Mobile banking professionals from around the world gathered in Barcelona on Tuesday for a day of networking and debate at the second annual MobeyDay. Finextra liveblogged events here.
If you want to see the future of mobile money go to South Korea, says Smilawicz.
And that's it for MobeyDay 2013. Until next time.17:17:
Now onto the trickier question of the long-term. Smilawicz identifies three factors:
1) The decreasing cost of technology (including smartphones) and growing number of people online will have a huge effect on availability.
2) The combination of WiFi and GPS will enable retailers to make incredibly specific location-based offers and observe where customers spend their time within stores.
3) Machine-to-machine connectivity will revolutionise spending: Eg. when your printer is set to run out of ink, it will automatically order some. Takes the human out of the equation.
No mention of virtual currencies. Asked by audience member about bitcoin et al, Smilawicz is cautious - it's not what I think about them, it's what the central banks think.16:59:
Our closing keynote is on 'the future of digital money' and comes from Tomasz Smilowicz, MD and global head of mobile solutions at Citi.
First, the short term: in emerging markets, more than 150 mobile money services now in action. It's better than cash. Best way to push digital money is to work with govts. Citi has inked deals with six countries and its easy to team up because they understand the financial benefits.
In developed markets there are four major forces: growth of EMV POS terminals; rise in the number of devices (ie mobiles); an ever-growing ecosystem of related services; data consolidation (to make this work, benefits must be shared).16:46:
Closing thoughts: lots of opportunities in mobile for banks despite raft of new rivals. Hartley suggests mobile payments will see big growth, tougher for m-banking.16:32:
Audience comment: all the talk of value added services today has been about internal stuff. If banks open up to wider world of developers, you'd get a lot of rubbish but some real breakthroughs.
Tabakovic agrees in principle, but says opening up to developers is not as easy as you'd think. Navarro points out his bank already has open e-payments platform but agrees you have to be careful about ensuring good user experience and make sure things don't get too fragmented (Twitter had big issues with API). Hartley says systems just aren't ready to be opened up and that there is also a conservative culture.16:22:
PFM has been around for years, but still hasn't really taken off, at least in Europe. Why?
Customers are scared suggests Bareisis, don't want to know. PFM only tells you what your situation is, says Tabakovic - customers want help with the next stage, which is doing something about it.
Is PFM not popular because customers are ignorant, or thick? Hartley says no; PFM popular in the US, where people have more accounts to manage. Data should be put into the hands of the customer to let them manage their own money/lives.16:10:
Having posed some questions, Bareisis opens up to the panel. Tabakovic says banks have to focus not on what they can sell to the customer, but using data to find out how they can help customers get what they want in day-to-day life.
Navarro says its not really about tech or even data, its about using relationships with customers and making interactions easy (via mobile). Similar argument from Hartley, the bank, and the bank account, should be the one facilitating the relationship between customers and merchants. Why can't all the coupon/loyalty stuff be handled via the bank account?
Bunschoten asks why facilitate something like offers for merchants, why not do it ourselves? Banks have a big advantage in that they have trust.
Tabakovic strikes note of caution on offers - we have a responsibility to customer. The car mPOS eg from earlier worries him - do we want to push customers to buy a car they might not be able to afford? Hartley says that as long as offers are well targeted, customers will be happy. Banks can do it better than the Groupon model.15:55:
Bareisis says banks face three big risks (the three Rs) from mobile competition: Loss of revenues (eg. PayPal going via direct debits; loss of relationships; loss of relevance.
How can banks counter this threat? PFM, gamification, cardless withdrawals, actionable alerts etc. But also need to rethink what a bank account actually is.15:45:
Final coffee break out of the way, it's time to talk value added service for mobile banking. Zilvinas Bareisis from Celent will give a short presentation before moderating a panel made up of ING's Petra Bunschoten, Clear2Pay's Mark Hartley, Banco Sabadell's Pol Navarro, and, back for more, PostFinance's Amir Tabakovic.15:12:
How do we pay for digital goods like software, audio and video, books? Carrier billing, credit cards, 'cash' via pre-paid.
Pre-paid/gift virtual cards offer a new opportunity for banks offering high growth and high margin. Currently people use their bank accounts to buy Amazon vouchers, why can't banks have in-app payments directly taking money from customer account?
PostFinance is working on this with iTunes: have complete iTunes gift card integration with bank app. Customer pays with account balance (no credit card) and then direct redemption.
Apple gets access to PostFinance customers and saves on gift card costs. Customer gets easy payment system. Bank gets new revenue stream.15:03:
And we're now into a case study - 'digital (is) good - bank as a retailer?' - from PostFinance's Amir Tabakovic.14:55:
Audience q: is mPOS going to be obsolete soon along with cards?
Corke concedes mPOS is a bridge but says full mobile wallet adoption is still a long way off. Cheques and cash still not dead so cards are safe for a while yet. Garcia says that if/when NFC takes off, firms like his can adapt to the tech changes and will have the important thing already - the customer relationship.13:40:
Garcia has been joined by the rest of the panel. First point is that mPOS is not just for micro-merchants anymore, the big boys want in. This is because it helps improve customer service and therefore close sales.
Holst-Roness uses eg of car dealer who can tempt buyer into putting down a payment when they are on a test drive and 'in love'.
How do the banks fit in? Corke says there's room for banks to work with firms like iZettle and for banks to launch their own offerings.
New mPOS players popping up all the time, panel agree that the winners will be those that come up with clever software add ons. The hardware doesn't have room for differentiation. Hardware will eventually be built into devices.14:21:
Garcia begins by talking about the accelerating mobile revolution. In its first year, the iPad shipped 100 million units: 3x iPhone in its first year and 50x the iPod.
How does this mobile, online, revolution affect the bricks and mortar world? Business, design and technology merge to make firms more customer-centric. Mpos helps them do this - iZettle claims to have forced a 25% year-on-year growth in POS sales in Sweeden since launch in 2011.
How do banks react. IZettle says it wants partnerships, points to today's news of Santander investment. (Another option is banks launch rivals - I'm sure Monitise's Corke will have something to say about that.)14:06:
Astonishingly, delegates have dragged themselves back to the hall from lunch on the sunny terrace.
Let's hope Ignacio Garcia, MD, iZettle Spain, makes it worth their while. After a presentation, he'll be joined by Tim Corke, MD, mPOS Division, Monitise and Erik Holst-Roness from SCCP Group for a discussion moderated by the Mobey Forum's Sirpa Nordlund13:03:
Time for lunch. We'll be back in an hour to talk mPOS.12:55:
Privacy: Birch says that if you're on Facebook you don't care about privacy.
Audience member disagrees, it's how your data is used and by who - Facebook is not the same as your bank. Gives eg that in Poland a big uproar was recently caused about idea of banks telling insurance companies if customer is buying cigarettes.
Birch asks what's the problem with that? If you smoke you should pay more for insurance.
Wilson asks what happens if you're buying cigarettes for your mother? Perfect eg of big data not being predictive. 12:40:
Worthy says that banks need to be very careful about using customer data for purposes it was not given for. New data protection regime coming in will put massive threats of fines. On using social media data, you also have to be careful about who owns it. It may look like its just out there, and freely available, but it's not.12:30:
Worthy makes the important point that there are big issues re privacy and regulations before we head straight into audience Qs.
First up: all this talk about how tough it is to harness big data but hasn't Google cracked it?
Birch suggests Google is just adding stuff up, its not big data. Wilson disagrees, they are finding patterns and are using information to make useful predictions. Audience eg of good use of big data: Amazon book recommendations. A bank eg. 'people like you' spend this much on insurance etc. Useful to see if you're overpaying.
Audience member says its not about using the bank's data but outside stuff like Twitter.12:17:
Birch is back to moderate the big data panel and is joined by Julian Wilson from FreedomPay and John Worthy from law firm Field, Fisher Waterhouse.
After a moany anecdote to illustrate how poorly banks use all the data they have at the moment, Birch hands over to Wilson for a presentation.
What does 'big data' mean? Too much unstructured data for us to handle with current tech and processes. Needs rethinking. Where does big data sit in value system? It's a tool for inferring correlation, not for predicting. Another part of business does the analysing and puts it to use.
So, what is the opportunity it presents us? To re-engage with customers.
Wilson says that technology over the last couple of decades has made things so automated, so algorithm-based, that customer engagement has been sacrificed for efficiency. Big data has the potential to make up for this.
How to harness all this information? Combine retail and transaction data to learn about customers; boost service propositions; then use social media to validate your moves and improve them. 11:54:
So what's the link with social media? Most customers use at least two social networks. CaixaBank is on all the networks but in the last year has also launched four of its own private communities.
One, the Inspiranos Network, already has around 80,000 users, who have submitted hundreds of ideas to the bank of which 100-odd relate to mobile services. If ideas get more than 100 votes, they get launched.
An eg. customer used the community to ask for the ability to check bills through their mobile app. Launched last month.
Another private community connects merchants and buyers for location-based offers/promotions. In 8 months it has found 500 merchants and 4000 customers. The average ticket amount has grown 20%.11:44:
CaixaBank has 6000 branches, 10,000 ATMs but also has a massive mobile userbase, with 2.3 million users who made 700 million transactions last year. It has the second biggest userbase in Europe and was ranked second in quality worldwide by Forrester Research.
The bank has a massive 70 apps: finance apps, non-finance apps, education apps, research apps, product apps etc.
The average age of mobile users is a (high? 37. 70% of users are men. 80% Android or iOS. 70% of users use it every month, averaging 10 sessions a month.
In the last six months, a significant percentage of users have started using mobile instead of, not as well as, online services. 11:30:
For the next keynote, David Urbano, director of mobile channels and digital networks at CaixaBank, is going to talk about 'enhancing the mobile banking experience through the use of social media'.11:10:
Time for a coffee break:
In the meantime, here's some news from iZettle, which will be talking in the Mpos debate later, revealing that it's secured a EUR5 million investment
from Banco Santander.11:07:
Moving on to P2P payments, Zafar asks if Pingit shows that banks are finally ready to take on PayPal in this area. Romero, unsurprisingly, thinks yes and also draws attention to the upcoming UK-wide offering. Daniel, who's employer Vocalink is working on that system, says that P2P might not make banks money but they've paid for it so that they can take advantage with other services later.10:52:
Audience q: How do Visa and MasterCard feel about PKO's wallet pushing them out?
Bolanowski says PKO is biggest Visa issuer in Poland so delicate and complex situation and card firms were "not happy" about the IKO move. Sill not real threat yet though; millions of cards but only tens of thousands of wallet users.
Audience member point: the threat to Visa and MasterCard is interchange revenue if we use bank transfers for mobile instead of cards. Why shouldn't we explore alternatives to card schemes?10:41:
Zafar finishes off with the obligatory dig at poor old Google Wallet before introducing our panel, who are PKO's Wojciech Bolanowski, Vocalink's Nick Daniel, HP's Tomasz Blicharz, and Manuel Romero from Barclays Bank Spain.
Who are the biggest non-bank threats?
Daniel doesn't think there is any one firm that dominates, he thinks APIs are where its at. Romero agrees that the field is open and many players can find a niche to succeed. Bolanwski thinks that if its about data, the big boys are either Google and/or the retailers. Blicharz cites research suggesting that if banks go it alone, chances of success are 7%, if telcos go it alone, chances of success are 5%, if they work together, chances are 60%.
Everyone agrees: no one will completely dominate this integrated, complex ecosystem.
Next Q from Zafar: why don't banks invest in innovation in the way Google etc do.
Daniel points out that UK banks were not keen on a mobile front end for Faster Payments but felt forced into it as cost of business. Always have to be dragged. Romero says that innovation is very different for banks than for start-ups because there's a huge legacy to consider. Risks are also greater in terms of regs etc.10:22:
And we're moving on again, this time it's banks V non-banks. Samee Zafar from Edgar, Dunn & Co begins with a presentation before moderating a panel.
The payments market is already congested. What will mobile wallets do? They are primarily an aggregation tool. Aggregation at three levels: loyalty/rewards, payments, transport. Apple Passbook hasn't really taken off yet but it is aiming for this aggregation model - place to store discount vouchers, plane boarding pass etc.
What does the provider get? Data, aggregated data that lets you understand the customer so you can sell to them. (Not easy to do though, how many irrelevant offers do you get?)
Zafar says that mobile is making the payments ecosystem far more complicated and threatening the dominance of banks. It's not about one party killing off the others, it's about partnerships but who is the senior partner, providing the infrastructure?10:09:
We're now on to a case study from Wojciech Bolanowski and Szymon Wałach from PKO Bank Polski.
Poland is already Europe's leading market for contactless. More than half of Poles think mobile payments are both cool and easy compared to cards. With smartphone penetration hitting 60%+ this year and telcos, retailer and new players all sniffing around the mobile money arena, the bank has decided its time to push its own wallet.Here's a Finextra story on it.
Our presenter has broken his mike and tells us he breaks all tech, which is why he was the perfect tester for the wallet...and the mike is back up.
It's worth noting, as our presenter does, ATMs are still very popular in Poland, people want cash so the wallet doesn't try to replace cash, instead it removes the need to use a card at the ATM. This, he argues, helps to give PKO a big advantage over telco rivals.
Localness is also an important factor:09:46:
How do we get there? Need to think of three things in relation to mobile wallets: authentication, apps and APIs.
Authentication: why do all banks need their own authentication, why can't I use same identity for all accounts.
Apps: banks shouldn't be making apps, providing infrastructure for retailer apps.
APIs: providing digital money APIs for the consumers and merchants.
Birch's conclusion: Stop thinking of the wallet as an app and start thinking of it as the infrastructure for other apps.09:40:
So how do banks build wallets that can match or beat the retailer and telco efforts?
Bank mobile wallets have to do more than just emulate the old-fashioned leather version. What can a mobile wallet do that a normal one can't? It's not talking to the banks and retailers. It's talking to other mobile wallets.
Eg. You're in the pub, friends see that from you social networks and join you, you get reward through discount on your pint.09:28:
van Wezel quickly gets to the heart of the matter when it comes to mobile money: 'if it's only a hobby, if we don't make money, then we don't go anywhere'.
And that's what will be up for discussion today, beginning with Dave Birch on mobile wallets. The way we've looked through wallets so far has been through prism of provider (banks, telcos, retailers etc).
Birch uses Barclays Pingit and mobile banking app but does he use it to buy online? No because not properly integrated with retail environment.
In London we can now finally use bank cards for contactless bus journey payments but you still cannot buy a single handset that lets you pay for your journey.
Retailers are the firms currently leading the way in mobile payments, says Birch, citing Starbucks, Chipotle and Halo (taxi app). The reason that these are so popular is that there is no 'payments experience' - they just give you what you want.
He also dismisses the 'too many apps' argument against shop-specific apps - says you'd only use about five regularly anyway.08:45:
Whether you're here in Barcelona or not, feel free to share your thoughts in the comments section or on Twitter, using the #MobeyDay
Delegates are filing in and grabbing some breakfast before we get under way in earnest when Ron van Wezel, chairman of the Mobey Forum board and director of emerging payment streams at Deutsche Bank welcomes attendees and hands over to keynote speaker Dave Birch, 'global ambassador' for Consult Hyperion, who will talk about 'apps, APIs and authentication - what the mobile wallet will "really" look like'.08:39:
Ahead of today's event, Finextra has carried out some research that shows banks around the world are looking to discounted offers and big data analytics to beat off the competition from telcos and tech start-ups as they battle for control of the consumer mobile wallet. You can read our write-up here
Organised by the Mobey Forum and Finextra, MobeyDay is again being hosted by Caixabank in Barcelona. Last year
we were at science museum CosmoCaixa, this time it's art gallery CaixaForum.View Larger Map08:35 (CET):
The theme for the second annual Mobeyday is 'monetising the mobile'. Among the subjects up for discussion will be the shape of the mobile wallet, the rise of non-bank players, the promise of big data, and the future of mobile point-of-sale. You can read the full agenda here