It was 2006 when I entered the mobile payments business and set my goal to migrate from wallet to phone. That’s when I was introduced to BREW (Binary Runtime Environment for Wireless). And it was the first time I thought that a mobile platform could actually have the flexibility for consumers to do more than make calls and download ringtones. The BREW environment might be rudimentary today, but before the advent of the iOS and iPhone, it was extraordinary as an API-based mobile environment. Developers were excited to get the BREW tools and libraries to build a payments app that could be ported to multiple phones quickly. This is when the revolution started.
The next chapter of mobile advances is well known, as Apple ran their tightly controlled iOS ecosystem and Google countered with the openness of the Android environment in 2007 and 2008, respectively. It is indisputable that this was the moment when everything changed.
"The current strategy of all major brands and banks is to make it as easy for customers to interact on their mobile, as it is to walk into a store or branch "
It became obvious quickly that smart devices were an ideal platform for payments, banking and even stock trading. The key issue in all of these applications, was and remains, how to make them easy to use, while keeping the transactions secure.
The Starbucks Effect
The next big watershed moment in mobile banking was rather unexpected. Starbucks caused a disruption in 2011 by experimenting with QR codes to allow customers to access their prepaid cards on their phone. I admit I thought it rather clunky—and even predicted it would not see uptake outside of Silicon Valley. I could not have been more wrong—as customers loaded millions of dollars onto their Starbucks app to get slightly faster access to their latte later. Today Starbucks is the envy of every consumer brand that spent millions to build a mobile consumer app only to see their apps languish, unused on iPhones, while Starbucks stacked up billions in prepaid balances. What these other brands missed, is that Starbucks is a near-cult-like brand used daily. An addictive product doesn’t hurt, either I credit the Starbucks app, although used for value transfer, for allowing me to reach the goal I set when I started on the mobile money journey: “Reach for your phone—instead of your wallet.” Starbucks has made it possible for consumers to walk confidently into a store, leaving their wallet in the car as they quickly pay for their daily caffeine with their phone. It was the first time that consumers in the U.S. easily and regularly used their phones to transact. The most important aspect of usage is frequency, and habits change with frequency. It was a game-changer.
Starbucks paved the way for the retail omni-channel experience—integrating the different available ways of shopping for consumers. Today a bank’s mobile app features the same look and feel as their web presence, which complements their storefront. The current strategy of all major brands and banks is to make it as easy for customers to interact on their mobile, as it is to walk into a store or branch.
The Mobile Banking Effect
As consumers began to look to their smartphones for more information, banks realized they were looking to do more than just check their balance. Taking a picture of a cheque with a smartphone camera to make a deposit felt very odd the first few times, but it soon became obvious that it was no longer necessary to go to a bank. Surveys show that of the top three uses of a mobile bank application, checking balances remains number one, followed by check deposits. The third most popular feature is, ironically, using the app to find a branch that will likely no longer be needed in three to four years. The phone, the ATM and the internet were all supposed to lead to the demise of the branch—but not until the smartphone did branch openings begin to slow down. The smartphone changed the banking industry.
Mobile interactions have become ubiquitous. It is common practice to use a phone for banking or payments— globally. Users are making financial transactions while they wait in line, ride with Uber and sometimes while socializing—so the mobile apps must be easy to use and intuitive.
The Future of Mobile Banking
I don’t have a crystal ball. If I did, I would use it to place bets on future Super Bowls and World Series. All joking aside, I do see indicators of what is next on the mobile journey for all of us in Financial Services.
• CIOs—New skills are needed by CIOs because consumers’ expectations are driven by mobile experiences. Having a resumé with a depth of IT experience is no longer enough to stay current on developing the next generation of bank products. One major bank, for example, recently appointed a CIO who lacks a technical degree and does not have experience as a developer or engineer. That CIO does, however, have experience in building digital business for BBVA and in leadership roles within a Fintech business.
• Fintech Cooperation—Banks have begun to eschew the “not invented here” syndrome and have recognized that Fintech companies can represent the best source of new ideas and products available in a technology-focused business that has no R&D. Fintechs should be looked at by banks as “outsourced R&D” for mobile and other new technologies.
• Tech Giants—Google, Apple, Amazon, Microsoft, Facebook and other large tech companies have R&D budgets in the $5 to $10 billion per year range. These budgets can easily be targeted toward the edge of a bank’s or FI’s business. You need to look no further than Apple Pay and Samsung Pay to see the potential—and now Amazon is on the verge of becoming the next billion-dollar payment company.
I have enjoyed my 10+ year journey in mobile money but will confess—it took much longer to reach ubiquity than I originally expected. If I could do it over again, I would have spent more time on design thinking, daily usage, bank and Fintech cooperation and of course utility for consumers.
Mobile finance started as a solution looking for a problem but did become an ideal solution to consumer’s busy lives. Everyone now assumes they can access their financial lives on their mobile device, which was my goal at the beginning. I really do think most consumers look at their mobile device for real time bank information and have begun paying with their device at merchants. Next stop is getting our government issued ID onto our mobile devices so I can truly leave my wallet at home.