple technology and can be easily licensed by competitors. Yes, Apple has leap fogged into the lead on building a mobile wallet, but the competition did see this coming. Apple must continue adding nationwide retailers to their network to enable consumers to use Apple Pay. The first mover advantage will be key and the network affects will take hold. If a competitor is to provide another offering for consumers and merchants, they better act FAST. Samsung and Loopt I’m sure are having lunch right now.
On a side note, I am amazed by the level of talent Apple employs for their advertising and marketing efforts; JT, Jimmie Fallon and U2. A list talent meets A + list company. I’m sure Apple pays a large portion of the marketing budget for these names. Or maybe it’s vice versa! Let this be a reminder of the high margins Apple receives on every product they sell. Impressive.
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.
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.
Those 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. 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.
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.
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!
There 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:
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.
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.
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.
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.
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. 🙂
Last year my wife and I began our search process to find a new SUV. Our consideration set included Toyota, Ford and Chevrolet. I tweeted out one evening that we were considering the Ford Explorer and asked for feedback from my community. Within 24 hours I received a reply…not only from friends, but also from Ford. The response included a link to the Explorer’s features and an offer to schedule a test drive. Color me impressed. (Tweet me at @ericdunstan with the 80s movie reference)
I responded that we were interested in a test drive. A Ford rep quickly responded and offered to schedule a demo and to provide incentives.
Ford is effectively using social media as a lead generation tool and quickly acquired my information to schedule a test drive. I used all natural language text with no # or handles. Clearly Ford is monitoring the social media channels and has an effective strategy to capture the information and act on it. Nice work.
I recently blogged about my frustration with the mobile deposit feature of the Wells Fargo mobile application. I tweeted my frustration as part of a theraputic venting processes. Within 24 hours Wells Fargo replied with a tip to address the mobile application #fail and a request for me to call a 1-800 number to address any further issues.
I applaud Well Fargo for capturing or “hearing” my frustration on Twitter and responding. However, given the importance of social media as a marketing channel, Wells Fargo’s response is almost a given. I would imagine that almost all of the Top 100 banks have similar processes in place to monitor and manage the social media channel. However, I believe Wells Fargo’s response falls short of meeting my customer needs and their social media team could learn a lot from what Ford is doing.
The Wells response was very generic and made me do the heavy lifting. “Try closing the app and restarting your phone. If the problem persists, please call 800….” Duh. Wells Fargo, I’ve been an iPhone user sense the iPhone 3 and know that restarting an app is a quick fix. However, given the Wells app recent reviews, I think this functionality fail is an application problem. Additionally, the LAST thing I want to do is call your 800 number to then have to dial through a myriad of prompts to eventually talk with a representative after a several minute wait.
The Ford response was very personal, responded to my specific question, and provided a channel to connect with a representative directly. Ford made me feel personally taken care of, listened to and treated as a desired customer. Wells could have worked harder by…
1. Offering to collect my information so an online/mobile customer service rep could contact me directly
2. Having the rep present the option of contacting him or her directly through a Twitter DM to help trouble shoot
3. Providing me a link to their website with a list of known issues
4. Acknowledging my frustration and offering an incentive as a “mea culpa” for their failed application
I feel like my concerns were heard by Wells Fargo, but I don’t feel personally taken care of to ensure my issue was resolved and that I’m a valued customer. This is an example of the difference between just listening to the customer and engaging with the customer. By engaging with the customer, Wells has the opportunity to personally respond to my need to show that my customer relationship is valued. Ford did this so well that we bought an Explorer from them.
Moving beyond just listening to and engaging with the customer may require rethinking how customer support teams are trained and incentivized. Additionally, companies should consider implementing a social media analytics and engagement software solution. These solutions go beyond functionality of Tweet Deck that enable users to track multiple accounts and listen for mentions of their company or brand. The more robust solutions, like Attensity or Nimble, for example, enable companies to listen to the customer, analyze the need and then act on meeting the customer need.
Consumers are increasingly frustrated with their banking relationship. There are a few Internet and mobile only banks, like GoBank or Moven, which take the mobile experience and customer service seriously. Leading banks, including Wells Fargo, will quickly lose customers should they not learn how to actively engaged with their customers through all channels of customer support, including social media.
I 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.
Apple Pay will be available on the iPhone 6 and Apple Watch devices for it requires technology included only in this hardware. Yes, the iPhone 6 and Apple Watch will set sales records and proliferation will be fast across the globe. However, Apple Pay will not be available on legacy devices that will slow down the adoption rate. Additionally, Apple Pay will be limited to major retailers including Whole Foods, Macy’s and Toys R Us. Yes, over 200,000 stores will be accepting contactless payments through Apple Pay. I’m sure Apple is busy negotiating partnerships with several other major retailers as well and the footprint will grow even more.
Eric Dunstan 