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Weapon of Mass Disruption

Will they, won’t they? Maybe, Yes…No? Sooner or later…There has been a lot of debate about whether Apple will include NFC in the new iPhone 5.  Some analysts have drawn conclusions from the launch of the Passbook wallet service that it will happen.  I don’t know if it will happen tomorrow, I hope it does, but the debate about whether Apple will do it at all must surely subside.  NFC will be included in Apple devices at some stage, not just because of payments, but for so much more.  NFC at its core is a service that allows instant and secure communication over short distances.  By enabling this capability, Apple will create a whole new paradigm in its ‘App Economy’ and further allow developers to create, be creative and monetise their app services.

 

There has been a lot of publicity over the last few years around the potential benefits of NFC in payments and shopping.  Whilst we should be excited about its application in commerce, it is only a small percentage of what it could be used for.  NFC can in effect become our sixth sense.  It can augment our ability to see, hear, touch, smell and taste by providing us information about products and services at the tap of a mobile phone.  There should be no doubt that at some stage NFC will be available in every single mobile phone, as common as a camera or email.  Not having NFC will be like not having access to one your senses in the future.  This is what makes NFC so exciting from a consumer’s perspective. This is what makes NFC so exciting for Apple.   

 

A lot of people have connected the adoption of NFC with payments.  I am sure Apple has thought more broadly than this, and whilst the service may very well be launched off the back of an ‘iWallet’ or Passbook its end game will be much more significant.   NFC can help integrate the digital and physical worlds because it can be attached to anything ‘unconnected’ and make it connected.  With Apple managing a more secure operating system, and responsible for the hardware, NFC will intrinsically be a much safer proposition for consumers in their ecosystem.  Having it enabled in the next iPhone device is a big step because it enables multiple applications to access NFC from the one single source.  Instead of having separate oyster, work pass and zip car passes, they could all exist on the one device.

 

If Apple was to launch NFC I would expect a hockey stick moment very rapidly.  At a recent event I was asked about when NFC would become mainstream?  I said 12 months.  Whilst to some this might seem incredulous, things can literally change overnight and whether you believe it or not, most major Banks, Retailers and Telco’s are busy behind the scenes working on projects in this space.  There is no doubt that if Apple was to make a service available that we would be hearing a lot of ‘pivots’ in a variety of these initiatives.  Once it happens, it will happen rapidly, and within a year most existing apps will be incorporating and utilising the NFC element.  Whilst my predication does not mean everyone will be using it, it does mean you will readily be able to.

 

Here are some ideas about where else NFC could be utilised by Apple and developers to disrupt business beyond payments and commerce.

 

1. Accommodation

Imagine booking a hotel room and just going straight to your room when you arrive.  Access to the room could be provided remotely.  You would simply tap your device at the door.  No more late night front desk staff and no more queuing to check in with information you’re already provided online.  This could also change the whole short-term rental model.  No more landlord interaction...

 

2. Home Access

No more keys or having to be home to collect goods.  Through new apps you will be able to provide access remotely.  Really useful for letting in your plumber to fix the shower or to get your latest shopping delivery dropped off.  This will also be able to link to information that tracks when someone has left or entered your home. 

 

3. Gym

Tap at the start of a session to enter the gym.  Access the spa with your device.  No more worries about lost membership cards.  You could even tap equipment so you can track your progress and set goals i.e.  Number of sets, repetitions and weights.  By tapping on equipment it could also let other members know that the piece of equipment is being used. 

 

4. Parking

No more annoying tickets and dashboard displays.  No more remembering to pay before you collect your car.  You could even tap a NFC reader at your parking spot that reminds you of where the car is located and that the space is taken. You could then use your mobile to tap on entry and pay on exit. 

 

Let me know about any other ideas you have…

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Comments: (23)

A Finextra member
A Finextra member 12 September, 2012, 10:46Be the first to give this comment the thumbs up 0 likes

Why NFC? Why not use bluetooth?

A Finextra member
A Finextra member 12 September, 2012, 21:57Be the first to give this comment the thumbs up 0 likes

I see them as complimentary, especially if BLE progresses.  There are advantages and disadvantages for both.

A Finextra member
A Finextra member 13 September, 2012, 10:11Be the first to give this comment the thumbs up 0 likes

Smartphones are about as insecure as PC's are - but combined with their much greater mobility and NFC as an additional target for fraudulent activity, I'm not so sure whether widespread adoption would be a good idea in the long run.

For access to my home, I will continue to rely on the oldfashioned mechanical lock and keys made of metal ...

A Finextra member
A Finextra member 13 September, 2012, 10:22Be the first to give this comment the thumbs up 0 likes

Well it turns out in the iPhone 5 does not have NFC, so Apple obviously don't consider it important... yet.

The iPhone 5 itself might be a "jump the shark" moment for Apple. It boils down to be slightly taller screen (but still much smaller than the competitors) and a new charger (so all your docks are now incompatable). It really looks like they've run out of ideas.

A Finextra member
A Finextra member 13 September, 2012, 12:25Be the first to give this comment the thumbs up 0 likes

Battery life on my smart phone is pretty bad.  How do I get in (to my home, hotel room, car) when the battery's dead?

I'm not ready to throw the hugely expensive super secure keys to my flat quite yet.

But I will watch "this space" to see what happens in next 12 months.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 September, 2012, 16:04Be the first to give this comment the thumbs up 0 likes

On the contrary, by launching Passbook just 3 months ago on QR codes, Apple seemed to distance itself from NFC. My other prediction that the next version of iPhone will include a native QR code reader app hasn't fared so well, though.

A Finextra member
A Finextra member 13 September, 2012, 17:31Be the first to give this comment the thumbs up 0 likes Whether it's NFC or QR, what's missing is a one-click access, bypassing lock screen - similar to the way Apple now allows you to access camera on iPhones. That way READ function could take off strongly, PAY will follow. Michael is right, for ad-hoc comm session NFC is hard to beat (there is no two-way data with QRs...). The problem is: consumers don't care about technology. iPod was not a better mousetrap (MP3 player). The same goes for NFC.
Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 September, 2012, 18:32Be the first to give this comment the thumbs up 0 likes

The way Passbook is described, it does display the appropriate QR code on the lock screen and seemingly permits users to tap it directly and launch the respective item. While I haven't tried it out myself, this seems like 1-Tap access. Not sure whether it asks the user to enter the lockscreen password in case one is set. If it does, it admittedly poses a certain degree of friction. If it doesn't, some would create a big furore saying it's a big security flaw - something I remember happened with Google Wallet a few months ago, forcing Google to rectify it.

A Finextra member
A Finextra member 13 September, 2012, 19:54Be the first to give this comment the thumbs up 0 likes

Some thoughts on the comments:

  1. It is quite common knowledge that Apple has been procuring NFC chips so I would argue that the reason Apple didn’t launch it in the iPhone is because it is so important. I believe they are still trying to get the best mix between the hardware and software on NFC.
  2. Saying that battery life is really bad is like saying I’m going to stick to using a horse and carriage because a car might run out of fuel.  There would be back up options or PIN entry at point of entry so I wouldn’t stress.
  3. I find it funny how people are happy to use a chipped card at hotels around the world but when I suggest using the NFC element on your handset at home its a different matter.  If you are that worried about the security of your property I wouldn’t find comfort in a physical key.
A Finextra member
A Finextra member 14 September, 2012, 08:45Be the first to give this comment the thumbs up 0 likes
  1. Not sure about NFC, but here is how the passbook works for e.g. boarding passes, from http://www.apple.com/ios/whats-new/#passbook:
    "Wake your iPhone or iPod touch, and passes appear on your Lock screen at the appropriate time and place — like when you reach the airport or walk into the store to redeem your gift card or coupon. And if your gate changes after you’ve checked in for your flight, Passbook will even alert you to make sure you’re not relaxing in the wrong terminal."
  2. On my particular phone, battery life is *really* bad. No horse and carriage required, a good meachnaical lock is all. Also, if there are "back up options or PIN entry at point of entry" then the system is now less secure.
  3. Your home is your castle.  We're not really going to have a discussion on how a hotel room is different to your home are we, how security is different to different people?  No lock is perfect, but a lock is better than nothing.  And layers of even not completely secure locks is even better.  Security is always a tradeoff.

 

A Finextra member
A Finextra member 14 September, 2012, 08:55Be the first to give this comment the thumbs up 0 likes

Re. Alexander Peschkoff - TEDIPAY - London' comments.

I posted a snippet from Apple's Passbook page above - seems the phone can be locked and the boarding pass will automaticallly appear on the lock screen at the right time/location.

Sorry, but I had to laugh at this: "The problem is: consumers don't care about technology. iPod was not a better mousetrap (MP3 player). The same goes for NFC."

No, the first iPod, as limited as it was, was a complete revolution in mousetraps.  Apple set the bar (then continued to raise it for a number of years).  The MP3 player offering beforehand was pretty bad (I was looking at the time).

BTW I got an iPod many years ago for a 'big' birthday.  I could not justify the cost myself, so was not going to buy one.  But as a group present, thank-you.  After dropping it too many times, the HDD failed 3 years later.  I immediately bought a new one.  Having access to my music during my commute and at work was now so important to me, that I had to replace my mp3 player.  I looked around as usual, checked reviews etc, and settled on an iPod (Creative Nomads looked good for a while, but were that mush heavier and bulkier duie to the 2.5" HDD they had to use, as Apple had almost all the 1.8" HDD).

A Finextra member
A Finextra member 14 September, 2012, 09:03Be the first to give this comment the thumbs up 0 likes @Ketharaman QR - I was talking about reading QRs, not presenting the ones stored on phone. @Christoper It seems you missed "not" when I was talking about iPod and a mousetrap. My point is simple - consumers don't use technology for the sake of it. When (if) Apple brings to market a mind-blowing ubiquitious solution, nobody would care whether it's based on NFC, BTL or telepathy.
A Finextra member
A Finextra member 14 September, 2012, 09:07Be the first to give this comment the thumbs up 0 likes

@Alexander

Must have read your post too quickly, in any case I agree totally - the cutomers don't care about the tech, only what they can do.

Hell, I love technology but it's getitng to the point that even don't really care now ("just work damnit!").

A Finextra member
A Finextra member 14 September, 2012, 09:08Be the first to give this comment the thumbs up 0 likes @Christopher - To avoid being "Lost in translation", the obvious meaning was: "iPod was NOT a better mousetrap (i.e. NOT just a better MP3 player)".
A Finextra member
A Finextra member 14 September, 2012, 10:34Be the first to give this comment the thumbs up 0 likes

We started out with NFC, and ended up with MP3 ...

Maybe the title should be changed to "Weapon of mass distraction" ?

 

A Finextra member
A Finextra member 18 September, 2012, 09:10Be the first to give this comment the thumbs up 0 likes

Well...... as the NFC payment chip is not there maybe the following are factors

1. No NFC Mobile trial has yet been proven successful recently ANZ bank dropped out of a scheme after a pilot proved less than successful

2. The Mobile NFC market is a mess and no-one looks like they are making money out of it

3. Maybe Merchant/private label schemes will proliferate in the USA which means that if the merchants approach Apple rather than the other way round then Apple has more influence/revenue generating opportunity, alternative is to go cap in hand to large merchants

4. Security is always going to be an issue....And as all locks made by mankind, can be broken by mankind, Apple may not want to wish to suffer the brand damage that occurs when someone announces "I Cracked the Apple Wallet"

5. If adding an NFC chip to every Iphone costs Apple $10 and only 5% of them activate and achieve a reasonable level of use over the course of the next 4 years  then each active phone is going to have to generate north of $150-200 to break even.... after 4 years obsolescence creeps in and opportunity for revenue declines.

Some of these assumptions may be wrong.... not all of them though.

A Finextra member
A Finextra member 18 September, 2012, 21:13Be the first to give this comment the thumbs up 0 likes

Some points though broadly agree with the rest -

1. 'No NFC Mobile trial has yet been proven successful' is a massive statement.  NFC is already well adopted throughout asia especially South Korea.  We shouldn't assume NFC is a pipe dream becuase it hasn't taken off in the UK.  It is already being used around the world...

2. 'The Mobile NFC market is a mess' - Agree.  The reason its a mess is because it is so important and potentially valuable.  I think eventually though...and I hoped Apple would lead the way...someone will take a big step forward and everyone will need to follow.

 

A Finextra member
A Finextra member 19 September, 2012, 09:15Be the first to give this comment the thumbs up 0 likes

Korea is a bad example.  in Korea the Industrial giants have driven technology into the market in a manner that would not be sustainable elsewhere....

A Finextra member
A Finextra member 19 September, 2012, 20:33Be the first to give this comment the thumbs up 0 likes But it proves the technology works, is scalable to the masses and is a valuable customer experience...
A Finextra member
A Finextra member 20 September, 2012, 08:57Be the first to give this comment the thumbs up 0 likes

But at what cost to the operators in Korea???... Oyster is successful in its way, but expensive/closed loop, the Open Loop, CARD based model is rolling out in the UK driven by banks and V/MC.... is there any more than anecdotal information about the success of the korean mobile NFC model that you have? I often hear S.Korea trumpeted as the shining example  of mobile NFC, but  have never seen much evidence or heard how its deployed (Samsung phones only?).... if you know where info can be found, a link would be much appreciated.

A Finextra member
A Finextra member 20 September, 2012, 17:56Be the first to give this comment the thumbs up 0 likes

@David

EMV-based Oyster replacement is driven by TfL, not by V/MC or banks. Contactless EMV is not limited to cards: TEDIPAY is bringing a "mobile" solution to the market, including TfL (and railway). Mobile/NFC payments, when it comes to transit, is well passed the "if/when" stage: it is already here, big way (depends on the definition of "big", of course - $50bn+ revenue, 100bn journeys with marketing value of [commercial secret]).

A Finextra member
A Finextra member 21 September, 2012, 13:24Be the first to give this comment the thumbs up 0 likes

Were the numbers from the Korean platform??? not clear.. I understand that they may not want to divulge how much the system is costing them to operate!!!    We know that Oyster has struggled to get Paywaveypass working fast enough...  they will work on alternatives but dont think a replacement is in devt yet... Looked for Tedipay... has no discernable identity online?

A Finextra member
A Finextra member 21 September, 2012, 14:33Be the first to give this comment the thumbs up 0 likes

@David

Not sure I understood your comment, and its relevance to what we do (and don't do, as a deliberate choice).

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A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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