Mobile 205 (required): GPC Payments Value Proposition
Lesson 1 Discussion Board: What do you think is the true mobile financial services “killer app” today? Click here to respond.
Unique Value Meets Consumer Need: We’ll open this section of the curriculum by reviewing a fundamental tenet of successful payments innovation when it depends upon consumer behavior. That is, for consumers to adopt a new payment form it must 1) fill a unique unmet need in that consumer, and 2) beat the value proposition of all other payment forms in filling that unmet need. We’ve looked at how the majority of consumers want to pay for the things they need every day with the funds they have on hand, and they increasingly want to access those funds electronically from the point of sale. Plastic cards have been the predominant way that consumers have generated electronic transactions from the point of sale. As we discussed last week, those transactions travel through a vast and complex infrastructure through the hands of a diverse group of stakeholders with significant businesses built on the management of electronic consumer payments. Some (at least people in financial services) might argue that the advent of electronic consumer payments has been one of the most significant technology developments in growing consumer economies globally. With a bit more than one payment card in circulation for every two people on the planet, there’s a certainly strong argument for ubiquity in card payments devices. Ask almost any consumer “what’s in your wallet?” and the answer will be “a plastic payment card.”
But let’s wait a second. If there is one technology that can make an argument for global consumer adoption champion, surely it’s the mobile phone. With roughly 5 billion mobile devices in circulation worldwide, almost every person in the world could have their very own mobile device. The number of mobile devices in circulation is greater than the number of PCs and televisions combined. In the developing world, many rural villagers get mobiles and a cell tower before they get running water. Even in advanced markets like Japan, there are significant segments of consumers who have never seen the Internet through any interface but their mobile. In North America, the number of households that have decided to go mobile-only is greater than the number of households that have land lines alone. And consumers love their mobile devices. They take their mobiles with them everywhere, primarily for communication but increasingly for accessing email, surfing the web, taking photos, and playing music. Smartphones and application marketplaces have created an expectation with consumers that they can access information and manage their lives from anywhere at any time. If there is a consumer product for the millennium that has earned the slogan “don’t leave home without it,” it is most certainly the mobile.
Convergence Strategy: So let’s say you’re a strategist at one of the leading mobile operators, or at one of the major card issuers or networks, and you see a simple opportunity. Consumers walk out the door every day with just a few things in their pockets: keys, wallet, and mobile phone. Ubiquitous. High-utility. Highly-necessary. These adjectives are every consumer product marketer’s dream. So you’re in a planning session with your colleagues, pull out your wallet and mobile, place them on the conference table, and say “why can’t we just put these two things together and make the world’s most amazing consumer product?” Why not indeed? Sounds simple. It worked for chocolate and peanut butter, right? Why not here?
Well, if only it were that simple. Yes, the mobile is a great distributed communications device. But it is also fair to say that mobiles, at least in some parts of the country, sometimes fail to perform their basic function — that is, carrying a call clearly from beginning to end — reliably. Certainly for many mobile customers, having their carrier decide when their personal conversations will end is frustrating in the least. Not that this means a mobile couldn’t manage a payments transaction reliably — most of the time — but consumer expectations of electronic payments might be a bit higher than “it works most of the time.” And how might a mobile phone create a transaction from the point of sale? The industry answer to that up to now has been a really complicated one, which we’ll address in the next section. Suffice to say that, as with many payments innovations, this one has yet to ignite because of the need to bring two sides of a market together at once with a compelling value proposition. And to investment insult to injury, the payment form that a mobile solution is up against works pretty well for consumers today. So where has the industry gone in an effort to combine mobile and consumer financial services?
Online Banking on a Tiny Screen. The first response to the opportunity to create a killer combination in mobile and financial services was a fairly basic one, and it came out of the eCom divisions of banks. Managers of online banking services saw a great opportunity to extend that service into the pockets of committed customers, and they enlisted developers to help them build interfaces into the vast array of operating systems, software stacks, and devices managed by the network operators within their “walled gardens” of proprietary network capability. In the early days, this wasn’t easy. But over time, a handful of outsourced developers and service providers built code libraries comprehensive enough to begin providing financial institutions with enough device coverage to deliver basic account information through a mobile phone.
Mobile banking services have been most commonly comprised of access to basic account views and some transaction activity details. In addition to providing balance information and recent transactions, some financial institutions provide interactive money-management such as bill payment, customer service requests, and customer intra-account funds transfer. Some institutions also offer intra-bank funds transfers as well. Other information, such as branch and ATM locations, is sometimes included. These services are typically provided for free to the consumer as a benefit associated with the core account. Provision of these services includes third-party application development hosted by a financial institution, hosted services from processors and developers, as well as in-house delivery by institutions.
But none of these services really sound like “payment.” So how have the financial and mobile industries tackled this? We’ll discuss the first, less-than-successful, foray in our next section.
Lesson 1 Discussion Board: What do you think is the true mobile financial services “killer app” today? Click here to respond.
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