Mobile payment lessons to be learned from Casino's

Many of the more innovative mobile payment solutions that have been launched recently have much in common with Casino's. We have seen a plethora of new and exciting mobile payment solutions in South Africa during the past two months. (This does not make South Africa unique as people keep on innovating in this area). Two of the more recent products launched in South Africa are Mowaly (Read here) and Ammomobile (Read here). Both of these (as is the case with many similar solutions) acquire their own merchants. In other words, you can only pay with Mowaly or Ammo at outlets that have specifically been contracted. This is probably the biggest challenge to profitability of these type of deployments.

The characteristics that I find most interesting is that often these solutions turn into float-solutions. This means that if you have funded your wallet, you cannot cash the money back. You have to spend it (or pass it on to some-one else). Turning value into money have all kinds of ramifications and these solutions often limit the subscriber's ability to get the cash back for what has been deposited. This reminds me of Casino's where the ammunition is not cash, but chips. When entering a Casino, one would deposit cash in exchange for chips. This is very similar to the said mobile payment schemes. Only difference, with Casino's one can cash the chips in for cash.

Strikes may be a way to drive mobile banking take-up

Mobile banking take-up has been quite satisfactory in most instances that I have been involved. It seems as if consumers see the benefits of having access to their financial matters by means of a personal mobile device.

Yet, most banks and mobile banking operators are looking at ways to increase uptake and transaction volumes. This is often stimulated by means of special offerings, an increase in promotional activities and the provision of additional features.

Finextra recently reported on a planned strike of financial services staff in Finland (Read here). The report seems to indicate that Finnish banks expect a growth in the usage of online services during the strike. This is a very positive side-effect of a strike I think. By withdrawing expensive services (and not having them available for a period - as if the bank is coping with a strike), consumers are in essence forced to use (the more effective) electronic channels.

Strikes (or temporarily withdrawal) of services in branches may be the most effective way to stimulate the uptake of mobile banking.... Just a wild thought.

Will large banks license enterprise mobile banking solutions?

Citibank recently discontinue a pilot with a mobile banking vendor. The pilot was intended to show how the bank could utilise mobile banking platform as a service. Many offerings exist today (in most countries and on all continents) where banks can contract mobile banking as a service. This is attractive in many ways as it ensures that some-one else must focus on a the complexer operational issues. Also, this approach (while sharing downstream recurring revenue) requires less capital in the beginning.

Why would a bank then consider licensing their own enterprise solution? The reason for this is more control, more competitive advantage and more options. It is clear that the mobile channel (in most markets and for most sectors) will grow in importance. This will be the primary way that banks will interact with their customers. This will be their prime touchpoint, the way that their clients will experience the bank's brand. By embracing mobile banking, banks will be able to operate much closer to their clients.

It seems almost inconceivable that banks should outsource mobile banking.

Mobile Money in Europe set to take off

As is the case with most lasting changes, mobile money is not replacing cash in one fell swoop. While things do take time and it is often experienced as very slow, this change is only slow in terms of the perception. Replacing cash with electronic payment mechanisms (many of them based on the mobile phone) is an unstoppable force that will fundamentally change the way that we pay.

Once again, another proof-point can be found in a recent study conducted by Frost and Sullivan (Read here). According to this study the Western European mobile money market is set to take off and will be worth up to EUR5 billion by 2013. The report highlights the fact that it is both mobile operators and banks that are getting involved with mobile money and this time they are serious. They follow evolutionary strategies where consumers are given rudimentary services first - to get them comfortable with the concept. Over time, the services are getting more and more sophisticated and will gather more subscribers according to the research.

It seems as if mobile money is now turning into a run-away train: as it gains momentum it becomes virtually impossible to stop. I suppose the lesson here is that one should rather get on the train, while the speed is not too big. Comes a time when it will not be possible to get on.

Exponential growth in US mobile banking activities reported

I keep press releases that I find interesting to blog about in a special folder. Sometimes I don't get to them and then I have to throw them away because they expire. However, I looked at this press release by Mercator (dated July 2009) (read here), and I felt that the message is still fresh and relevant.

The report refers to the comparison between two consumer research assignments conducted in May 2008 and June 2009. With two report one year apart, it is possible to draw some conclusions on changes in behaviour. The report concludes (amongst others) "exponential growth seen among the younger generations" in using their mobile for banking and also payments. The big growth in numbers reporting that they now use their mobile to also pay and transfer money (I believe) is really significant. If the reported growth is to be projected to today, close to half of the US population in the age-group below twenty-five are using their mobiles for financial services.

Anybody in banking not taking this seriously should be fired.

Mobile payments square up with iPhone applications

This is one of these sexy announcements that everybody picked-up on. I had to swim through an avalanche of alerts, e-mails and tweets to be told: "Twitter founder's new venture is shaping up" (Read here). And then one is told how this new invention (called Square) will revolutionise payments forever. You cannot be serious!

See, what Square will do, it will turn your card info (also the track 2 data, that is not visible on the card) into a sound. The Square device is plugged into the ear-phone socket on an iPhone. The invisible information on your card is now audible!

I can just imaging a number of applications that will be so much easier to write, like fraudulent capture of card information at restaurants, or the storage of card information to be re-played later (after a valid transaction had happened.) I am sure that one can think of more applications where the Square could be used to steal money.

A better name for the Square could have been Hole, as it creates a massive hole in the well-defined security dispensation for magnetic stripe cards.

Mobile banking receives criticism too

Twitter is such a good tool to be connected to what is happening in the real world. What is great about it, is that one can read the messages of people that you do not even follow. I recently saw the following two tweets (from people I do not know at all):

"Chase Mobile Banking Alerts are always late. I get deposit alerts two-three days after they go in. Might as well send me an alert via mail."
"Seriously, Bank of America, why do you have a mobile banking app if it's not going to reflect the correct information?"

and I am sure that there are many others. I find criticising tweets of mobile banking very interesting. Not only does it show that people are starting to use the service, but that they are also developing levels of expectation of what the service should include.