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Banks - Own Mobile Wallet to lead Digital Commerce Transformation

Banking industry is on the cusp of Digital disruption. Threats are no longer coming from their traditional peers, but from disrupters across telecom (Bharati Airtel applying for Banking license), cash rich retail (Amazon, Alibaba providing lending services) & Smart phone manufacturing (Google, Apple etc) industry. To complicate things further, multiple Digital disrupters are introducing innovative models like P2P, crowdsourcing lending to negatively impact Cost income ratio and RoE.

In fact tomorrow if a telecom or a retail company opens a bank, they can create much better payments and ecommerce driven experience than most of the banks do today. Banks eventually run the risk of losing low margin, high volume retail banking business to these new breed of competition.

This requires a fundamental shift to the way Banks do business. While focus should still be on core products (Retail and investment and commercial), banks should start to provide more advisory and value added services to make them integral part of customer day to day life.

Once banks master the art of managing real time, mobile-wallet driven Payments advisory services, they are then better off focusing on how to influence, add value and drive digital commerce.

Initially commerce used to happen between two individuals. Gradually the concept of Market place evolved. It gave buyers the opportunity to search, evaluate, bargain & go for the best offer. It also gave seller opportunity to innovate and compete on product, services & price. Market place was also used as social platform intelligence gathering, reviews & recommendation. Primary channel of the commerce (sell, service) was F2F. And trade was done either with a common physical currency and exchange of physical commodities. Supply chain management (inventory, procurement, distribution management) was done manually and very Adhoc basis.

If we think carefully the basics of commerce remained same, only the boundaries between physical and digital world is blurring. Mobile is becoming primary channel for commerce, market place is no longer a town centres, it’s internet. Search is digital & intelligent meta data driven, Customer service is done over digital channels. Social media is becoming a place for intelligence gathering, product review and recommendation. Rewards, discount, personalization, optimization & recommendations are done real time based on data. And supply chain & inventory management are optimized using digital platforms.  And most importantly the currency used to trade is no longer physical, its virtual or digital. This puts banks at the centre of commerce economy. And Banks can get their digital wallet strategy right and it will play a bigger role in driving digital commerce through progressive stages of adoption:-

Stage-1: Rise of Mobile channels - establish wallet for sales channel 

Proliferation of Mobile, Wearables, IoT, Augmented, Virtual reality devices coupled with Digital wallet is driving adoption of Mobile commerce. Consumers are targeted intelligently at real time based on location, context. Seller & merchants are also benefits due to adoption of mobile POS devices.

Banks should build its own digital wallets. CITI, Nationwide, Visa and MasterCard's etc  have already built the wallet. This will enable banks to enforce transaction using mobile devices.

Stage-2: Next generation customer Service - driven by wallet

Customer services is a key post sales activity which increases the loyalty and advocacy. This also ensures high NPS score and larger wallet share.

Along with call centres and branches, Web and mobile & social channels are used to drive interactions with customer. Techniques like Collaborative browsing, co-browsing, video/web/voice chat, Web real-time communication, Social feedback management, virtual customer assistance could drive customer satisfaction.

Banks can align their services to provide higher customer satisfaction. For example, A quick video call to increase your digital wallet cards credit limit on real time, if if your digital wallet transaction is declined. Banks can also advise on real time abt the best promotion, rewards and loyalty to save money. 

Stage-3: Customer and product personalization - deliver marketing & advisory services through wallet

Rise of the real time data driven analytics has changed the game for most ecommerce companies. A 360* view of customer combined with NEXT BEST OFFER can drive the personalization across customer segments. Customer behaviour, interaction, transaction history, demographic details coupled with its social and other digital footprint can drive reward and loyalty points. A detail analysis of Product/Services consumption, review & recommendation could help in configure & optimize price and recommend right set of products for high cross/up sell.

If Banks can enforce use of Digital wallet & effective partnership with retailers, then it can own the interaction and transaction data to drive advisory capability for value added services.

Stage-4: Supply chain - optimized by wallet

Retailers are moving towards distributed inventory and order management paradigm. Where order fulfilment can span across multiple systems; can be owned and operated by the organization or its partners.

Retailers are optimizing its inventory and de-risking the operating model by partnership with local merchants. This requires an integrated order management approach which works in this network model.

Banks can tap into this chain of retail/merchant network and open up larger credit line. Banks can also drive marketing notification model to drive more traffic to SME business through digital wallet.

In summary, if banks to survive in tomorrows world, they must build and encourage Digital wallet adoption. This will ensure active role in digital commerce & survival in digital economy. 


Comments: (8)

Prasenjit Das
Prasenjit Das - Virtusa - Hyderabad, India 01 March, 2015, 18:55Be the first to give this comment the thumbs up 0 likes The digital disruptions is disproportionate in case of transaction banking in retail as compared to lending in retail or commercial banking where human intervention is must . Mostly to secure cheap deposits by pleasing the customer through enhanced experience I think banks are going over board . The disclaimer being all the hype made in media is indeed true . A more sensible investment would be to invest on analytics as in any case banks need to comply with BCBS 239 . With a structured data architecture available in a single point of truth investment in analytics will reduce marketing costs and result in a higher conversion
Abhishek Chatterjee
Abhishek Chatterjee - Gartner Inc. - London 01 March, 2015, 21:161 like 1 like

Spot on Prosenjit. conversion is still at 25-30% for most of the banks. increasing that will definitely help.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 02 March, 2015, 12:08Be the first to give this comment the thumbs up 0 likes

In the past, I wrote that TELCOs were making a hash of financial services:

  1. Banks Have Nothing To Fear From TELCOs
  2. Omnichannel Fiasco No. 2: M-PESA

Lately, I'm feeling that TELCOs are making a hash of telecom services itself: 

  1. One TELCO's website EBPP doesn't work.
  2. One MNO's mobile app fails to enroll.
  3. Another MNO's 3G has 40% downtime. 
  4. Another MNO changes bill cycle unilaterally, spouts BS by claiming that it has done so to "serve you better", threatens to stop service unless I immediately make a payment that I'd already made 3 days before the previous deadline, which turns out to be 1 day after new deadline.
  5. I've never ever received a sensible upsell / cross-sell offer from any TELCO.

It's not just in India. I remember Ron Shevlin, a leading analyst in USA, once calling a leading American TELCO the most incompetent company in the world (   

Banks are not the epitome of great CX but if they ran their shop the way some TELCOs did, I’d be driven to pull out all my money from banks and keep it below my mattress. 

Against this personal experience and anecdotal evidence, I'm very curious to know what TELCOs have done to justify your overwhelming confidence in their ability to "create much better payments and ecommerce driven experience than most of the banks do today."

Abhishek Chatterjee
Abhishek Chatterjee - Gartner Inc. - London 02 March, 2015, 23:58Be the first to give this comment the thumbs up 0 likes

I think,every transition or major shift goes through Hype cycle before it gets streamlined. Telcom or retailers are taking their time to streamline things. But, point is not what is the current state of affairs but what could happen in a blink of eye (1-2 years).
The winners in this emerging arena will be those who “own” the consumer. This includes both access to customer information (e.g., daily contacts for gaming, shopping or chatting), as well as the ability to provide a compelling value proposition to activate and engage the consumer over time. Financial services providers are in a prime position to capture the mobile payments and marketing value pools given their broad scale, connectivity assets and privileged role as the guardians of consumers’ financial information. However, if financial services providers move slowly or resist disruption of their core business, nimble non-bank technology companies are likely to develop workaround solutions in the medium term, exposing banks to full disintermediation.

Pls refer: Mckinsey research articles
“The role of data analytics
companies in mobile commerce,”
"The 2013 McKinsey Mobile Payments Consumer Survey"
"The road to mobile payments services"
"Payments wave, commerce ocean: The arrival of the mobile wallet"

Gartner-> mobile payments transactions will break the $235 billion mark by the end of 2015. That would be an increase of 44 percent over the figure from 2011"

Business Insider -> "United States there were already approximately 7.9 million consumers who had adopted a system compatible with NFC technology (near field communications) or QR codes.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 March, 2015, 13:23Be the first to give this comment the thumbs up 0 likes

"Blink of an eye"? "Deep slumber" is more like it. I first heard this "TELCOs will disintermediate banks" rhetoric in 2009, when Boku, Zong and other Gen Y Mobile Payments (GYMPs) entered the retail payments fray. Six years have passed. What has happened? None of them has gone past their initial target market of virtual goods. For their own survival, they've given up their sole reliance on their MNO billing model and have started using the same banking rails that they'd originally set out to disintermediate. In other words, far from disintermediating banks, these companies have become even more reliant on banks now. Given their unenviable track record over 6 years, why should we expect anything great from the TELCO industry over the next 1-2 years?   

Mobile payments has been at the tipping point for each of the last 10 years, so crystalball gazing in this space has lost meaning.

I'm surprised to see TELCOs linked to mobile payments in the same week that the biggest TELCO-sponsored mobile wallet, ISIS / Softcard, has shut down. The only couple of mobile payments that have achieved some degree of success are Starbucks and Apple Pay. Both of them use banking rails. Whether mobile payments goes mainstream or not, TELCOs' track record tells me they won't be able to disintermediate banks. 

Prasenjit Das
Prasenjit Das - Virtusa - Hyderabad, India 03 March, 2015, 17:21Be the first to give this comment the thumbs up 0 likes Right words Abhishek -Hype Cycle . The very purpose of technology is it divest customer out of the branch . It was ATM then internet banking and now various apps . From a business point of view there is hardly any direct income stream though a indirect one exists from mobile payments/ banking.May be a good ploy like social media banking too keep the customer interested :)
Abhishek Chatterjee
Abhishek Chatterjee - Gartner Inc. - London 04 March, 2015, 10:16Be the first to give this comment the thumbs up 0 likes @ketharaman - i think both of us want banks to succeed and be the institution we all respect. banks are better of being more respective to the threats coming from outside, rather than assuming everything is fine and be happy. I will be happy to be proven wrong, because we share the same end goal.
Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 06 March, 2015, 12:19Be the first to give this comment the thumbs up 0 likes

I've no vested interest in banks other the quality of their CX. While they're years ahead of TELCOs on that count, banks can still do a lot more to put their house in order and improve their CX. All that requires a lot of time and energy. I don't want them to waste their efforts on sensitizing themselves to non-existent threats from TELCOs, who, over the years, have clearly proved themselves incapable of competing with banks on financial services.

Abhishek Chatterjee

Abhishek Chatterjee

Managing Partner

Gartner Inc.

Member since

16 Dec 2014



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