Babies, Toothbrushes & Chinese Bank Accounts: An Update on Mobile Banking & Payments

 Author: Lee Wetherington, LWetherington@profitstars.com

In the U.S., there are more mobile phones than toothbrushes. In China, there are more mobile phones than bank accounts. Around the world, more iPhones are sold daily than babies born.

I don’t know if any of these things are true, but they were all spoken by mobile-payments VIPs and market makers recently gathered in San Francisco for SourceMedia’s 6^th Annual Mobile Banking and Commerce Summit, a conference convened in the shadows of another affair going on down the street at a little company called Apple.

While Apple’s World Wide Developers Conference (WWDC) certainly garnered more press, the biggest movers and shakers in mobile banking and mobile payments were presenting at the Mobile Banking Summit, including executives from Isis, PayPal, MasterCard, and American Express.

Here’s a roundup of some of the best takeaways:

‘Siri for Banking’ But Better

The most interesting new technology on display at the Summit was one that leverages voice recognition technology for a better mobile banking experience.

Similar to Apple’s Siri, Personetics’ Digital Banker is a voice-enabled mobile banking assistant. Unlike Siri, Personetics’ predictive analytics and decisioning make for a much easier and more productive customer experience, i.e., Digital Banker not only recognizes natural-language requests spoken by the bank customer, it also predicts what the customer might want to know next or do next based on account data and historical behavioral analysis, proactively providing prioritized prompts for those options. It also enables personalized messaging and promotions.

The bank customer may simply ask, “What’s my balance?”, “What is my available credit?”, or “How much did I spend on toys this year?” Balances and other non-public, private information are presented visually, not audibly, to protect privacy. By recognizing speech and predicting/prioritizing next steps, Personetics’ Digital Banker dramatically expedites customer inquiries and reduces thumbing on tiny visual keyboards.

Tablets Are Not Large-Screen SmartPhones

These days, many financial institutions are tackling the question of tablet banking, how important it is or will become, and how it compares to banking on mobile phones. According to Alejandrao E. Carriles, EVP and Director of Mobile Strategy & Retail Innovation at BBVA Compass, 5% of BBVA customers are tablet users but those users represent 22% of BBVA’s mobile banking usage. BBVA tablet users use tablet banking 4X more than mobile banking. The reason?

“Tablets are not large-screen smartphones,” says Carriles. Tablets are used mostly at home in the evenings in a leisurely environment. Smartphones, however, are used everywhere briefly for more urgent, time-critical needs. Smartphones are personal devices, while tablets are typically more communal and shared by the family.

And while tablets are physically portable, the reality is only 38% are truly mobile devices. And this is why 53% of tablets are Wi-Fi only and are primarily used on home networks. Even so, iPads already generate 25% of all mobile Internet traffic, according to Mark Jamison with Capital One’s Digital Innovation Lab.

Mobile Payments: What, When, How

The real buzz of the conference centered around mobile payments and whether a consensus exists regarding when, how, and what form mobile payments will take. While there was little doubt or serious challenge to NFC’s role in the future of mobile payments, most agreed that NFC would not be the only, much less best, means of facilitating mobile payments in different settings: in-person (proximity), remote (online), and hybrid (in-aisle or on-the-way-to-the-store).

Moreover, many presenters insisted there would “not likely be one single wallet” on the mobile device but rather many. Isis’ Jim Stapleton noted that many confuse the mobile app with the mobile wallet, which he defined as the secure element on the mobile device that activates, stores, and manages the consumer’s payments credentials.

PayPal countered with a different “hands free”, cloud-based model of mobile payments, one independent of any given mobile device. PayPal also fended off bank fears of disintermediation, insisting consumers do not hold balances in their PayPal accounts. PayPal executive, Dan Schatt, said that PayPal accounts are “pass-through accounts” and that most consumers use PayPal to link back to a bank-issued credit/debit card or DDA account.

No matter the form or adoption timeline of mobile payments, there is broad agreement on the convergence of banking, shopping, payments, and geo-location. According to a Monitise (fka Clairmail) executive, almost half of consumers want to use their mobile phones to shop for the best price, and a third of consumers want deals offered in real time based on where they are. Informing such decisions will be the account balances, budgets, and personal financial management tools provided by the consumer’s financial institution.

What to Do Next

For financial institutions contemplating mobile payments, Capital One’s Mark Jamison said it best: “Think Big. Start Small. Scale Fast.” Mobile payments are bigger than payments. Consumers don’t need another way to pay, but most will avail themselves of easier, faster, better ways to shop, save, and spend. The good news is that financial institutions are central to this pursuit and are already armed to remain relevant. So, when thinking mobile, think big. Think China, toothbrushes, and iPhones.