Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets
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Mobile Commerce Guide Engage Customers And Build Loyalty in Developed and Emerging Markets 11 FOREWORD Published by: SAP AG By Sanjay Poonen, President, Corporate Officer, Technology Solutions Dietmar-Hopp-Allee 16 69190 Walldorf and Head of Mobile Division, SAP Germany Copyright © 2013 SAP AG or an SAP affiliate company. All rights reserved Library of Congress Cataloging-in-Publication Data 14 PART 1: MOBILE COMMERCE: MAPPING THE COMPETITIVE LANDSCAPE SAP Mobile Commerce Guide Engage Customers & Build Loyalty in Developed and Emerging Markets Edited by Peggy Anne Salz 16 Mobile: A License To Thrill p. cm. A look at how mobile is impacting business, people and society at every level, ISBN Number: ISBN 9780988588677 1.Mobile technology. 2. Mobile commerce everywhere on the planet. Library of Congress Control Number: 2013906059 By Tomi T. Ahonen, best-selling mobile author Printed in the United States of America Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed 22 Who Will Lead The Mobile Commerce Charge? in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. The advance of mobile and the breakneck pace of technology innovation are coming together to provide amazing opportunities for banks to extend financial services to new and existing customers - but banks aren't the only ones taking action. By Pradipto Pal, Executive, Accenture Mobility
34 Money 2020 And The Business Case For Mobile Payments: The Role Of Rewards Compelling reasons why financial institutions need to leverage the consumer data that is locked in their debit and credit card products to better service consumers and better partner with retailers to drive commerce. By Aaron McPherson, Practice Director, Worldwide Payment Strategies, IDC Financial Insights 38 Mobile Commerce And Financial Institutions In Latin America: An Evolving Ecosystem Banks are jockeying for competitive advantage using some rather sophisticated smartphone apps and approaches that deliver utility, drive engagement and stand out from the crowd. By Mary A. Gramaglia, Director of Sales, Latin America, Mobile Commerce, SAP
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43 Digital Money Sweeps Mexico And Brazil 82 PART 3: BANKING IN DEVELOPING MARKETS: PLOTTING THE COURSE As the mobile money phenomenon sweeps across Brazil and Mexico banks FOR FINANCIAL INCLUSION AND FINANCIAL SUCCESS aren't the only ones lining up to transform financial services. 84 Advancing New Frontiers For Financial Inclusion By Charmaine Oak, Practice Lead, Digital Money, Shift Thought Pakistan is one of the fastest growing branchless banking markets in the world. AbacusConsulting recounts recent developments in mobile banking 50 PART 2: BANKING IN DEVELOPED MARKETS: TAKING CHARGE and the impact on the local landscape. OF CHANGE By Abbas Khan, Partner, AbacusConsulting
52 Banks: Evolve, Innovate And Embrace ‘True Multichannel’, Or Be Left Behind 92 Accelerating Mobile Banking Through Collaboration Banks must generate customer-centric insights through advanced analytics Malaysian Central Bank is on a mission to transition Malaysia to a high value-added, that will allow them to enhance products, personalize service bundles — high-income economy by 2020. A big part of the plan involves the widespread and or make way for companies that will. rapid migration to electronic payments spearheaded by MyClear. By Simon Paris, Global Head of Financial Services Industries, SAP, and By Siek Kar Teck, Director, Retail Payments Division, MyClear Matthew Talbot, Senior Vice President, Mobile Commerce, SAP 96 Mapping The Market For Financial Inclusion 59 Removing Friction To Build Relationships HBL is harnessing mobile technologies to do more than enable the delivery of At RBS Citizens the goal is to get customers in and out fast — and success innovative banking services; it is providing all people, including the poor and rural is all about delivering financial services that respect customers' time. populations, access to convenient mobile banking services that put them in control By Scott Manley, SVP, Head of Product – Delivery Channel, of their financial future. Treasury Solutions, RBS Citizens By Faiq Sadiq, Head of Payment Services, Habib Bank Limited
64 The Convergence Of Mobile And Online Banking 101 Creating New Pathways For The Poorest This is the future of electronic banking that requires a common middle layer DBBL launched mobile banking services targeting the unbanked, signing up an with business logic and messaging infrastructure. average of 100,000 customers each month since the commercial launch in 2012. By Jacob Jegher, Research Director, Celent Now the bank is planning additional services using new authentication technologies 69 Breaking The Mobile Banking Mold to grow that number exponentially. Organizations must be agile. To keep pace First Tennessee Bank delivers financial By Abul Kashem Md Shirin, Deputy Managing Director, Dutch-Bangla Bank Limited services that empower executives to act fast and conduct transactions on the move. 108 Targeting Tomorrow’s Mass Affluent By Taylor J. Vaughan, Director of Treasury Management Services, First Tennessee Bank CIMB Niaga, the number five bank in Indonesia, through innovative services 75 6 Ways To Wring More Value Out Of Multi-Channel Banking and social media outreach is preparing for a day when today's unbanked will The pressure is now on banks to help their customers make smarter decisions be part of the burgeoning middle class. based on increased visibility into all their accounts as they save, spend and shop. By Wan Razly Abdullah, Strategy and Finance Director, PT Bank CIMB Niaga Tbk By Davor Ebling, Director, Mobile Commerce Solutions, SAP
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114 Branchless Banking Driven By ‘Disruptive Innovation’ 140 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE Bank BTPN reveals its plans to disrupt the market with a new and cost-effective OPPORTUNITIES AT THE INTERSECTION model aimed at empowering people at the bottom of the pyramid to manage an 142 Mobile Shopping And Coupons Transform Retail interest-bearing bank account. Yankee connects the dots through recent data and surveys to show why — and By Donny Prasetya, Head of Business Development, btpnWOW! how — mobile coupons are becoming the way to lure shoppers. By Yankee Group 122 PART 4: MOBILE OPERATORS: PAVING THE WAY FOR MOBILE PAYMENTS AND MORE 148 Opportunity At The Intersection Of Retail And Mobility Smart marketers in transportation, utilities and consumer products companies 124 SIM-Based NFC: Enabling A New Level Of Interaction For Latin are exploring how they can deliver relevant, timely information, promotions, and American Big Events special offers right to the consumers’ smartphone. A string of NFC trials are taking place in Brazil just in time for the FIFA 2014 By Colin Haig, Program Principal, SAP Retail Soccer World Cup and the 2016 Olympic Games, enabling consumers to make Fast Shopper, Slow Store: A Mobile Playbook payments and access information, and highlighting new business opportunities. 153 Actionable insights and valuable advice to connect with the 'new' mobile consumer. By Valter Wolf, Market Development Director, GSMA By Gary Schwartz, CEO, Impact Mobile. 127 Open Solutions Could Help Fulfill The Promise Of Mobile Money Survival Guide: Evaluating The App Vs. Web Debate With over 100 mobile money deployments globally, only a handful have reached 161 Mobile apps vs. mobile Web is a topic of heated debate in the industry today. meaningful scale. Here are some key examples and learnings revealing what A successful approach is one that uses mobile apps and the mobile Web in the makes services tremendously successful. right combination to make shopping across all channels seamless and personal. By Sal Karakaplan, Vice President, Mobile Money, MasterCard By Panagiotis Papadopoulos, Retail Mobile Lead, SAP 131 Preparing To Deliver ‘Advanced’ Services Mobile Retailing 2.0: Connect With The Customer At The Point of Decision From enabling merchant payments to driving financial inclusion, Ooredoo 166 How retailers can realize the full potential of the greatest marketing tool ever is positioning itself to be a leading provider of mobile money services and invented to win the battle for the customer and get the edge on online rivals. one of the world's top 20 mobile operators by 2020. By Mickey Haynes, Global Principal, Mobility Solutions in Retail, SAP By Rambert Namy, Head of Mobile Financial Services, Ooredoo 171 Showrooming, Deconstructed 136 Expanding Mobile Wallet Capabilities To Encourage Customer Loyalty A guide to help retailers build the key capabilities that will allow them to clinch Celcom has made its mark with AirCash, one of the first mobile wallet services the deal and stem showrooming. to launch in Malaysia. Now efforts focus on integrating AirCash into its larger By Nikki Baird, Managing Partner, RSR Research customer loyalty program. By Afizulazha Abdullah, Chief Digital Services Officer, Celcom Axiata Berhad
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175 Consumer Focus Key To Closing The Mobile Commerce Loop 204 Detect, Connect And Engage Innovative retailers are using mobile to equip their stores and empower their Technology and analytics are coming together to allow retailers to radically staff to deliver an omni-channel experience personalized to each customer, redefine the relationship they have with their customers in real-time. and to accelerate revenues and deliver customer value. By Mark Dahm, Senior Manager, Business Development, Wireless Networking By Rakesh Gandhi, Senior Director, Mobile Application Solution Management Group, Cisco Systems and Jason A. Oglesby, Director Mobile Solutions – Consumer Mobile, SAP Management, SAP
210 Public Transport Drives Personal Loyalty 182 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) Canadian transport authority STM has launched an innovative mobile CONNECTION WITH YOUR CUSTOMERS customer rewards pilot program, delivered by a smartphone app, to thank existing customers and attract new ones. 184 Gateway To The Future Of Customer Relationship Management Examining the customer journey, the purchase funnel and the many moving parts By Pierre Bourbonniere, Head of Marketing, Société de transport de Montréal marketers need to understand to encourage commerce, trigger conversions and 214 Utilities Customer Engagement boost customer engagement. Customers are moving to mobile and other channels to solve issues, report By Michael J. Becker, Managing Director North America, Mobile Marketing Association outages or simply check their bill — and utilities companies need to prepare. By Haridas Nair, Vice President, mCommerce Products and Solutions, SAP 192 Reaching The Mobile Consumer Organizations must be careful not to miss the opportunity to build mobile into a wider strategy, that is cohesive across all channels, to enable meaningful 220 PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES — and ongoing — customer engagement. AT RETAIL By Jason A. Oglesby, Director Mobile Solutions Management, SAP 222 Starbucks: A Mobile Payments Case Study 200 The Engaged Retailer: How Mobile And Big Data Improve Revenue, Exclusive insights to track and analyze the stellar success of Starbucks' Retention And Profits mobile based payment system called ‘mobile pay’. Retailers must take proactive action to turn mobile into an asset that delivers By Sam Gellar, Analyst, Portio Research revenue and customer engagement. They can start by building an information 232 Weighing The Alternatives To NFC technology and customer-facing strategy that capitalizes on mobile attributes An evaluation of alternative mobile payment technologies shows the such as location, activity, and sensor data to delight customers. benefits and drawbacks to conclude that the ideal solution may be a By Maribel Lopez, Founder and Principal Analyst, Lopez Research combination of 'all of the above'. By Mickey Haynes, Global Principal, Mobility Solutions for Retail, SAP
8 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 9 FOREWORD
FOREWORD Sanjay Poonen, President, Corporate Officer Technology Solutions and Head of Mobile Division, SAP
240 A Serious mPOSition Mobey Forum has seen more than 30 mobile point of sale (mPOS) solutions launch around the world and considers the implications of this trend for banks as they forge customer relationships with merchants. By Sirpa Nordlund, Executive Director of Mobile Financial Services, Mobey Forum
244 PayPal: Enabling Payments Anytime, Anywhere And Via Any Screen In Germany PayPal has completed a successful trial of its PayPal QRShopping solution and shares its strategy to change the entire end-to-end shopping experience across all screens. By Tobias Zadow, Business Line Manager, Mobile DE, PayPal
251 How Apple’s Passbook Ushers In The Third Mobile Marketing Wave With nearly 3.2 billion mobile consumer requirement for an enhanced, Learn how to leverage this new mobile marketing imperative to drive sales, relevant and — hence — more contextual boost loyalty, and increase customer engagement. phone users and counting, retail experience. If we think that the birth By Joe Beninato, General Manager, Digital Wallet, Urban Airship worldwide mobile penetration of electronic commerce and the advance has already been remarkable. of eBay and amazon.com in 1995 was a big 258 PART 8: CLOSING THOUGHTS: THE ROAD AHEAD But mobility is not only enabling phenomenon, then the impact of mobile is going to be transformational. 260 Big(ger) Data Pushes The Boundaries rich and always-on interactions. Today, we are arguably on the cusp of a fourth revolution: the age of Trillions. It is also transforming banking The impact on all industries will be profound. But the real excitement starts Mobile has the power to trigger a seismic and commerce, creating a new when these microprocessors join the conversation, communicating with shift in commerce because consumers themselves and with us. global mobile marketplace that already live their lives on mobile. Reams of By Mickey McManus, President and CEO, Maya is always accessible and always research documents people — everywhere — reach to their mobile devices every step ready for business. of their daily journey. Already the number of 266 APPENDIX Indeed, mobile commerce is becoming a people using their mobile phone to access Company Descriptions fact of life, driven by the advance of mobile the Internet far exceeds the number using technologies, a surge of innovation in devel- a desktop PC. oped and developing markets and a growing
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Another driver is the passion Millennials Moreover, mobile is evolving, driven by customers faster; retailers and consumer have for personal mobility. In many regions companies that have succeeded in product companies may refine their models of the world, people under the age of 40, a enabling person-to-person payments to enable contextual commerce their segment keen to adopt mobility innovations and have set a course to transform the customers genuinely welcome and appreciate and integrate mobile into every aspect of their entire retail environment. because it is personally relevant and valuable; lives, will be the majority of the population. and utility companies may harness mobile This will create new opportunities, and It’s new territory that offers new challenges to provide customers new visibility into the new pressures, for companies across the — and huge benefit to the companies that services they use and the payments they make. emerging ecosystem — banks, card issuers, can master them. mobile operators, app developers, merchants To wield the transformational power of — to enable commerce experiences that To help you navigate this new market and mobile for your business, you must first know neither boundaries nor friction. grasp the growth opportunities ahead the fully understand its impact. The examples second edition of the Mobile Commerce gathered in this Guide for this purpose are Mobile is also driving financial inclusion, Guide has brought together a wide variety global and diverse. But — more importantly allowing banks such as Dutch-Bangla Bank of case studies and success stories, — the insights presented here, drawn from Limited in Bangladesh to extend their contributed by the executives who helped the expertise and experiences of more than services to the unbanked. The impact is make them reality, to show how mobile 40 leading analysts, professional industry profound as financial institutions — and impacts the Retail, Consumer Product, organizations and futurists, are actionable. mobile operators where regulation allows and the Utilities industries. — empower people at the bottom of the These are exciting and challenging times. pyramid to participate in society and As this Guide shows, precisely how compa- Whether you are eager to start planning your improve their quality of life. nies can deliver value — and communicate mobile commerce strategy, or seek guidance this to their customers — will depend on a as you expand your existing offer, think of Mobile operators are experiencing similar variety of factors. Banks may encourage and this Guide as a knowledge resource and success. Ooredoo, a multi-country mobile educate unbanked to see their mobile companion on the journey ahead. operator group has identified mobile money wallets as instruments that allow them to as a key capability and a pillar of its initiative save money and plan their financial futures; to be one of the top 20 mobile operators mobile operators may share infrastructure worldwide by 2020. and best practices to reach and educate
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PART 1: MOBILE COMMERCE: MAPPING THE COMPETITIVE LANDSCAPE
The advance of mobile technologies, a surge of innovation in emerging markets and increased consumer requirements for enhanced retail and commerce experiences present opportunities for the ecosystem. Banks, mobile operators, card issuers, app developers, and retail chains are all jockeying for position to establish competitive offers and grow their footprints. In this section, we explore the current global ecosystem and hone on key regions (Latin America, Asia Pacific) and important offers (mobile payments, mobile wallets, mobile apps) to shed light on a much larger trend. It’s all about enabling transactions (and commerce) that harness mobile to deliver customers real benefit.
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Mobile: A License To Thrill By Tomi T. Ahonen, best-selling mobile author
I could go on and on. But let’s forget about Mobile is massive You may have noticed that the Yes, mobile seems to be an engine to deliver the tech and media industries. Take Visa, the world’s biggest Internet company, growth, revenues, profits, and wealth for those world’s largest financial company by number When I wrote my first book about mobile technology, telecoms, and IT companies. of users and obviously the world’s largest services and apps over a decade ago, this Google, says the future of the credit card company. They now say that the whole mobile industry was only an experi- Internet is mobile. You probably Now let me ask you this: Did you hear what future of payments... is mobile. The world’s ment that spanned some random countries noticed too that a once hovering- Electronic Arts, the world’s largest game largest lock maker, Assa-Abloy is building where they spoke languages nobody else near-bankruptcy PC maker called developer says about the future of gaming? locks that are operated by your mobile phone. ever bothered to learn, like Finland, Japan, They declare it is mobile. What about the The world’s largest airline by passenger miles, South Korea and Sweden. It was eccentric Apple Computer dropped ‘computer’ BBC, the world’s largest radio and TV broad- Delta, is now deploying mobile phone based to believe in mobile back then, and an act from its name, launched mobile caster? It says that all broadcast content will check-in and boarding passes. of faith to think mobile would ever be big. phones, and today calls itself a become available on mobile phones. What mobile company. about Warner Music? It said wireless is the In France Carrefour, the country’s largest When I showed off the ‘cool’ ways these future of music. What of Sony, the world’s retailer has deployed mobile solutions mobile phones could play elementary music Oh, and you might recall that Apple was largest home electronics company? The so advanced that they will help mobile snippets — known as ‘ringtones’ at the time — for a while last year — the most valuable CEO there just said that mobile was front shoppers find the shortest route in the - most said it was a fad that would never company on the planet, making the biggest and center of Sony’s future. And Samsung? stores. To assist shoppers the shopping catch on. Today mobile data services are a profits. But did you also know that the The world’s largest tech company said last list stored on their mobile phones is even massive global hit! In fact, they were worth computer-era billionaire Bill Gates is no year that their mobile unit is the driving re-arranged by aisle, depending on which US$436 billion last year. Yes, bigger than longer the worlds’ richest man? That title force of their profits. Or Facebook, the store you go to. In Japan McDonald’s the the Internet, bigger than global radio, bigger was taken by Mexican Carlos Slim. biggest social media company? It revealed world’s largest restaurant chain, has already than Hollywood movies, bigger than video last year that more than half of users now convinced one out of every six Japanese gaming. The mobile data industry is the What could possibly replace computers as come from mobile - and that the future of consumers to sign up to receive mobile fastest-growing industry of all time. No the engine to generate such wealth? In a social media is... (you guessed it!) mobile. coupons and offers. And speaking of ads, wonder it turns around companies like word: mobile. By the way, Carlos Slim Helú Not to be outdone the Associated Press, Coca-Cola, the world’s largest soft drinks Apple, or creates billionaires like Carlos Slim. runs Mexico-based América Móvil, one of the news agency headquartered, in the U.S., maker, recently ran an international the world’s largest mobile telecoms empires announced that it was the mobile phone, not multi-platform ad campaign with mobile stretching across all of Latin America. the traditional Internet, which was the future at the heart of it that achieved a whopping of the news media. 45 percent response rate!
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No matter who you are or what you do We are mobile, too away - to the farmer downstream who is only too happy to get your topsoil. mobile is your tool to get ahead. But what about you and mobile in your life? Let’s look at mobile starting with some very basic services and abilities, and soon you’ll Mobile money prospers see that mobile is already a huge part of M-Pesa in Kenya launched six years ago; last caused their jewelry sales via the mobile daily life in countries across the globe. And let’s not forget mobile money. In many year the Central Bank of Kenya told us the channel to more than double. The Hockey parts of the developing world people have amount of money that transited mobile News, a weekly ice hockey magazine, Let’s start with children. Did you know only managed to save small amounts of phones was equal to 48 percent of the total launched a pure mobile version of the there are now mobile tools and services money — if any. They cannot qualify Kenya GDP. Yes, of the total Kenya economy, magazine and not only found 100,000 that help kids study better for their school for a bank account to put their money nearly half already transits mobile phones, new paying mobile readers as an audience, work? In South Africa, for example, a local away safely because they lack the proper and this in only six years. The World Bank they observed a positive knock-on mathematics books publisher released a identification and a permanent address. counts nine countries in Africa where already effect on print sales, which increased mobile math practice solution that helped Literacy is also an issue. at least 10 percent of the adult population by 5 percent! What print title reports South African students using it score uses mobile money or mobile payments. increases in circulation these days? 14 percent better in national math exams! So what do they do? They try to hide what little cash they have. It’s a risky business. The moment the decision was official, Or what about a farmer in India? The time It’s not safe — and burglars, thieves, animals Mobile, mobile everywhere Pope Francis sent his first greetings via to go turn on and turn off the irrigation at and natural disasters can take the money SMS. Was that an innovation for a religious the farm can take hours riding a bicycle way. Your life savings are gone. Vertical industries are also getting in on the leader to use text messaging to reach from one irrigation valve to another. action. An example is Willer Travel, a long masses of followers? No, the previous Now there is a mobile solution for that. But once the miracle of mobile payments distance bus company in Japan. They had Pope, Pope Benedict XVI, did it too. Was he The solution, which uses SMS, allows the arrives, suddenly anyone can have the basic a popular Website where they sold tickets. the first mobilista-Pope? No. The Vatican farmer to control his irrigation from home safety benefits of depositing their money When they mobilized their Website, they has been sending mobile messages at a few clicks of his phone. It’s not just onto something — a card, a phone, a branch- achieved a three-fold increase in their ticket to the faithful since January 2003. saving him time, and water, and the costs less bank account — that is permanent, sales on their mobile sites. of electricity and money - it also saves trusted, and safe. Run by the mobile operator Politicians are also harnessing mobile to with soil erosion! If you irrigate too little, or the local bank, these services empower Similar stats come all around the world. drive amazing results. President Barak the ground is dry and is blown away. If you the poor to save and plan a better future. Tiffany’s the U.S. jewelry store decided Obama’s re-election campaign masterfully irrigate too much, the ground is washed to mobile-optimize their Website which utilized new media in many forms. One of
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Coca-Cola, the world’s largest soft drinks become more loyal to you, if you get the Tomi T. Ahonen is an ex-Nokia executive, maker, recently ran an international value exchange right. and one of the most published authors in multi-platform ad campaign with mobile the mobile industry. He counts over a dozen at the heart of it that achieved a whopping If you’re not a business, mobile can help you books, as well as a regular blog that has heal the sick, educate the students, get the gained him the number one spot in the 45 percent response rate! votes to be elected and improve your life. Forbes Top 10 Power Influencers in Mobile1.
In 2013 there is no industry that is not being the highlights was on Election Day, when action (make a phone call to someone impacted and revolutionized by mobile tech- Team Obama sent out a text message to convince them to vote for Obama) nology. From car manufacturers to funeral to his followers and volunteers, asking probably accounted for the lion’s share homes, mobile is becoming part of their them to make one phone call on behalf of that surprisingly large winning margin. corporate DNA. Yes, I said funeral homes. of the President. In total 9.5 million such That, my friends, is the power of mobile. These institutions are now deploying QR SMS text messages were sent to all codes to gravestones, so our memories of those who had given Team Obama their our dear departed can be cherished and mobile phone number. This one SMS text Mobile to the end shared by friends, relatives and ‘significant message was estimated to have achieved others’ who scan the codes and access the 1.9 million bonus volunteer phone calls It doesn’t matter if you are a giant company things the deceased did and held dear. on Election Day because of the acts of or a tiny family-run business. It doesn’t volunteers who agreed to donate one matter if you’re living in the most advanced Yes. Mobile is with us every day everywhere. phone call to Obama, after receiving that digital nirvana or a person carving out an It’s the first thing we see when we wake message that morning of Election Day. existence in the developing world. It doesn’t up and the last thing we look at before we matter if you are a highly educated MBA or fall asleep. And now, this industry is even The impact was profound. All the polls in an illiterate fisherman. No matter who you letting mobile be the way we connect the last days before the election measured are or what you do mobile is your tool to get with the memory of our loved ones long the vote to be very close, about 1 percent ahead. If you are a business you can harness after they are gone. advantage to Obama. But Obama actually mobile to get more customers and make won by 4 percent. That difference was about more money — more quickly, more profit- Yes, mobile is a wonderful technology that is 3 million votes. This never-before-used tactic ably and more reliably. It also helps you completely changing every aspect of our world. of sending a text message to call voters to reach better and bigger audiences that will FOOTNOTE
1. www.forbes.com/sites/haydnshaughnessy/2012/01/03/who-are-the-top-10-power- influencers-in-mobile/
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Who Will Lead The Mobile Commerce Charge? By Pradipto Pal, Executive, Accenture Mobility
transaction histories, to more advanced Banks may choose to extend existing offerings The advance of mobile technologies, With nearly 6 billion connections and operations such as loan applications and to new customers, branch out into new value a surge of innovation in emerging counting, worldwide mobile penetration inter-bank fund transfers. segments or increase the sophistication of has already been remarkable. But mobility their services in a particular area. markets and increased consumer is not only enabling rich and always-on Mobile money transfers and purchases, requirements for enhanced retail interactions. It is also transforming banking or mPayments, open the door to previously However, banks should be aware that experiences present opportunities and commerce, creating a new mobile unbanked markets. These types of services they are not the only ones with this for banks to expand into new marketplace that is always accessible can vary significantly in their sophistication, ambition. While the banking industry and always ready for business. from SMS-based money transfers, to Near has dominated banking and payment service areas and extend their Field Communication (NFC) payments, services for many years, the recent advance existing services to the unbanked. The movement toward this new phase of to a full “digital wallet” capable of storing of mobile technologies and emergence of But banks are not the only ones mobility — which Accenture calls Mobile multiple credit cards, prepaid cards, and new consumer behaviors has leveled the taking note. Mobile operators, Life — is pushing mobile money offers in discount cards for mobile transactions playing field. As a result, new entrants, new three distinct directions: traditional mobile and commerce. partnerships and new operating models card issuers, app developers, and banking services (mBanking Services), are flooding the space and transforming retail chains are also jockeying to mobile payment services (mPayment Least understood and not yet widely the competitive landscape. establish competitive offers and Services), and mobile enabled consumer adopted, mEnabled Consumer Services grow their footprints. Accenture services (mEnabled Consumer Services). encompass a broad range of mobility offerings catering to specific consumer Asia’s affluent describes the current ecosystem Often the initial point of entry for banks lifestyle needs within and outside the and defines the capabilities mix into the mobility arena, mBanking links traditional banking realm. Services can Thus, many banks find themselves in that will be needed to serve the customers’ bank accounts to their mobile range from simple SMS-based promotion an unfamiliar position, struggling to keep market of ‘less cash’ consumers devices and provides customers with a new alerts to location-based targeted market- up — or join up — with mobile operators, way to manage their finances. Services can ing. With mEnabled Consumer Services, card issuers, app developers, and retail of the future. range from basic product information and banks have the opportunity to venture into chains that are also jockeying for position new businesses and further embed their in a value chain that spans activities from brand in consumers’ daily lives. banking to commerce to CRM. Most banks are in the business of making money — and they have a huge learning curve to travel before they can serve the poorest of the poor.
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Four mobility value segments for banks Competition is stiff, particularly in Asia will swell by 37 percent (nearly double
Pacific where a digital wave is creating a the global rate). market hungry for mobile money services. Mobile as a platform to Driven by the advance of a tech-savvy The region is not only growing richer; it improve bank’s operational Mobility consumer base and a ‘change of the guard’ is also becoming more passionate about efficiency
m-Salary transformed Enterprise focus that sees Generation X making way for mobile technologies and services. m-Allowances banking processes m-Claims m-salesforce Generation Y to take the helm, this shift is happening much faster in Asia Pacific The outcome will be an increase in smart- than in Europe or North America. phone penetration, a trend we already observe, that will drive more mobile mEnabled enterprise Indeed, the youth segment in Asia Pacific app downloads and usage of the mobile is not only far greater in sheer numbers; Internet. Significantly, NFC will likely gain it also has a much greater desire to lead a serious traction, with an estimated 450 Mobile Life. This segment, which I describe million NFC-capable devices expected to as digital natives’, has a huge appetite for hit the market over the next three years. mobile/digital services. In fact, demand mBanking services Mobile Life mPayment services in the region far outstrips supply of both As more people embrace a Mobile Life, Mobile as Mobile as a services and bandwidth. the demand for services — including a new payment tool to banking, payments and commerce — interactive target unbanked channel to sections of Notably, the rapid growth of the middle will skyrocket. In fact, Accenture research increase society and class across Asia Pacific presents players found that 60 percent of mass affluent customer expand
Customer focus with additional opportunities. Another customers, which includes the region’s loyalty and mCommerce cross-sell mEnabled opportunities 70 million households are expected to join upper middle class and high-net-worth opportunites consumer services this burgeoning class by 2015, and this individuals, are interested in using digital impressive income growth extends all the channels in conjunction with bank branch way up the social ladder. Between 2010 and visits. In addition, 21 percent of respondents 2015, the number of millionaires in the Asia would prefer to switch completely to Augmented Mobile wallet reality, for (Stored value Pacific region is forecast to increase by direct banking. e.g. real-time account) 25 percent (compared to 17 percent world- property guide Mobile as a conduit to build brand mCommerce presence and integration into wide), while the ’ultra wealthy’ segment consumer’s daily lives
White space represents the untapped opportunities as a result of new business and/or operating models
Figure 1: Based on data from www.accenture.com/Microsites/accenture-innovation-center-asia-pacific/Pages/index.aspx
24 Mobile commerce touch points same chain just happens to have an outlet. to grant loyalty points and thereby I don’t know this, but I do receive a push encourage a return visit or purchase. Now that I have described the key market notification directly to my mobile phone demographics and data points across the that says “Hi Pradip, if you are nearby From the perspective of the bank the Asia Pacific region, let’s examine how and walk into our store, we will give you a mobile wallet currently sits outside the mobile banking services have evolved 10 percent discount on your next pair of core banking system. In practice I can across the region. jeans and you can use your loyalty points”. transfer money from my account to a mobile wallet. However, clever banks are Dramatic economic growth and rising Now let’s look at this from the perspective of also taking advantage of the opportunity household incomes across the region the store merchant. First, this is a new retail to provide me additional wallets for have created a market of mass affluent. experience that only mobile can deliver. family members, for example. This segment carries a mobile phone and It can’t be done with any other channel is already well accustomed to using mobile because there is no other channel I have on In this scenario I have the option to open banking services to check balances, pay my person at all times, even during shopping up a family wallet, or perhaps separate bills and make P2P transactions. and — more importantly — no other channel wallets for my wife and daughter. I am still can deliver location-based services coupled the account holder, but the bank has now The next step is full mobile commerce, a with deep customer insight. gained two ‘new’ customers — my wife and space where banks and merchants have daughter — and sees a two-fold increase in an important role to play. Together they The beauty of this is that this channel transactions and revenues. The additional must build on the mobile wallet, a product allows the consumer to pay from a mobile mobile wallets allow us all to conduct banks first provided to make P2P payments, wallet and not a credit card, which means commerce without cash or cards, so we and extend that functionality to enable and the merchant does not have to pay the are happy. The merchant also benefits for enhance new retail experiences. 2-3 percent charge to the credit card the reasons I mentioned. The result is a company. For the merchant it’s a win-win virtuous cycle benefitting the bank, the Let’s say I use my mobile wallet, provided all around. They get their money up front merchant and the ‘less cash’ consumer. by my bank, to do some shopping and buy and without having to pay the fee to the some clothes at Store X, for which I also credit card company. What’s more, the But banks are not alone. receive some loyalty points as part of the merchant now has a deeper relationship transaction. A few days later I walk into a with the consumer, one that allows them shopping mall in a different city, where the
26 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 27
A day in the life of a 'less-cash’ consumer society of the future Nearly all of the world’s financially unserved adults live in Africa, Asia and Latin America Millions of adults 6.30am > 7.30am > 9.00am > 10.30am > 12.30pm 3.30pm > 7.00pm > 9.00pm >
Adults who do not use formal financial services1 Percent of total adult population Millions of adults that is financially unserved
59 Top up Pay for Gain Transfer Pay for Pay for Pay for Pay for East Asia 876 transport train access money to lunch coffee and groceries taxi card/ ticket to office sister magazines 58 mobile South Asia 612
Sub-Saharan 80 The cycle continues 326 Africa
65 Incoming transaction Outgoing transaction Transfer Security transaction Latin America 250
Central Asia and Figure 2: Based on data from Accenture Analysis 49 Eastern Europe 193
Arab States 136 67 They are confronted by new entrants and banking access and mobile subscriptions, competition from companies across the that have important implications on a High Income merging mobility value chain. Banks must bank’s mobile commerce and wider mobility 60 8 OECD adjust to this reality, which is why Accenture strategy, it is important to stress that banks has recently surveyed the Asia Pacific land- have a limited time to master the capabilities 2,455 Total 53 scape and developed the Accenture APAC to deliver a full mobile commerce experience, Banking Mobility Maturity Index1. one that allows people — especially those ‘born digital’ — to do much more with the While it is beyond the scope of this article to mobile phone they already reach for on Figure 3: Based on data from Honohan. 2008: Human Development Index: World Bank discuss the Index and the factors, such as every step of the consumer journey.
FOOTNOTE FOOTNOTE
1. www.accenture.com/Microsites/accenture-innovation-center-asia-pacific/Pages/index.aspx 1. Regional groupings based on UN Human Development Index
28 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 29
Banks have a limited time to master operators. They will want to do it as part of Financial inclusion will also make it much the capabilities to deliver a full mobile a kind of ecosystem so they can benefit from easier for governments and NGOs (non- commerce experience, one that allows sharing infrastructure and best practices. governmental organizations) in developing people — especially those ‘born digital’ markets to disperse aid and so push money to the mobile wallets of the poor. There is — to do much more with the mobile phone. New mindset also a knock-on benefit for NGOs — and banks that choose to grasp the opportunity Significantly, banks have the capabilities mix — to provide microfinance. Loans and In the view of Accenture, as the balance These unbanked populations have quite — and the corporate DNA, to extend their credit extended to the poor will not only shifts from cash to contactless payment, basic needs, which first-mover banks such services to the world’s unbanked. However, help improve their lives; the wealth created banks operating in Asia Pacific have a as Dutch-Bangla Bank in Bangladesh are not all have the proper mindset for the task. will increase overall GDP and inject new unique but fleeting opportunity to extend meeting with mobile banking services that dynamism into local economies. their reach across the entire socio-economic include airtime top-up, cash-in, cash-out, utility The unbanked are not unbanked because spectrum and position themselves at payment and remittance — to name a few. they don’t work or earn money. In many Clearly, the role of mobile in these markets the heart of these ‘less cash’ consumer cases, the unbanked lack a residential is to facilitate payments. However, it has the societies and retail value chains of In markets such as China, Indonesia, address, or fail to earn a salary that covers powerful potential to transform entire econ- the future. Which value segments and Malaysia and the Philippines, where there the fee structure offered by most banks, omies. In some regions, such as Bangladesh, audiences each bank pursues will depend is a large population of migrant workers, and discourages small deposits. However, it is possible to glimpse that future today. on the opportunities available in their the unbanked have a particularly strong mobile allows economy of scale, increasing markets and their own ability to compete. demand for mobile banking services that reach and lowering costs and allowing banks However, this progress also raises a allows mobile money transfers within and to generate revenues by serving a large question mark over the future role of banks across national borders. volume of low income customers. in enabling commerce in unbanked markets. Unbanked opportunities While many banks are no doubt defining Interestingly, this is also a space where Here the expectation is that the mobile the course of mobile commerce, acting as While economic growth across Asia Pacific mobile operators, such as Ooredoo, have wallet will evolve to drive financial inclusion the ambassadors of mobile commerce, it has been dramatic, the GSMA reports1 that a huge opportunity because their footprint by creating a mobile marketplace where is a herculean task that not every bank can 2.5 billion adults, just over half of world’s allows them to facilitate remittances on the unbanked can buy goods and services, master. Besides, many banks are not able adult population, are unbanked, meaning a large scale. However, that is the catch. as well as access financial products, such — or willing — to offer additional services to they do not use formal financial services Mobile operators that want to target the as insurance, that will allow them to plan a encourage commerce at the bottom of the to save or borrow. unbanked will not want to do it as single secure and stable future. pyramid. They prefer to focus on serving
FOOTNOTE 1. www.microfinancegateway.org/gm/document-1.9.40671/25.pdf
30 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 31
the customers at the high-end with large global mobile commerce space. Banks may And there other scenarios, enabled by technology and secure their position in this deposits and high-end devices. have dominated with banking and payment new technologies, that are poised to move increasingly competitive mobility landscape. services, but many will soon find themselves commerce to the realm of machines. If we Certainly, the banks, with the exception of struggling to keep up. consider the interactions that lead those Pradipto Pal is responsible for driving those institutions dedicated to driving ‘born digital’ to an actual purchase, we Accenture’s Mobility footprint in Asia across financial inclusion, will likely not be among Mobile operators are joining together, and begin to see a path that takes them from different industry groups and business the legends in the business. Put simply, most some are teaming up with card issuers, one ‘machine’ to another. A typical scenario functions. He charters new Mobility solution banks are in the business of making money — such as Visa and MasterCard to offer NFC could look something like this: The digital offerings and builds assets by cultivating and they have a huge learning curve to travel and mobile wallet services. At the other end native watches Smart TV, using the app an ecosystem of leading software vendors. before they can serve the poorest of the poor. of the spectrum e-money providers such from the relevant app store to purchase as PayPal and Singapore-based NTS and the item they see on TV using their mobile Korea Smart Card Company, which provides phone. For that transaction there doesn’t New entrants, challenges T Money, are capitalizing on their strong really have to be a full-fledged digital wallet; presence in certain local markets. there only needs to be technology in the Driving mobile commerce requires the background that can ‘see’ the machine- grit and the power to roll services out to a Finally, transport companies are also taking to-machine operation between the TV and customer base of 100 million customers and advantage of easy access to customers at the mobile phone and relate this to the more. It also demands that the company the point of sale to offer mobile payment customer and CRM. undertaking this is not measured by the services. Hong Kong’s Octopus card, same KPIs applied to financial institutions. launched by a local transit company Although cash is unlikely to be eradicated joint venture to facilitate fare payment on completely in the foreseeable future, Therefore, it is quite probable that large the city’s mass transit system, is a good the gradual movement toward electronic organizations — such as mobile operators, example. The Octopus card has since spread currencies and virtual transactions is governments, NGOs or even large petro- its tentacles to capitalize on growing demand edging us ever closer to a ‘less-cash’ leum companies — will have the resolve for contact-less payments in other areas society for both consumers and industry. to accept this challenge and drive the of consumer life. Today, this rechargeable All indicators suggest Asia Pacific may be first transformation of commerce. stored-value card can be used to pay for to fully embrace Mobile Life. Now it is up to parking and fares on all modes of transport, companies across this emerging ecosystem And we should not rule out the potential and is accepted by many retailers, including to adapt to the fast-paced nature of mobile of new entrants to stake their turf in the fast food restaurants and supermarkets.
32 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 33 PART 1: Mobile Commerce: Mapping The Competitive Landscape
Money 2020 And The Business Case For Mobile Payments: The Role Of Rewards by Aaron McPherson, Practice Director, Worldwide Payment Strategies, IDC Financial Insights The spectrum of rewards programs
At the Money2020 Conference, As it happens, “daily deals” programs such much of the discussion centered as Groupon and Living Social have already provided an example of the sort of incentive on various types of mobile pay- that merchants are willing to finance: a “Earn and “Offer Card-linked “Daily deals” Loyalty ment schemes, from person-to coupon worth 50 percent of the value of burn” malls” offers programs -person fund transfers to digital a purchase of a certain size. The value of these incentives far exceeds what payment wallets that allow a mobile phone Single Multiple card Consumer portal No issuer Single issuers, with card issuers have traditionally been able to issuer issuer (groupon, living involvement to be used in place of a payment cosmetic social) offer based on merchant payment card fees customization card or cash. (typically 1 percent or less of the value of a Variable Standard Targeted Targeted Standard exchange rates, purchase), and even those minimal rewards exchange rates, offers based on offers based discounts, little little targeting little targeting spending history on consumer targeting It soon became clear that most of these have provoked a class-action lawsuit and behavior mobile payment schemes were dependent major legislation. Bank-centric to one degree or another on merchant- Limited Multiple Multiple Multiple Single Merchant-centric merchant merchants merchants merchants merchant funded offers to finance their operation. The crucial difference between ‘daily deals,’ involvement In our opinion, the simple replacement or (more generally) direct merchant offers of a payment card with a phone does and payment card usage rewards (also issuer and Mostly Merchant- Merchant- Merchant and not provide enough value to persuade known as ‘earn and burn’ programs) is in merchant merchant- funded funded manufacturer - funded funded -funded the average consumer to switch to mobile the restrictions: direct offers are restricted payments. While mobile payments do have both in which consumers receive them as advantages over payment cards and cash, well as how they can be used. Therefore, a Figure 1: Base on data from IDC Financial Insights, 2013 there is a learning curve and switching costs merchant can offer a substantial discount that inhibit adoption. Therefore, consumers in confidence that it will result in additional must have a powerful incentive to try the sales, and that it can track the return on its Figure 1 shows payment card usage rewards Card-linked offers are like traditional new technology. marketing investment. and direct merchant offers as two poles of “earn and burn” programs in that they are a spectrum, with a hybrid system of card- associated with a particular payment card, From the merchant perspective, financial linked offers in the middle. but are restricted in the same way that a direct merchant offer is. institutions have data about overall spending patterns by their customers, not just their spending with that merchant.
34 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 35
The more a financial institution increases its influence over its customer’s economic decisions, the more it will secure its own position.
Benefits ests; for example, financial institutions Overcoming these concerns will require Adapted from “Business Strategy: The Strategic Opportunity in Transaction Marketing Programs” feared reputational damage if a merchant both sides to proceed cautiously but Copyright Notice The main benefit of a card-linked offer for failed to fulfill an offer, while merchants deliberately in order to establish trust and The analyst opinion, analysis, and research results presented in this IDC Financial Insights Executive Brief are drawn directly from the a card issuer is the additional revenue it can worried about their data being used to a common understanding of the value of more detailed studies published in IDC Financial Insights subscription services. Any IDC Financial Insights information that is to be used in provide in the form of a commission from generate competitive offers. personal financial data. advertising, press releases, or promotional materials requires prior written approval from IDC Financial Insights. Contact IDC Financial the merchant (or more accurately, from an Insights at 508-620-5533 to request permission to quote or source IDC Financial Insights or for more information on IDC Financial offer syndication network). This revenue can • Financial institutions are sensitive Insights Executive Briefs. Visit www.idc-fi.com to learn more about IDC Financial Insights subscription, consulting, and Go-to-Market not only offset legally-mandated reductions to charges that they are selling their Conclusion services. Copyright 2013 IDC Financial Insights. Reproduction is forbidden in overdraft and interchange revenue, but customers’ financial data, so the unless authorized. can provide funding to support mobile programs have to be clearly Financial institutions need to more effectively payment services. documented and presented on leverage the consumer data that is locked in Since 2000, Aaron McPherson has led the an ‘opt-in’ basis. their debit and credit card products so that global payments research program at IDC From the merchant perspective, financial they can obtain new revenue streams and Financial Insights. Aaron writes and consults institutions have data about overall • Merchants are still uncertain about the reduce their reliance on interchange and with clients on a wide array of subjects, spending patterns by their customers, not value of card-linked offers, since they do overdraft fees. Doing this will require a new including enterprise payments, financial just their spending with that merchant. This not have much experience with them, and willingness to actively partner with retailers supply chain management, mobile and allows more precise delivery of customer there are many competing programs with to drive new business to their stores. While emerging payments, card regulation and acquisition offers than is possible through different terms and conditions. financial institutions obviously do this today, international payments. direct mail or advertising. transaction-based marketing requires that • Both sides see mobile payments as an they redefine their customer relationship opportunity to increase their influence goals from ‘ownership’ to influence. The more Considerations over consumer purchasing behavior, and a financial institution increases its influence perceive any increase in influence by one over its customer’s economic decisions, At the Money2020 conference, there was side as a loss of influence by the other. the more it will secure its own position. considerable controversy about the card- In addition, the financial institution will linked offers model, for several reasons: • Merchants believe that the current payment gain more influence over the retailers and card system costs them more than it manufacturers with which it does business, • Both financial institutions and merchants benefits them, and are anxious to prevent helping to offset the commoditization of had concerns about their customers’ data financial institutions from re-creating this business banking. being used in ways contrary to their inter- situation in the mobile context.
36 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 37 PART 1: Mobile Commerce: Mapping The Competitive Landscape
Mobile Commerce And Financial Requirements to leverage location-based services Institutions In Latin America: have grown substantially An Evolving Ecosystem and it is not uncommon to By Mary A. Gramaglia, Director of Sales, Latin America, Mobile Commerce, SAP That said, rural banks and the majority see marketing campaigns of microfinance institutions continued to emphasize the importance offer rudimentary mobile banking services As banks across the region are Throughout 2012 mobility continued that leveraged the SMS channel. Mass of social media integration. warming to mobile apps, strategies to be a key area of focus for financial market-focused financial institutions, institutions in Latin America, with such as Davivienda in Colombia and Caixa and offerings are becoming con- smartphone apps emerging as the Econômica in Brazil, also proved to be siderably more ambitious. Some preferred channel for banks seeking to the exception, targeting the unbanked are releasing apps full of features project a more sophisticated image. In with mobile wallet solutions. and functionality to impress cus- fact, banks enthusiastically embraced smartphones’ inherent advantages Apart from the proliferation of tomers and achieve differentiation; despite the reality that a vast majority smartphones, other factors that drove, others are seeing the opportunity of the population still relies on feature and will continue to drive, banks’ to develop a mobile app strategy phones with limited data capabilities. interest in mobile apps include security as a chance to revamp their overall considerations, the general lack of a viable Due to the growing proliferation of USSD alternative, and the penchant of presence via the mobile channel. both Android and iOS devices, coupled mobile operators to dramatically increase And let’s not forget the vast with mobile network operators’ offers the cost of SMS messages. In some populations of unbanked or under of compelling monthly plans, banks countries banking regulators’ insistence banked who do not have access increasingly saw mobile apps as a way on the use of a second authentication to drive mobile banking adoption and mechanism (2FA), in some cases to a smartphone. No matter the create differentiated brand and service involving IVR callback, for SMS banking approach, and the bank taking it, offerings. This mobile app phenomenon transactions caused financial institutions it's clear that the endgame is held true for leading financial institutions to appreciate the benefits associated about enabling financial services throughout the Latin American region, with offering banking via the mobile app. where it was treated as a priority, more so that harness mobile to deliver than targeting the unbanked populations. real benefits to all customers.
38 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 39 Requirements to leverage location-based services have grown substantially and it is not uncommon to see marketing campaigns emphasize the importance of social media integration.
Despite the challenges, as banks continue to Different approaches was originally seen as a means for reducing mobile offerings are expected to opt for place significant emphasis on mobile apps, gain traction costs, and only recently, as a new way to SaaS solutions. This will particularly be service offerings are becoming considerably help banks increase revenue through the case in the smaller countries of Central more ambitious. Requirements to leverage With the widespread focus on mobile apps cross-selling products. In the card-less America, where actual numbers of mobile location-based services have grown among many banks who had previously not ATM cash-out option, banks with significant users are quite low and banks find it hard substantially and it is not uncommon to emphasized the channel, leading banks such physical presence are seeking to reinforce to justify significant mobile app related see marketing campaigns emphasize the as Brazil’s Banco Itau and Banco de Chile that differentiation through seamless expenditures and the ongoing effort importance of social media integration. — who were at the forefront in deploying integration with their mobile offerings. required to maintain them. Many banks leverage the channel to cross- mobile banking apps — are now re-visiting sell new products and give consumers their strategy around how applications can Internet banking offerings are being The reverse will also be true. In those the opportunity to apply for, and receive, best be used to maintain differentiation and similarly re-examined, with many countries such as Colombia and Argentina, on-the-spot credit line increases. Mobile- deal with escalating costs associated with banks convinced that superior mobile where outsourced mobile banking solutions app-enabled person-to-person transfers realizing ambitious plans. solutions will highlight deficiencies in their are already in place, local providers leveraging consumers’ Facebook contacts online presence. During 2012 it was not (Redeban and Banelco, respectively) will are also gaining traction. Use of a hybrid container approach for uncommon to see the region’s financial be challenged to remain relevant in increas- application deployment has gained traction institutions launch Internet banking projects ingly competitive, mobile app environments, In countries ranging from Costa Rica to as banks seek out vendors with broad in conjunction with, or in parallel to, app-focused in which differentiation will be key. There are Chile, interest is growing in enabling card- product offerings in an effort to control costs mobile projects. While the majority of initia- also those financial institutions affiliated less cash-out at ATMs so that consumers associated with customization. Ambitious, tives had the consumer in mind, during the with a strong retailer – such as Chile’s who receive funds via P2P transfers, but feature-rich offerings are being planned past year Latin American banks increasingly Banco Falabella and its sister department who are not existing bank customers, can in multiple phases as banks try to quickly sought to target corporate customers with store chain Falabella, and Mexico’s Elektra, still gain access to their funds via ATM make available differentiated mobile apps enhanced, integrated Internet banking and which shares the same corporate owner networks. Some services, such as remote they can steadily expand and improve upon. app-driven mobile solutions. as Banco Azteca – that will re-imagine the deposit capture, a popular feature in the mobile opportunity by leveraging these U.S., have been absent in Latin America. In the midst of all the attention given to With the mobile momentum continuing its relationships to develop mobile commerce This is due to regulation that does not the importance of a more sophisticated, push throughout the region we can expect a ecosystems that expand mobile banking permit virtual deposit of a physical instru- app-driven presence, has come the realization variety of trends to accelerate in the coming offerings to include point-of-sale purchases ment, and not because of a lack of interest for the region’s banks that, for the most years. Banks facing limited budgets and the and encourage customer loyalty. on the part of either banks or consumers part, the mobile channel remains one that possibility that their IT teams may not be is not easily monetized. The mobile channel able to manage increasingly sophisticated
40 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 41 PART 1: Mobile Commerce: Mapping The Competitive Landscape
Digital Money Sweeps Mexico And Brazil By Charmaine Oak, Practice Lead, Digital Money, Shift Thought While the majority of initiatives had the consumer in mind, during the past year Latin America and the Caribbean Although Mexico has done much to bring Latin American banks increasingly sought to region (LACA)1, has been one of down the costs of remittances from the U.S., the financial crisis is now affecting the target corporate customers with enhanced, the last regions to get swept up volumes. Remittances fell by 1.5 percent in integrated Internet banking and app-driven by the mobile money phenomenon. 2012 as compared to 2011, with December mobile solutions. Within this region, Mexico and 2012 marking the sixth consecutive month Brazil are the two largest countries, of reduction. Meanwhile Brazil, though relatively unaffected by rising unemployment both classified as ’Advanced Overall, mobility is likely to take different in the U.S., does feel the pinch through the forms depending upon a bank’s level Emerging’. While Brazil was the effect on its major trading partner, China. of ambition in the channel, desire for first country to introduce branch- differentiation, size of actual and targeted less banking on a large scale, For Brazil, domestic and regional money market, and available budget. What is transfers are bigger drivers than in Mexico. Mexico is now poised to transform certain is that Latin American banks will What is common though is that in both increasingly perceive the mobile app as a financial services through the new these countries digital money innovations key tool for reaching customers now and mobile accounts. In this article, stand poised to deliver value to mass in the years to come. we analyze the similarities and markets and, in particular, small enterprises, which currently drive innovation and contrasts, which are useful in Mary A. Gramaglia is responsible for driving recovery around the world. sales of the SAP’s mobile banking, mobile understanding how digital money payments and online banking solutions in initiatives are unfolding in the region Since 2007, when M-Pesa Kenya became Mexico, Central and South America and the in 2013. The analysis is based on the the wallet that launched a 100 others, Caribbean. She has extensive international Latin American countries largely remained continuously updated Digital Money experience in both the telecom and financial an untouched “black spot” in the mobile services sectors and has worked in sales, SAGE knowledge base, and the Shift money revolution. So it is really interesting marketing and business development for Thought Digital Money Series. to see the picture changing now. a broad range of blue-chip companies that includes Lockheed Martin, Sprint International and Citibank.
FOOTNOTE
1. LACA here refers to Latin America (all of the Americas south of the USA) and the Caribbean
42 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 43 What has been labeled as ‘elitist banking’ from foreign banks that dominate the financial services scene in Mexico leaves a gap, sought to be filled by the entry of large retailers.
Access channels in Mexico and Brazil Key enablers make this possible. Also, Brazil is a shining
example, having earlier achieved a Mexico has already achieved remarkable transformation to non-cash payments,
255 transformation in one area. It managed so that a mere 1 percent are now paid to bring down the average cost of in cash through Bolsa Familia, the social Brazil remittances from the U.S. to Mexico to just cash transfer scheme equivalent to 203 Mexico US$5.57, as against US$11.95 from the Mexico’s Opportunidades. U.S. to Brazil1. This was achieved through remarkable collaboration with the U.S. Another key driver towards the transition and implementation of direct-to-account, to non-cash payments in Mexico comes 115 highly competitive services for migrant from the Mexican Finance Ministry, 91 92 82 transfers. This is significant as Mexico is Secretaría de Hacienda y Crédito Público the fourth largest recipient in the world. de México (SHCP). This is by way of anti- 43 But even more transformative could be the money laundering (AML) regulations that 25 next set of changes that unfold over 2013 restrict the amount of physical U.S. Dollars and affect the way money is transferred that can be deposited in Mexican banks, in Population Banked Mobile Internet domestically, and in the region. an attempt to control money laundering.
Figure 1: Based on data from The Shift Thought Digital Money SAGE The driving force behind taking banking It is important to compare the access services to the masses is the remarkable that markets in Mexico and Brazil have ruling from Mexico’s Ministry of Finance, to channels and financial services, in Over 2013, Pakistan, Bangladesh, India, to-cash operators to new entrants like requiring all Opportunidades2 payments order to understand the need for digital Nepal and many other countries in Xoom. Looking south, towards Central to be deposited direct to bank accounts money initiatives. Asia Pacific are rapidly reducing the and South America, if Mexico does for by December 2012. ‘leakage’ in reaching money to the poorer its domestic money transfer what it did Figure 1 compares access channels population. Mexico is poised to do the for the international remittances, a lot Considering that as recently as 2011, over available for outreach in each country. same with knock-on effects on both North of other countries are likely to follow 66 percent were paid in cash, this seems Brazil is already feeling the pain of the and South. Looking north, the change with a cookie cutter approach based an incredible feat to expect. However, the mobile operators in developed countries, in the way remittances are disbursed in on these recent developments. new mobile accounts that are allowed with mobile penetration reaching historic Mexico is tipping the balance from cash- since mid-2012 are the key enablers that highs. Mexico, however, still has some
FOOTNOTE
1. World Bank Remittance Prices, Third quarter 2012 2. www.oportunidades.gob.mx/Portal/wb/Web/oportunidades_a_human_development_program
44 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 45
Indicative market share - Mexico way to go to put a mobile into the hand Mexico has allowed banks to use agents,
of every person. While online payments and since 2010, mobile operators can be Nextel (NII) 4% have taken off in Brazil, it is mobile that the agents for banks. However, concern Lusacell 4% has the real potential in Mexico due to arises from the dominance of a few players, Telcel (America Movil) the paucity of Internet connections. not unlike the situation in the banking side. 69%
From Figure 2, it is clear that América Payments and ecosystems Móvil owned Telcel, and to a lesser extent Movistar (Telefonica) 23% Telefónica, could have economies of scale More importantly, what has been labeled from existing top-up agreements to build as ‘elitist banking’ from foreign banks that new agent networks that may further dominate the financial services scene in skew their advantage in the marketplace. Mexico leaves a gap, sought to be filled Comparatively, the Brazil mobile market is by the entry of large retailers. Financial much more evenly distributed between the services with a new business model are top four players, as can be seen in Figure 3. Figure 2: Based on data from the author now available from large retail groups that have set up banks in Mexico. Banco Indicative market share - Brazil Wal-Mart and Banco Azteca encourage Nature of services people to bank-while-they-shop. There are Others 0% also a number of initiatives underway to fill So, the need for the new mobile accounts the gap left by a paucity of ATMs and POS. in Mexico is there. But how fast will the Nextel (NII) 2% services achieve traction? Do the new Brazil, however, has successfully used the services have characteristics that can
Vivo (Telefonica) banking correspondent route to create strong transcend long established business models Oi (Telemar) 20% 28% bank outreach and widespread availability of the providers and truly deliver value that of POS machines. It has also put debit cards attracts daily use? To answer this requires in the hands of lower income consumers. an analysis of the services as they unfold.
Now Mexico aims to follow that path, through One of the earliest to be announced was Claro (America Movil) the use of non-bank agents. Since 2008 Transfer, the joint venture launched in 25% Telecom Italia (TIM) 25%
Figure 3: Based on data from the author
46 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 47
Digital money innovations stand poised to deliver value to mass markets and, in particular, small enterprises, which currently drive innovation and recovery around the world.
October 2011 by Citi Group and América to the consumer. Further advantage stems become the ‘mobile accounts’ in Brazil, Charmaine Oak brings a unique perspective, Móvil. Through Telcel, América Móvil from the availability of better consumer consumers stand to gain by getting more having contributed to the global development controls close to 70 percent of the mobile insights, loyalty offers and the creation control when they manage them via their of digital money through the leading money connections in Mexico. América Móvil, of multiple revenue streams. mobiles. This will supplement the debit card transfer company Western Union, a leading through the Claro brand, is also a dominant services currently offered with the low value bank (Royal Bank of Scotland), a global player in Latin America. América Móvil has Unsurprisingly then, there are interesting accounts. Altogether, there promises to be mobile operator (Orange FT), LogicaCMG stated ambitions of converting 9 percent partnerships developing involving players a great deal of learning for Latin America, (the pioneer in SMS) and Wipro a leading of its base to mobile banking by 2012. from the banking, mobile and retail industries. and indeed the world, from the services IT provider. Her area of expertise is in One of the most important of these is the rolled out in these two markets over 2013. mapping opportunities in digital money and The other significant joint venture is launch in Mexico of mobile accounts by providing consulting services based on Shift Wanda, the brand announced in February BBVA Bancomer and Coca-Cola Femsa, The devil lies in the detail, and in the process Thought’s Digital Money SAGE technology. 2012 for the Movistar-MasterCard initiative the largest soft drinks manufacturer in of our continuous analysis of digital money earlier announced in January 2011. The Latin America. Through the Coca-Cola initiatives covering more than 32 services Telefónica Movistar brand has more than chain store Oxxo, branchless banking around the world, one thing we at Shift 100 million customers in 12 countries in services can now be offered to support a Thought have learnt is that no two markets Latin America. range of services including money transfer, are alike. Ultimately, there is no substitute bill payment, prepaid mobile recharge and for taking the time to understand each, in In Brazil the joint venture targets 65 million in-store payment. terms of the history and ecosystem, in Vivo customers with a mobile wallet. It will order to have a better chance of delivering offer an alternative approach to Paggo from appropriate services and staying relevant. Oi, a relatively simple mobile credit card What lies ahead? SMS-based payment service supported by an OTA downloadable SIM application. In the competition that is developing in each of the markets, it seems the retail But where there is a wallet there must be payments outreach in Mexico and Brazil cash in-cash out agents, and this is where could start to become more alike. Mexico the retail sector comes in. When the world’s stands to benefit with more points of largest retailer is also a bank, as in the case transaction, ATMs and point of sale devices, of Mexican Banco Wal-Mart, it adds a whole while implementing agency models already new dimension for offering value bundles prevalent in Brazil. As prepaid cards
48 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 49 PART 2: Banking In Developed Markets: Taking Charge Of Change
PART 2: BANKING IN DEVELOPED MARKETS: TAKING CHARGE OF CHANGE
Smart banks are winning customers by putting them in control of their experiences and the channels that deliver them. Some banks are achieving this through advanced analytics that will allow them to enhance products, personalize service bundles and respect customers’ rising requirements for visibility into all their accounts on their terms. Others are leveraging ordinary smartphone apps to achieve extraordinary results. At the other end of the spectrum, banks are delighting customers and keeping them loyal by delivering services that deliver convenience and utility. We bring together the key learnings offered by banks (RBS Citizens, First Tennessee Bank) and industry authorities to provide guidance as you map a multi-channel strategy that removes friction and boosts engagement.
50 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 51 PART 2: Banking In Developed Markets: Taking Charge Of Change
Banks: Evolve, Innovate And Embrace ‘True Multichannel’, Or Be Left Behind By Simon Paris, Global Head of Financial Services Industries, SAP, and Matthew Talbot, Senior Vice President, Mobile Commerce, SAP Increasingly, banks are seeing a clear From the allegations of mortgage fraud at shift from physical to digital channels. Deutsche Bank to news of rogue traders Out with the old and in with the In decades past banks were in quite an In fact, Citibank has reported that at UBS, hardly a month in 2012 went by new. The 'old school', which was enviable position. The power of control 95 percent of all transactions for Citi that the financial services was not rocked was with the bank, and customers adapted in Asia occur outside a branch office1. by scandal or a crisis in management. The all about pushing one-size-fits-all their schedules to make visits only during industry's reputation has suffered, and marketing and offers at customers, banking hours, accepted bank fees and But it's not just about flexibility in how now banks must work to rebuild trust. does not resonate with the customer pricing driven by internal KPIs, not individual customers access information and advice. of today. It’s the customer that needs. Customers avoided switching banks Customers also want visibility into all This is one of the key takeaways offered by because they had limited access to which their accounts, a one-stop view into their the 13th annual Edelman Trust Barometer2. now has all the power and access products were on offer with the competition finances that will allow them to make The report, based on a survey of more to technology, so the 'new school' unless they actually visited those banks. smarter decisions and manage their than 31,000 respondents in 26 markets is about winning these customers money whether it’s related to their saving, around the world, measures public trust in by giving them control of their Fast forward, and the shift of power has current, trading, or insurance account. institutions, industries and governments. moved 360 degrees, and customers are It's a demand banks must meet to remain Specifically, the Trust Barometer shows experiences 24/7/365 days increasingly in control. Always-on, always- truly relevant in the 21st century. a steep decline in trust in banks from through the channels of their choice. connected, these empowered consumers 56 percent in 2008 to 45 percent in 2013. To make this transformation possible are doing their banking whenever and most Banks must change their wherever they want. Customers also have a (Re)build trust What can banks do to regain their footing desire for more visibility and more services. and restore trust? While there are no simple operating model, and generate Addressing the requirement that customers answers here, the Trust Barometer stresses customer-centric insights through As a result of this power shift and the fact have unique needs that merit attention that all industries and governments face the advanced analytics that will allow banks are being forced to service customers also sends a strong signal that banks are same task and suggests that 'trust building' them to enhance products, at a lower cost, physical branch banking is resolved to serve their customers better. attributes are clustered around actions that in decline. It will soon join 'one-size-fits-all' This is critical at a time when trust in banks encourage engagement. personalize service bundles and marketing and advertising on the scrapheap is at an all-time low, especially after the respect customers' rising of outdated business models that have failed financial crisis and the continuing issues requirements for visibility into all to accept today's hard truth: consumers we are seeing throughout Europe and their accounts on their terms. want what they want the way they want it. other parts of the world
FOOTNOTE
1. www.theasianbanker.com/press-releases/citi-mobile-clients-top-one-million-mark-in- asia-pacific-region 2. www.edelman.com/trust-downloads/press-release/
52 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 53
Breaking barriers Voice, ATMs, mobile phones, smartphones, in a fragmented and inconsistent view of mobile apps, tablets, PCs, personal the customer across products and lines Listening to (and responding to) customer navigation devices, games consoles — of business. For one Asia-based bank this needs, acknowledging customer feedback and the list goes on. Banks must not only approach is now costing it tens of millions (positive and negative) via social implement new channels, but they must of dollars to just support the release of media and offering solutions that help also develop solid cross product integration new mobile applications! customers in planning their financial to achieve consistency across all customer futures are items that top the agenda for touch points. Success means a true multi- What’s worse, underestimating the need banks in both developed and developing channel architecture that also provides for customer data to be accessible and markets. Many CEOs today talk about a consistent 360-degree view of the integrated through all channels may ultimately ‘customer centricity’ as a key focus. customer and the various lines of business. cost banks competitive advantage. Their decision to build on top of the legacy Banks must be more customer-centric In many cases we have observed first-hand, systems, rather than take the necessary and trade-in their outdated product-oriented banks have jumped on the mobile app steps to integrate all channels, leaves the processes and legacy systems for holistic bandwagon, adding mobile as just another door open to new entrants and online giants. approaches that address individual needs, digital channel. While some banks have and encourage consumers to invest more built bespoke applications and platforms Google, Apple, Facebook and Amazon of their wallet that enable banking and other extremely are just a few of the companies moving valuable services using technology full-speed ahead on aggressive customer- Clearly, building the right backbone like location-based services, there is centric strategies, aimed at piecing together and capabilities to enable multi-channel no underlying platform in place to give the clues customers leave behind across all banking is key, especially as many banks banks a consistent user interface or channels (profiles, preferences, past purchases, are restricted in what they can change in 360-degree view of the customer and browsing patterns), develop a single view the core due to the cost and ‘heart surgery’ products across all platforms. of the customer and drive commerce with involved. It is not about implementing silo personal and relevant offers. And there solutions that allow customers to conduct Our experience shows this is a flawed are other payment companies and mobile banking regardless of their preferred approach that breeds yet more siloed operators that also aspire to take a bigger platform. This approach may bring the channels and adds additional costs and chunk of the wallet, and they do not have customer in, in the short term, but it does strain to the banks, which they cannot ‘legacy’ systems to weigh them down. not address the problem at its roots. continue to justify or support. It results
54 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 55 Banks must be more customer-centric and trade in their outdated product-oriented processes and legacy systems for holistic approaches that address individual needs, and encourage consumers to invest more of their wallet.
Ironically, banks are very well equipped to is centered on a multichannel approach. DBBL's suite of mobile banking services To this end banks in North America, Europe deliver customers more relevant (hence From offering customers remote account use a technology platform that it currently and Australia are adopting customer-centric valuable) bundles of products and services opening in the field, hundreds of kilometers operates as a separate platform from its models that allow them to forge a new value provided they take steps to become the from the nearest physical bank, to creative core banking system. However, there are web with them at the center, a position they authoritative source of consistent customer services like ‘funeral plans’, Standard Bank plans underway to link these systems to can claim because they have begun to use data across all channels. The ability to move is pushing the boundaries around customer enable a single, integrated view of the analytics to gain deeper customer insights from a one to 1000 offer to customer to a centricity by embracing multichannel. customer across all channels. The goal is across all channels. Sharing this information 1:1 offer can become reality with the right In a country where over 85 percent of the to use these insights to extend lending with merchants and other players — adhering architecture in place. population has a mobile phone, the services, in the form of microfinance, to to personal privacy laws, of course — builds digital channel is critical for its future. the unbanked and the underbanked. a robust and sustainable business ecosystem. It's a critical next step as the mobile phone Bright spots Another customer Dutch-Bangla Bank In the more developed markets banks morphs into a mobile wallet to ultimately Limited (DBBL) is among the pioneers in increasingly see multichannel as an become everyone's new portable and Fortunately, many banks are now seeing mobile innovation. Some 87 percent of the essential step in a wider strategy to personal point-of-sale. the opportunity ahead. They are competing population in Bangladesh, a country with add value (and encourage loyalty) by smart, armed with comprehensive strate- a population of 160 million and a mobile providing offers that are completely gies that harness multi-channel banking penetration rate of just around 60 percent, aligned with the needs of key customer Break away to satisfy customers and grow their do not have ‘official’ bank accounts. segments. It's all about winning the race business. We are seeing this with some of Determined to drive financial inclusion to power payments and commerce. The evolution of banking mirrors the evolution the Tier 1 banks in Australia, including ANZ, DBBL made the decision to harness of technology. IVR, ATMs, the Internet and and the Commonwealth Bank of Australia, mobile, the channel the unbanked have From coupons and vouchers, to location now mobile banking — each channel was as well as in banks across North America made an integral part of their lives. -based services and proximity payments, implemented as part of a wider strategy and Europe. This change though is not just banks are taking advantage of advances to improve customer access to products. evident in developed markets, it is also In early 2012, DBBL launched a suite of in technology to deliver on the promise In today's increasingly customer-centric happening in developing markets like mobile banking services — and 12 months of one-to-one marketing. We are seeing world this outdated approach short South Africa and Bangladesh. later — it counted more than 1.2 million first-hand how many of our customers like changes both customers and banks. new customers with 5,000 to 6,000 new ATB Financial and CIMB in Canada and Standard Bank in South Africa, one of our customers joining per day. These customers RBS Citizens Bank in North America look Research shows that consumers demand core banking partners, is one of the most have deposited more than $7.75 million to use digital channels for new services a single view into their accounts — and innovative banks in the world. The growth using the mobile banking platform, not like QR code payments, remote check every aspect of their relationship with the they have seen around ‘Inclusive Banking’ the legacy core banking system. deposit and location-based services. bank — across all channels. This demand
56 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 57 PART 2: Banking In Developed Markets: Taking Charge Of Change
Removing Friction To Build Relationships It's all about winning the race to By Scott Manley, SVP, Head of Product Delivery, Channel Treasury Solutions, power payments and commerce. RBS Citizens
will only grow as consumers embrace of the empowered consumer have come Business school dogma may dictate conducted by the Aite Group, sheds some digital channels to pay bills, conduct together to create a new urgency for new that companies must consistently interesting light on what customers expect commerce, purchase transport tickets models. Banks must tear down the silos and — even demand — from their banks. exceed customer expectations to and manage their daily lives. replace their product-driven mindset with a singular and sincere focus on the customer. beat the competition. But studies For example, a survey of 300+ treasury Will customers vote with their feet if banks Evolve or get left behind. It’s time for true show that delivering simple conve- executives conducted by the Aite Group fail to offer them a single, consistent view multichannel platforms. nience — not bells and whistles — highlights key requirements that are just of their financial services? Let's just say that as pertinent today as they were when the results in satisfied customers and the barriers to switching banks (or moving Simon Paris leads SAP's end-to-end research firm published them1 in 2010. to a new entrant that offers a helpful and footprint in the Financial Services Industries, lasting loyalty. This is why RBS more holistic view of consumers' that today covers more than 5,700 Citizens has purposely chosen a Among the findings: approximately two-thirds transactions) will be quite low. customers. Previously, Paris served as vice solid approach to mobile banking of businesses would be at least “somewhat president at HP, where he was responsible likely” to perform basic transactions over that streamlines important decision For banks, enabling a single and consistent for the P&L of a US$17 billion division. corporate mobile banking services in the view into customer data on multiple -making and removes the friction next 12 months, while 42 percent described channels not only satisfies customers. Matthew Talbot is responsible for mobile from moving money. themselves as ‘likely’ or ‘very likely’ to do so. It also paves the way for them to generate banking, online banking, mobile consumer More importantly, the Aite group found that additional sales, enhance products, refine payments and mobile inclusive banking. Research suggests that mobile corporate over half (56 percent) of survey participants pricing and improve CRM. Talbot joined SAP in 2004 via the acquisition banking is in its infancy. But, turn that statement expressed interest in performing more of Sybase Inc., where he played a key role on its head, and it’s clear that there is also advanced functions, such as approving French writer Victor Hugo once famously in developing the company’s mobile a first-mover advantage for banks that transactions and initiating payments. said, "There is nothing more powerful commerce initiative. Previously, he was deliver the services customers appreciate than an idea whose time has come." based in Beijing and Sydney, as CEO — and use — the most. Fast forward, and these observations, After decades of building on top of legacy of Mobile Internet Group, a Wireless combined with the results of focus group systems, the arrival of the digital channel Application Service Provider and publisher. Indeed, a strong business case for mobile research conducted on behalf of RBS being led by mobile and the emergence corporate banking services exists, and Citizens, underlines the importance of research, including a string of surveys delivering mobile corporate banking
FOOTNOTE
1 www.aitegroup.com/Reports/ReportDetail.aspx?recordItemID=719
58 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 59 The purpose of these mobile banking services, which we offer customers free of additional charge, is to deepen the customer relationship thus keeping existing customers loyal.
What to offer via mobile? services that allow decision-makers to for mobile banking services, have started How likely would your business be to consider making the following 2009 2011 get more done faster using the smart- to issue their executives iPads and tablet types of business phones and connected devices that have devices. It’s a seismic shift that we have already become part of their daily routine. observed over just the last 12 months, and Check bank account balance Already do this 13% 33% clearly one that will continue to impact the Definitely/probably would consider 24% 31% banking business. Small business owners Make internal bank funds Already do this 5% 26% Mobile explodes are also large users of tablets using them transfers Definitely/probably would consider 22% 28% for everything from administrative tasks Obviously, mobile plays a central role, which to cash registers. Pay bills Already do this 5% 29% is why RBS Citizens launched accessMOBILE Definitely/probably would consider 21% 26% in 2010, a mobile corporate banking offer Approve debit or credit Already do this 2% 17% catering to the needs of commercial customers, Convenience pays dividends transactions Definitely/probably would consider 22% 32% ranging from small businesses to large corporations. It currently exists as an But it’s the customer, not advances in Make expedited payments Already do this 1% 19% iPhone application, allowing customers technology, that guide strategy, serving Definitely/probably would consider 22% 33% to approve wires, make transfers and as what we like to call the ‘North Star’ for Make transfers between Already do this 2% 15% check balances. In the next phase there RBS Citizens’ mobile banking offerings. external bank accounts Definitely/probably would consider 18% 31% are plans to offer an Android app, as well And it’s this singular focus on the customer Approve wires Already do this 1% 14% as a Web browser experience that works that confirms we deliver real value when Definitely/probably would consider 17% 26% for both Android and iPhone users. we provide mobile banking services that remove friction and boost efficiency. Capture and send check images Already do this 2% 13% Of course, the meteoric rise of tablets has for remote check deposit using Definitely/probably would consider 15% 37% also had an impact on the mobile roadmap. Put simply, an approach aimed at merely mobile device camera Research documents the massive increase replicating online services is sure to fail. View and make pay/no-pay Already do this 1% 12% in tablet sales, showing that shipments have At RBS Citizens we know that the majority decisions on positive pay Definitely/probably would consider 15% 32% more than tripled. of our online customers who use corporate exceptions banking services are cash management Against this backdrop, an increasing professionals that are in front of their PC Approve payroll batches and Already do this 1% 15% number of corporations, our target audience from 8 to 5 Monday through Friday. However, other ACH payments Definitely/probably would consider 13% 23%
Figure 1: Based on data from Aite Group study “The ROI of Small-Business Mobile Banking” 2009 and 2011
60 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 61
It’s a seismic shift that we have observed over the majority of our mobile customers are That’s why we plan to add additional small-business owners, managers on the functionality to accessMOBILE allowing just the last 12 months, and clearly one that will move and time-strapped executives that customers to initiate wires by filling in continue to impact the banking business. are everywhere but in front of their PC. a template on their mobile device. Due The former group is the one that delves to concerns about security and risk our into the details and handles daily operations, customers will not be able to do free- while the latter wants to make sure they form wires via mobile, but they will be In mobile banking speed is everything. After all, this is a customer segment that have the appropriate oversight to keep able to initiate this from a template. We focus our efforts on making sure the is time-strapped and short on resources. things moving while they’re on the move. It also won’t be possible for customers services we offer are faster and easier than They are under pressure to do more with to change or authorize users via mobile, those of our competitors. If a competitor less, and mobile banking services that can Focus group research reveals that roughly but the service will allow customers to service allows customers to conduct reduce complexity and remove friction are 95 percent of our customers do most of be the second approver on changes business in five minutes, and our service lets a huge advantage when it comes to building their cash management from their desks. to users within our systems. the customer accomplish the same task in relationships and driving lasting loyalty. It’s the remaining five percent, the decision two clicks, then chances are customers are -makers and the small-business owners going to do their banking business with us. As Head of Product, Scott Manley is wearing a bunch of hats, who need mobile Positive impact involved in the conceptualization and services to move the money. They don’t Ironically, our mindset is the exact opposite implementation of emerging technologies want or need a month’s worth of data to do The purpose of these mobile banking from what it would be if we were offering a and solutions for commercial customers. reconciliation. They want to approve wires on services, which we offer customers consumer service like news or entertainment. He focuses on revenue generating and the move and make decisions on positive pay. free of additional charge, is to deepen There the endgame is all about finding process enhancement initiatives as they the customer relationship thus keeping ways to extend the time people spend on a relate to Treasury Management solutions The scenario is familiar. A business owner is existing customers loyal. Customers, Website or interact with an app. including file transfer, online and mobile on the road, or on vacation, and is contacted particularly small-business owners, are technologies, secure messaging, and to approve a wire in order to get a payment positive about our services, praising At RBS Citizens the goal is to get customers Customer Relationship Management. through. We know from asking customers, the convenience and speed. As fraud in and out of the service fast. Success is and from checking this against the majority continues to rise in the commercial space, all about creating efficiency and respecting of calls received through customer care treasurers, CFOs and other executives customers’ time. Significantly, that is services, that this is where mobile must appreciate having the oversight and ability the ‘wow’ factor about mobile corporate be harnessed to streamline the process. to approve transactions while on the go. banking services that impresses our customers the most.
62 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 63 PART 2: Banking In Developed Markets: Taking Charge Of Change
The Convergence Of Mobile And Online Banking It’s certainly challenging By Jacob Jegher, Research Director, Celent to build a single solution; it’s even more challenging, One Solution to Rule Them All? and absolutely critical, Users are oblivious to the challenges components in a single place. Interchangeable banks have in getting digital banking modules (bill payment, wire transfers, etc.) Convergence goes well beyond front to fine tune a segment- would be served up to the device/OS and end online and mobile banking solutions. up to the speed of the Web. These customized front end. modality selected by the user, along with For a number of years, a group of software challenges are being compounded a properly skinned front end. vendors have been working on creating by the range of devices (tablets, a single electronic banking solution. smartphones, computers) and This is the future of electronic banking, This solution could serve multiple market and it will take several years to get there. segments, and has taken on several complex operating systems, the consumer It requires a common middle layer with forms over the years (depending on the may want to use to bank. The digital business logic and messaging infrastructure. vendor and its strategy). world is moving at light speed, and as banks bolt on additional channel Furthermore, these changes will have For example, there are solutions that serve profound implications for the vendor community retail and small business online; others that capabilities (such as mobile), it is and the financial institutions that rely upon serve small business and corporate online; becoming very difficult to manage. them. Online and mobile banking vendors and finally, some that have attempted to Sure, banks can decide to build an have already begun to consolidate in the conquer consumer, small business, and iPhone app, build an Android app, consumer space. They will continue to join corporate online. This is done by exposing forces in the form of acquisition. individual modules of functionality (bill refresh the Web experience, and payment, wires, ACH, etc.) and providing then build something for the tablet. Vendors with existing online and mobile port- packaged access to the modules to the If this development is done in folios will invest in bringing them together. various segments (see Figure 2). a siloed manner, it will cost the Tablets will become a natural extension of their solution capabilities. At the end of The single solution approach has been bank a fortune. the day, users simply expect to pick up any primarily focused on online banking, though Financial institutions and the software device and have the appropriate experience. this is bound to change given the criticality vendors that serve them need to come The burden is on the bank to provide it. of mobile banking. The shift to a device up with a more holistic approach. An ideal agnostic electronic banking platform is scenario would be for the bank to be able a critical and complex input to a single to house all of its electronic banking solution approach.
64 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 65
Digital banking must be device-agnostic while providing a tailored experience One solution to rule them all?
Retail online banking
Module A Module A
Returning users: Log on Full solution User ID JohnQPublic Module B Module B Password Electronic Electronic Small business ******** banking banking online banking Remember my User ID Module C platform platform Forgot user ID Module C password? Bite sized Module D Module D
Corporate online banking/ cash management
Selective/full
Figure 1: Based on data from Celent Figure 2: Based on data from Celent
Is it really possible to have one solution to There are a few key challenges here: Even if the meeting does take place, which • Technology hurdles. It requires a great rule them all? Are banks interested in this group or groups will fund the project? deal of investment and tech prowess to kind of approach? The answer is not cut- Political battles. Large banks are typically Which group and individual will lead and accomplish this. Some of the software and-dried. However, financial institutions, very siloed. As such it may not be possible own the project? This is a totally different vendors that have gone this route have particularly smaller ones, are gravitating to get the heads of retail online, small story at small banks, where responsibilities, spent years on this approach and still have towards single solutions. business online, and cash management teams, and clients aren’t as segmented. not completed their builds. This should online together at the table to explore this. invite scrutiny from financial institutions.
66 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 67 PART 2: Banking In Developed Markets: Taking Charge Of Change
Breaking The Mobile Banking Mold By Taylor J. Vaughan, Director of Treasury Management Services, First Tennessee Bank If this development is done in a siloed manner, it will cost the bank a fortune. In today’s world, agile execution is Understanding that small business owners crucial. But companies aren’t the must wear several hats, First Tennessee Bank made the conscious decision to only ones under pressure to adapt launch a mobile corporate banking service • User experience chaos. Different-size The convergence of mobile and online to market shifts quickly. They also that equipped this customer segment businesses will have different requirements solutions is inevitable and comes with a require mobile banking services to get more done faster. Ironically, it was but could access the same technology. tremendous amount of complexity. It’s that can keep the pace, allowing what we chose not to do that has made the The problems creep up on the front end. important that banks harness technology service a success. their management to make key Should the same user interface to the but don’t always use it as their best foot shared ACH module be provided to large forward. It’s easy to get caught up in the decisions, conduct transactions and For one, we chose to put the customer corporations and small businesses? For array of sexy tools and devices on the embrace opportunity as it happens. experience first, not the technology. example, do small businesses even know market, but at the end of the day it’s But rather than try to teach seasoned what ACH is? Many don’t, nor should they the customer and their experience If you look at consumer banking services, executives new mobile tech tricks, have to care. It’s certainly challenging to that matter most. they are, for the most part, convenient, build a single solution; it’s even more First Tennessee Bank has developed flexible and easy to use. Our small-business challenging, and absolutely critical, to Jacob Jegher is a Research Director a hybrid approach to mobile customers are people before they are fine tune a segment-customized front end. within Celent’s banking group. Jegher’s corporate banking that builds professionals and have no doubt already research focuses on emerging technologies been exposed to consumer-facing services on the familiar online experience Challenges aside, there’s one very solid and business strategies in retail and through family members, friends or via the factor driving the interest—cost. Purchasing wholesale banking. He heads up Celent’s to deliver impressive results. media. The small-business owner sees this and maintaining one solution as opposed online banking research (consumer, small and says, “Gosh, why can’t I do all my mobile to two or three solutions can certainly be business, corporate cash management) It has never been easy for companies to banking for my business the same way?” attractive. Tight IT budgets are pushing and is a recognized thought leader in this be nimble. Large enterprises frequently Our answer is to offer a corporate banking banks in this direction, albeit at the cost space. Recent research has focused on struggle with a thousand tiny threads service to meet the very basic — and human of user experience. next-generation online and mobile banking, of hierarchy that impact their speed and — need for simplicity and speed. personal financial management, social agility, and small-businesses, forced to media, and financial technology startups do more with less, are often constrained by a lack of time and resources.
68 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 69
Free and easy mobile corporate banking services. very small because the need to build To date, the penetration percentage interfaces, often the most expensive We also chose not to charge the customer. is still in the single digits — but growth part of deploying services, didn’t exist. Instead we deployed a service that would momentum shows no signs of slowing. practically pay for itself. By taking a more hybrid approach, bolting But, as mentioned earlier, this is also the onto the infrastructure we bought off In many ways, small business customers customer segment that can’t be charged the shelf, we were also able to accelerate have more in common with consumers than for the new channel, so the challenge time-to-market. Allowing some time for the corporate users. While organizations generally for First Tennessee Bank was to deploy customization that would transform what have a team of financial analysts or a staff the service without high cost to do it. was essentially an online experience into a of accounts receivable clerks, the small mobile one, we were able to get this service business owner is largely a one-man show. Fortunately, this is where the ability to up and running in less than 6 months. On the other hand, we also knew that we build on the bank’s existing online banking would more likely see strong usage and back-end systems, rather than launch a rapid take-up of mobile banking services totally new mobile service or app, came into Familiarity boosts utility among small business customers. After all, place to deliver value to the bank and its large companies are often constrained by customers. Put simply, we basically bolted First Tennessee did not only get more very clear and protracted policies about our mobile banking offer onto the Corporate value out of its existing online banking how processes have to run, a mindset that Online Banking tool from our existing vendor, infrastructure -it also used the online can slow adoption of new services because that also provides the platform for all our service as a blueprint for the mobile organizations have to change their own banking services, both retail and consumer. offering, rather than build a new mobile internal processes and policies first. In practice, the interfaces that went to all banking service from the ground up. Small businesses are faster on their feet the systems — Automated Clearing House, because, in many cases, they have to be. Account Reconciliation, Demand Deposit The logic was simple: we didn’t think Account System and Check Image Systems, customers would appreciate having to take Some 18 months after launch and what was among others — interfaces that took the the effort to learn and internalize a different forecast for our corporate mobile banking team months to build and implement, model of logging on to use the service. With offer is now fact. As we expected, smaller were still valid for the mobile banking offer. this in mind, we made sure that customers businesses have been more nimble and Therefore, the cost to implement corporate could use the same ID, the same password, willing to make the decision and adopt banking services on top of this platform was
70 71 Ironically, it was what we chose not to do that has made the service a success. For one, we chose to put the customer experience first, not the technology.
and the same security profiles they were response from the customer because they apps, we decided to buck the trend and remind them that the corporate mobile familiar with from the get-go. only have a window of a few hours in the design a mobile Web experience that banking service uses the same technology. morning to let the bank know how to handle emulated an app, allowing users to use All we are doing is rendering different What should the customer be able to do these suspicions transactions, which is touch to swipe, stretch and scroll. screens on the exact same security ramp. when they logged on? Again we followed why it’s also a perfect match with mobile. the online model, mobilizing the basic The result is a mobile optimized Website functions our customers want and use With our service, customers can see an image that looks and feels like an app. The Go with the flow most. They check their balance, they want of the check that we have called into question customer doesn’t have the hassle of going to move money and they want to have and they can make a decision directly on into an app store and downloading the right At this point, the business benefits of secondary approval of transactions. The their mobile phone as to whether the check apps and we at First Tennessee Bank have corporate mobile banking services are tedious practice of creating the payroll file should be paid, processed or returned. completely avoided the headaches and sharply focused on customer retention and in the back office is a long and arduous costs associated with supporting multiple reinforcing the position of First Tennessee process that customers don’t want to do on Finally, we also modified Lockbox, another device operating systems. Bank as a bank that is on the forefront. their mobile phones. But once that process standard banking service that has been We use the tools that help them do their is completed, then customers do want to around for years, to cater to customers on Interestingly, not releasing a mobile app business, and we don’t waste their time review it on their mobile phones. So, we the move. In practice, we collect their checks has allowed First Tennessee Bank to nip with services that emphasize technology made it possible for the customer to see for them, make their deposits for them and many security concerns in the bud. Popular for technology’s sake. We also see clear the totals, see the amount and provide make the totals for those daily deposits reports about mobile apps that collect benefits when these satisfied customers the secondary approval. available on their mobile devices. As a and pass on personal data to third parties become our advocates, telling their business result, customers know exactly what we are without asking consent first have turned colleagues about the benefits of doing Another area we addressed was fraud going to deposit in their accounts and what consumers off on apps, and small business with a bank that truly understands prevention. We achieved this by allowing amounts are going to be available to them business customers are no different. the pressures of doing more, faster and the customers to use their mobile phones to tomorrow, insights that allow them to plan proper role of mobile devices in the mix. respond quickly in critical situations. An and execute important business decisions. However, our service is the mobile Web example is Positive Pay, a service that has version of what they know — and trust — Right now it’s all about helping our customers been available in banking for years, allowing from online. The security profile is identical to perform better. But we also see customers to review transactions that Apps vs. Web to the one they have on their PC. We know that opportunities to wield mobile to boost our look suspicious to the bank because the our customers are already quite comfortable own performance. It’s easy to imagine a customer did not notify the bank in the first Rather than follow the lead of companies with the level of security offered by their scenario where mobile can extend and place. It’s something that requires a quick — including banks — racing to launch mobile online banking service, and we simply enhance the entire sales cycle, for example.
72 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 73 PART 2: Banking In Developed Markets: Taking Charge Of Change
6 Ways To Wring More Value Out Of Multi-Channel Banking By Davor Ebling, Director, Mobile Commerce Solutions, SAP However, our service is the mobile Web version of what they know — and trust — from online. Thanks to the proliferation of Connectivity and connected devices are The security profile is identical to the one connected devices — PCs, phones, coming together to create more customer touch points and more distribution they have on their PC. smartphones, tablets, Smart TVs channels. The assumption may be that and games consoles — consumers everyone is online, but it's important to In this scenario a First Tennessee Bank This is what we envision as the next step in across all demographics now share remember that everyone is not just online. sales officer goes with their tablet device our strategy. It’s innovative, but, in a way, it’s a common trait: they are empowered People use a variety of channels every day, to the customer, able to show, not tell, a also inevitable. Clearly, mobile has increased switching back and forth between them and they are always connected. customer the real benefits of our products. business velocity for our customers, making frequently. From simple IVR calls, to ATMs, it necessary for them to do more, faster. They have the freedom and to sophisticated apps, people decide the With this tool the sales officer could hone in But mobile also creates an opportunity for flexibility to choose how they interact channels they will use to interact with on the point the customer is not currently First Tennessee Bank to decrease costs, with their banks. Consumers, already banks, not the other way around. using a product and then show how many increase customer loyalty and remove the masters at multi-tasking, readily bank customers are using it, the results friction from the flow that stands between It's a new multi-channel world where customers they achieve and conclude by doing the the customer and the products they want. switch between platforms and are in control, and expect anytime, anywhere complete ROI analysis for the customer. devices, tailoring their experiences access to their financial information via a If the customer is sold on the product, then Taylor J. Vaughan has been with First to suit their needs. The pressure is multitude of channels and devices. the sales officer can use the same tool to Tennessee Bank for 23 years and currently now on the banks to adapt to this seal the deal, sending a confirmation email manages the Treasury Management product A 2012 report titled "A Biometric Day in to the customer, forwarding a copy of the team. Accredited as a Certified Treasury shift in consumer behavior and the Life"1, commissioned by Time, Inc. contract, and providing a delivery date for Professional by the Association for Financial help their customers make 'smarter' and conducted by Innerscope Research, equipment, such as scanners. This tool would Professionals, Taylor holds a B.B.A. from the decisions based on increased, found that people who grew up with the also trigger the back-office to move on the University of Hawaii and an M.I.S from Internet, so-called Digital Natives, switch real-time visibility into all their request, ordering the scanners, start the Roosevelt University of Chicago. their attention between media platforms DDA systems to feed the transaction data so accounts as they shop, spend and (TVs, magazines, tablets, smartphones or there is no delay anywhere in the process. save. Here is a checklist to guide channels within platforms) 27 times per banks as they map out their hour, or about every other minute. multi-channel strategies.
FOOTNOTE
1. www.timeinc.com/pressroom/detail.php?id=releases/time_inc_study_digital_natives.php
74 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 75
Accept that consumers How U.S. consumers want to view their account balances? At the other end of the spectrum, reams of want choice, and the research show time-crunched, slightly older flexibility to disengage consumers increasingly depend on their Tier 1 mobile phones to manage their daily lives. and try another channel View all account balances 49% From researching products, to conducting if one doesn’t deliver the transactions, to sharing reviews with their results they want. social network, this demographic relies on Tier 2 mobile to access advice and make decisions. Personal finance alerts 38%
Urgent need Comparison pricing 37%
What do today's always-on, always-connected customers want from their banks? Tier 3 Card-reward recommendations 31% There’s no single best answer. When it comes to customer service, for example, customer 0% 10% 20% 30% 40% 50% preferences vary greatly. Some want to speak with a call center agent; others want to perform Percent of consumers self-service tasks using a mobile app, or an online channel. And a significant and growing Figure 1: Based on data data from Javelin Strategy & Research 2013, from August 2012, N=3,000 group of consumers want 'all of the above'.
Based on this what customer experience Strategy & Research, a firm providing created an "urgent need for the financial can — and must — multi-channel banking strategic insights and research in retail services industry to break free from the deliver? Again, there are no easy answers. financial services, sheds some important 1980s thinking about personal finance light on the features U.S. consumers management (PFM) and redefine it for the Fortunately, 21st-century PFM for a mass would like to see most. mobile mass market of the 21st-century."1 audience: How to Build Everyday Online Javelin further found that U.S. consumers and Mobile PFM 1, a new report from Javelin As the report points out, the rise of the "crave a way to view all their account empowered and connected customer has balances in one place," with nearly half of FOOTNOTE
1. www.javelinstrategy.com/news/1394/92/ FOOTNOTE Nearly-Half-of-U-S-Consumers-Want-to- View-All-Financial-Accounts-in-One-Place/ 1. www.javelinstrategy.com/news/1394/92/Nearly-Half-of-U-S-Consumers-Want-to-View-All- brochure/280 Financial-Accounts-in-One-Place/d,pressRoomDetail
76 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 77 Delivering a connected, consistent experience in real-time is crucial, particularly when it comes to self-service.
consumers (49 percent) prioritizing this their customers a single view into all their your foray into online or mobile, accept Within five seconds the customer gets a text feature over all other PFM services. actions and aspects of their relationship that a further delay could cost your message welcoming them to text banking. with the bank. Javelin has also identified business customers. Similarly, you can use your ATM channel to Against this backdrop, the pressure is on omni-channel banking in its list of Top Ten promote text banking, enabling customers banks to start seeing multi-channel as Trends for 2013, stating that financial #2 Focus on the mix. Be imaginative to sign up for text banking while performing a a must-have feature. For banks this means institutions "need to change their perception and you can inject new dynamism financial transaction at the ATM, for instance. bringing together all customer information of omni-channel banking" to see it as into all your channels, even ATMs. across all channels to present customers "necessary rather than novel".1 Just think of it as another screen and then #3 Be consistent. As I have pointed one unified, integrated, branded, channel capitalize on the time you have a captured out, the proliferation of screens — -optimized experience. Delivering a Clearly, multi-channel is the next step in the audience to initiate a new process in just a PC, tablets, mobile, smartphone, connected, consistent experience in real- evolution of banking. But how do you get few simple steps, or introduce a new service smart TV, in-car navigation systems time is crucial, particularly when it comes there from here. Here is a checklist of six to customers most likely to appreciate it. — to name a few (!) is also driving consumer to self-service. key tips to help you develop your strategy to Your customer database will tell you demand for a single view into all their accounts, offer customers a truly seamless experience, when a customer has married or started in one place, in real-time. No matter how you and so enhance the quality of your brand. a business (because they provided this connect with your customers, make sure ‘Necessary not novel’ information in the first place). Present the the customer experience is consistent, #1 Open your eyes. To make newlywed customer standing in front of your harmonious, and optimized for the specific 'Ease of use' is the new business mantra meaningful improvements you ATM with a mortgage offer and the option channel. Allow the customer to choose the here. If consumers can’t accomplish what need to be clear about how you do things to schedule a follow up call with a banker. channel they want to use to get the information they want within an app, because it's too now and what you need to change moving Be sure that your back-end system 'knows' or advice they need. No matter the customer's complicated or too cumbersome, then forward. This also means accepting some about this interaction and notifies that preferred medium of communication, be they want the flexibility to disengage and try hard truths in the process. Branch traffic banker to respond. Think creatively about it e-mail, chat, Facebook, Twitter, or any another channel, such as online or IVR. But is on the decline, and shows no signs of how you can utilize the IVR channel to sign other communication channels, be ready transitioning to another channel often means stopping as time-strapped Boomers and up customers for text banking for example. and be responsive. starting all over again, an experience that will tech-savvy Millennials, a demographic From experience, we know that close surely end up in increased customer dissat- weaned on the Internet, flock to digital to 80 percent of all IVR calls are simple #4 Optimize self-service. isfaction — and increased costs to the bank channels rather than make the trip to a requests to check available account Customers will try a variety of physical office. Therefore banks must offer balances. Why not enable the callers to sign channels to get things done. Self- Significantly, I am not alone in my view that a variety of channels to reach and delight up for text banking via IVR? While in the IVR service is a great place to start banks need to take steps now to deliver customers. If you have been putting off flow, simply give the customer an option to if you want to remove friction and reap the provide their mobile phone number to sign rewards. Customers that can accomplish up for a lower cost text banking channel. what they set out to do will be more likely FOOTNOTE
1. www.javelinstrategy.com/news/1394/92/Financial-Services-Analyst-Firm-Announces- Top-Ten-Trends-in-Banking-Payments-Mobile-and-Security-for-2013/d,pressRoomDetail
78 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 79
MYTHS
Myth #1 Pursuing a multi-channel strategy in order to to stay loyal. But don't just add mobile apps superior customer service, and fell short of with increased precision and relevance. deliver on the promise of one-to-one marketing, to your arsenal of capabilities. Accept that this goal because the new channels worked In my view, the ability to cross-sell and or Precision Marketing, is prohibitively expensive. consumers want choice, and the flexibility independently of the old ones. To complicate up-sell to customers based on completely There are vendors that can provide this solution to disengage and try another channel if one matters, backend systems are often not real- accurate and up-to-date information, right now. And the advance of cloud-based doesn't deliver the results they want. They time and process transactions in a batch thus delivering relevant offers that are solutions means banks can 'plug in' to get the capabilities they need. What better way to stay may love your app, for example, but they mode, thus not providing customers real completely aligned with their lifestyles in step with the breakneck pace of technology will also appreciate an on-click feature from visibility into their financial affairs. Research and life stages, is essential for banks to and the proliferation of channels and devices? within the app that allows them to click to call shows customers want one view into their achieve and maintain high performance. the call center. Keep in mind that customers accounts, so don't disappoint them. can grow annoyed if their decision to transition The even better news: the reasons many Myth #2 Customers don't see the value in receiving to another channel forces them to start all #6 Get personal. My list of tips of my clients list when they explain just personal offers. A raft of recent reports confirms over again, so make sure to enable customers focuses on the steps you can follow why they can't start planning their multi- that today's empowered consumers expect, to start the process in one channel, and then to encourage loyalty and increase channel strategy now don't hold up when even demand, relevant offers. Anything else will pick up where they left off in another. Real- customer engagement. There are we compare them to the reality around us. be dismissed as spam. What's more, people will time channel awareness is key. Customers significant business benefits if you revamp even volunteer additional personal information increasingly demand one view into their processes to provide a truly 360-degree Clearly, the dizzying array of choices has if this guarantees them access to personalized offers that offer real benefit. However, consumer entire relationship with the bank, and they view of your customer in real-time. You don't created a new appetite for multi-channel surveys also found people lose patience if expect their bank to have a similar holistic just cut the time needed to provide a client a banking. The impact on financial services the offers are intrusive. This is especially true view into them as individuals. Visibility quote, by hours or days. You also build a core will be nothing short of profound. for offers presented on the mobile device. reduces friction and drives positive set of capabilities to cross-sell and up-sell results for everyone. your products with increased chances of Davor Ebling has more than ten years of success because you can wield your data, mobile industry experience, and has been Myth #3 Mobile banking is in its infancy, so better #5 Offer real-time information. in real-time, to target individual customers focused on the Mobile Financial Services skip that channel for now. Press and analyst Make sure your channels work with offers that are personal, relevant and space for more than six years. Prior to reports document the hockey-stick growth of together and share the information highly contextual. joining SAP, Davor was Vice President, mobile banking as customers reach to their they collect in real-time. Otherwise, you won't Mobile, eCommerce and Payments mobile phones to pay bills, scan and deposit have a complete picture of your customer The good news: the technology exists Strategy with JPMorgan Chase. checks, make transfers and much more (!) And — and they won't have one view into their today to analyze huge amounts of data in don't ignore the merits of text banking when you develop your mobile banking approach. relationship with you. I know of pilots that real-time, opening up new opportunities Text is the primary channel for the worlds started out with a great vision to deliver for you to market to your customers unbanked and underbanked, a segment that cannot afford smartphones. It’s also one of the best ways to deliver alerts, notifications and enable customers to quickly check their account balances in every geography.
80 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 81 Part 3: Banking In Developing Markets: Plotting The Course For Financial Inclusion And Financial Success
PART 3: BANKING IN DEVELOPING MARKETS: PLOTTING THE COURSE FOR FINANCIAL INCLUSION AND FINANCIAL SUCCESS
Mobile banking is an essential component of enabling the developing world to maximize its demographic dividends, increase financial stability and achieve financial inclusion. The GSMA estimates some 2.5 billion people globally lack access to basic financial services. Fortunately, this is changing as the spread of mobile banking and payments transform entire economies by providing all people, including the poor and rural populations, access to convenient mobile banking services that put them in control of their financial future. We examine the ambitious strategies banks in Pakistan, Bangladesh, Indonesia, Malaysia and elsewhere are pursuing to disrupt the market with a new model aimed at empowering people at the bottom of the pyramid to manage an interest-bearing bank account. We also highlight exciting activities at the other end of the spectrum, where banks are targeting the next generation of tech-savvy customers and mass affluent with disruptive services tailored to their lifestyles and life stages.
82 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 83 Part 3: Banking In Developing Markets: Plotting The Course For Financial Inclusion And Financial Success
Advancing New Frontiers For In Pakistan regulation permits only banks to Financial Inclusion offer banking services, By Abbas Khan, Partner, Financial Sector Solutions, AbacusConsulting a requirement that has In the case of TimePey, Zong, instead prompted mobile 2012 was a milestone year for mobile of Pakistan, has established important of establishing its own bank, has teamed operators to acquire banking services in Pakistan. principles to assist in the creation of an up with Askari Bank to launch its mobile enabling policy and regulatory environment banking offer, which enables users to pay local banks. The country’s continued efforts to drive financial inclusion. utility bills, transfer money to specified to establish an efficient and thriving recipients anywhere in the country, banking system underlined the Another factor driving this change is the deposit and withdraw cash and carry resolve of the State Bank of Pakistan fact that mobile operators and banks out account transfers. have stepped up the introduction of mobile to achieve its goal of financial banking services targeting the needs of the The services offered may appear to be quite inclusion and ‘Banking For All.’ unbanked. In November 2012 Waseela basic, but the fact that the unbanked can Progress on all fronts, including the Microfinance Bank Limited, in partnership access them anywhere in the country using launch of several new mobile banking with mobile operator Mobilink, launched their mobile phones, is truly transformational. mobile banking services in Islamabad. The services targeting the country’s services, offered under the brand ‘Mobicash’, In fact, the quarterly report issued by the poor, prompted the World Bank include top-ups, utility bill payments, cash State Bank Of Pakistan for the period July to recognize Pakistan as one of deposit and withdrawal, fund transfer from -September 2012,1 reveals that the number the fastest growing branchless account-to-account and person-to-person of mobile wallets increased by 25 percent, transfers. Just a few days later Askari Bank reaching an impressive total of 1.8 million. banking markets in the world. Limited, in partnership with mobile payments Significantly, a major driver was the AbacusConsulting recounts recent enabler Zong, launched a mobile banking staggering rise (84.2 percent) in Level 0 developments in mobile banking and service under the brand name TimePey. accounts, the most basic accounts with low the impact on the local landscape. KYC requirements and small transaction limits In Pakistan regulation permits only banks catering perfectly to the needs of unbanked. Pakistan has made remarkable progress in to offer banking services, a requirement recent years toward the goal of bringing the that has prompted mobile operators to The activity level also showed growth, unbanked into the formal financial system, acquire local banks. The first to market was with 66 percent of those total accounts an outcome that obviously enriches the Telenor, a mobile operator that established active at the end of the quarter, after socio-economic development of the entire Tameer Bank. The next to make its move posting 30 percent growth during the country. To accomplish this the Pakistan was Mobilink, which established Waseela July-September 2012 period. government, together with the State Bank Bank for its branchless banking services.
FOOTNOTE
1. www.sbp.org.pk/publications/acd/ BranchlessBanking-Jul-Sep-2012.pdf
84 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 85
Status of mobile banking services in Pakistan Growth in m-wallet accounts
Live Pilot Will start pilot 655,311 Level 0 +84% 355,704
• Tameer offers Dubai Islamic Bank Meezan Bank Easypasia 1,079,309 Level 1 +7% • UBL offers OMNI MCB Bank 1,012,287
• Waseela Microfinance Habib Bank Bank offers Mobicash 48,893 Level 2 -1% • Askari Bank Limited 49,436 UBank offers TimePey
32,098 April - June 2012 Level 3 +7% 29,954 July - September 2012 Figure 1: Based on data from AbacusConsulting
Figure 2: Based on data from The State Bank of Pakistan
The report also details the growth in the Bill payment and mobile phone top-ups number and value of transactions using accounted for nearly half (45 percent) of Call for creative solutions wallet services and build more trust m-wallets. Specifically, more than 31.4 transactions, followed by P2P payments in mobile banking services. million transactions worth some 139 billion (38 percent). Overall, the numbers tell a However, both new and old entrants are Rs (US$ 1.4 billion) have been conducted positive story and underscore the growing confronted by the same issue: a lack of While there are no easy answers, it’s during the quarter ending September 2012 acceptance of mobile banking by the customer awareness. They must therefore clear that education must be part of the through branchless banking channels. mainstream market. work together to encourage use of mobile solution. The unbanked are obviously not
86 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 87
Share of active and inactive accounts Growth in number and value of transactions As of end of a quarter
31,447 120% 28,366 +21% 160,000 35,000 +35% 100% 25,272 140,000 +7% 30,000 20,597 80% 46% 47% 36% 34% 120,000 +35% 25,000 1000,000 60% 139,011 20,000 80,000 +11% 40% 115,304 15,000 54% 53% 64% 66% 60,000 79,410 85,092 +12% 20% +30% +23% 10,000 40,000 0% 20,000 5,000 Q4 2011 Q1 2012 Q2 2012 Q3 2012
Active accounts Inactive accounts Q4 2011 Q1 2012 Q2 2012 Q3 2013
Value of transactions during the quarter (PKR in millions) Figure 3: Based on data from Development Finance Group, State Bank of Pakistan No. of transactions during the quarter (in 000s) RHS
Figure 4: Based on data from Development Finance Group, State Bank of Pakistan accustomed to opening and using mobile distribution network and outreach to accounts. It’s a new experience and players the unbanked population. with the average number of transactions channels and products, there is also a heavy must come up with creative marketing per agent per quarter standing at 1,000. reliance among customers and not on strategies and financial literacy schemes While the brick-and-mortar retail network At these agent outlets customers can make over-the-counter (OTC) transactions which that help customers understand and appreci- currently stands at around 11,000 outlets deposits or withdrawals, transfer funds or are predominantly P2P money transfers ate the benefits of mobile banking services. (after 65 years of banking tradition) the pay utility bills. followed by a complete cash-out payment. number of branchless banking agents totals Another focus must be on hiring and just over 32,000. Official numbers indicate Despite the significant growth in mobile It would appear that customers prefer to training agents, thus growing the the agent network is seriously under-utilized, banking, driven by innovative delivery store cash, rather than store value, on their
88 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 89
It’s gold rush fever as banks and mobile The market for mobile banking services executives confirm that the vast majority operators step up investments and activities to may be in an early stage, but it is also poised have placed mobile at the center of their launch services targeting the unbanked as well for a new stage of growth and innovation. services roadmap. What’s more, they as a growing segment of the population that is Granted, there are hurdles to clear first. confide to me that they fear they will be Players must create an ecosystem that sees irrelevant if they don’t participate in this willing and able to spend US$20 to US$40 on mobile operators cultivate relationships mobile revolution. a smartphone device. with verticals, including finance, rather than compete. And radical change must be made Significantly, my experience as a consultant in order to establish a complete and unified to all industries, not just finance and mobile phones. The players are therefore services, pay bills, borrow money and system of governance to allay concerns telecoms, suggests that mobile banking called upon to introduce new and creative — ultimately — invest in their future. that Pakistan is unstable or unsafe. is just the start. The realization is real and approaches that can trigger a change in growing that mobile can transform all this customer behavior and so encourage Of course, mobile banking services today But there is no denying that it’s gold rush industries, allowing Pakistan to reach the unbanked to see their mobile wallets focus on providing quite a basic suite of fever as banks and mobile operators step stellar growth rates that have allowed its as instruments that allow them to save capabilities and are not yet progressed up investments and activities to launch neighbors — China to the north and India money and plan their financial futures. to enable investment, offer insurance or services targeting the unbanked as well to the south — to achieve and sustain encourage commerce, but the resolve to as a growing segment of the population remarkable growth. push the expansion of mobile banking that is willing and able to spend US$20 Numbers speak volumes services is strong. to US$40 on a smartphone device. While Abbas Khan is a Partner and Global the Pakistan economy is set to grow by Leader at Abacus. He leads the Information Mobile technology is enabling the financial Clearly, Pakistan’s regulatory environment 2 percent, the market for mobile money Technology Solutions vertical and oversees inclusion of the unbanked in Pakistan, a for microfinance and branchless banking, services on the whole is forecast to more a broad range of technology services country with a population of over 190 million. considered one of the best globally, than double, increasing by 250 percent. including the firm’s outsourcing services If we consider that there are only 35 million provides ideal conditions for the advance portfolio, mobile solutions, SAP ERP solutions, traditional bank accounts and some 120 of mobile banking. However, the real boost Change is underway in the country and the e-Business and e-Government offerings. million mobile phone users, it is clear that comes from market forces and the sheer impact is profound. All major players have only mobile banking services will serve the determination of new and old entrants to mobile on their radar and I expect to see financially excluded market, providing them stake and protect their turf. some 20-25 players active in the market convenient and simple access to services in the next 3-5 years. In fact, my own that will allow them to buy goods and conversations as a consultant with C-level
90 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 91 Part 3: Banking In Developing Markets: Plotting The Course For Financial Inclusion And Financial Success
Accelerating Mobile Banking Through Collaboration By Siek Kar Teck, Director, Retail Payments Division, MyClear
This vision, detailed in the ambitious MyClear is charged with hosting a nation- Mobile banking is an essential users with both feature phones Financial Sector Blueprint, issued by wide mobile payment infrastructure component of enabling the and smartphone devices. BNM, sets out the strategies and action platform, which it extends to all banks plans necessary to transform the Malaysian and mobile operators in the country in developing world to maximize its The payment and settlement systems in payment system into one that is highly order to drive the rapid deployment of demographic dividends, increase Malaysia have evolved significantly over efficient through more intensive use of mobile banking service. financial stability and achieve the years, supported by a solid regulatory mobile banking by 2020. financial inclusion. In many coun- framework and driven by advances in This collaborative approach offers two key mobile penetration. In fact, the MasterCard In line with this mandate BNM has fostered advantages. First, because the model is tries the majority of households Mobile Payments Readiness Index gives the the creation of a mobile banking and inclusive, not exclusive, it ensures that all lack access to basic financial country high marks, noting that Malaysia payments ecosystem, one that enjoys the stakeholders share a common infrastructure services. Fortunately, this is not is well on its way to “building a solid support of key stakeholders including financial and thus enjoy the benefits delivered by cost the case in Malaysia, where Bank foundation for mobile payments to flourish.” institutions, the Ministry of Finance, the savings, reduced complexity and a shorter Malaysia Administrative Modernisation and time-to-market. Negara Malaysia, the Malaysian While consumer adoption in Malaysia is not Management Planning Unit, the Malaysian Central Bank, is on a mission to as high as it is in other countries, people do Communications and Multimedia Second, this approach unites the transition Malaysia to a high show increased willingness to use their Commission (MCMC), government agencies stakeholders in a focused effort to value-added, high-income economy mobile devices for P2P payments. and several major mobile operators. educate and empower consumers with the services, skills and financial literacy by 2020. A big part of the plan Indeed, access to payment systems has to manage their personal wealth. They involves the widespread and rapid broadened, offering greater efficiency Open and collaborative are thus able to offer consumers cost- migration to electronic payments and convenience to consumers and effective mobile banking services. spearheaded by MyClear, a businesses. The momentum is significant, Importantly, the BNM has also established and inextricably linked to the resolve of the MyClear (Malaysian Electronic Clearing wholly-owned subsidiary of Bank Bank Negara Malaysia (BNM) to improve Corporation Sdn. Bhd.), a wholly-owned Mobile banking pilot Negara Malaysia. It is spearhead- the overall efficiency of the payment system subsidiary with a mission to spearhead ing the transformation with the and provide meaningful cost savings and the migration to mobile and achieve the It is our conviction that it is far better to launch of MyMobile, a mobile benefits to the entire economy. objectives outlined in the Blueprint. allow the stakeholders share a platform, banking services that cater to
92 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 93
This approach unites the stakeholders in a focused effort to educate and empower consumers We are in product development to target with the services, skills specific customer segments, beginning Smart move and financial literacy with smartphone owners. Following the success of the MyMobile to manage their services offer, a mass-market offer built from the ground up to appeal to personal wealth. all customers who own a mobile phone, fully hosted by MyClear, than to make Since starting the pilot in November we are in product development to target the development and deployment of 2011, more than 65,000 subscribers have specific customer segments, beginning mobile banking services the responsibility registered with these banks and more than with smartphone owners. of each individual bank. But we do not only 355,000 live transactions have taken place. believe there is great strength in numbers, However, it’s not just about offering a particularly when all players are united To date there is a total of 38 million mobile mobile app to provide the user experience behind a common goal. We also have great phone accounts in the country, a vast smartphone users have come to expect results to report. segment that MyClear is targeting. We also and demand. MyMobile Smart is also the expect that this project will grow this year to first important step in a larger strategy to Among these is the ongoing pilot of mobile include one more mobile operator and a few encourage and enable mobile commerce, banking services called MyMobile involving additional banks. an activity that is particularly well suited three major Malaysian banks: Maybank, to smartphone platforms. CIMB Bank and Public Bank, and three To ensure that every customer, regardless mobile operators, Maxis, Celcom and DiGi. of the type of mobile phone they own, Siek Kar Teck oversees Retail Payments can conduct mobile banking these pilot Division for MyClear, where he is responsible In practice MyMobile allows customers to services use USSD1 a global communication for brand and marketing of products and check banking account balances and view technology that is used to send text between services including MyMobile, Interbank transaction history, pay for their credit a mobile phone and an application program GIRO, e Debit, FPX and Direct Debit. Prior card accounts, manage checks, pay bills in the network. Since USSD does not store to his current role, Kar Teck held a variety for government services, top up mobile information, it was considered to be a more of positions in the credit card and prepaid accounts and transfer funds (mobile-to- secure technology and one particularly well card industry. mobile) using the recipient’s mobile phone suited to offering mobile banking services number, and not the recipient’s bank for a mass market of consumers, many of account details. whom live in rural areas and villages.
FOOTNOTE
1. Unstructured Supplementary Service Data
94 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 95 Part 3: Banking In Developing Markets: Plotting The Course For Financial Inclusion And Financial Success
Mapping The Market For Financial Inclusion By Faiq Sadiq, Head of Payment Services, Habib Bank Limited
At another level, banks have been unable Start small, think big The penetration of formal financial populations, access to convenient to serve the unbanked because the size services in Pakistan, where the mobile banking services that put of their individual deposits made it difficult These are early days for mobile companies to justify the operating and administrative and financial institutions in Pakistan who World Bank estimates only 10 percent them in control of their financial future. costs associated with distributing financial are at various stages in their mobile banking of the population or some 18 million Traditionally, banks have lacked a clear services through a traditional branch strategies. Currently the focus is on remit- people have a formal bank account, focus on Pakistan’s low-income population. banking model. tances and utility bill payments. These are has historically remained below While this demographic, which accounts for two services that have wide appeal and, at roughly 60 percent of the country’s total This is where mobile technologies — the same time, help build trust in mobile par compared to other countries population, represents a huge potential as part of a larger Branchless Banking banking on the whole as customers make in the region. However, the rapid market, it has been a difficult one to address. strategy — have come to play a transform- mobile banking an integral part of how uptake of mobile phones, which ational role in finance, allowing banks to they manage their lives. are now in the hands of over 131 At one level, this segment of the population, offer services that have been specially referred to as the unbanked, lacks familiarity priced and designed to target this To be clear, remittances to date are limited million citizens, has encouraged with banking services. To complicate population segment. to interbank and intrabank remittances, local banks to embrace branchless matters, the unbanked often find it difficult which means money can either be banking, also called inclusive bank- to trust services they do not know. With mobile penetration rates in Pakistan transferred from location to location within ing, into their mainstream channel. nearing 75 percent, it is clear that there a bank’s own office network, or it can be This is unfortunate because, even though is a huge opportunity for banks to deliver transferred between two different banks HBL - Habib Bank Limited, the their savings are meaningful and could be services to the unbanked at significant operating within Pakistan. There are no country’s largest and oldest financial managed to their benefit if they approached cost savings. international remittances in this bucket. institution, is harnessing mobile a bank, many are overwhelmed by the technologies to do more than enable notion of walking into a bricks-and-mortar building and asking for assistance. A lack the delivery of innovative banking Mobile banking is just part of a larger of literacy and formal education makes this services to the country’s unbanked. an even more daunting task. Incidentally, portfolio of capabilities that would allow It is determined to drive financial this is why building trust through frequent Pakistan to close the gap with other inclusion by providing all people, interaction, which is enabled by mobile countries in the region and offer a blueprint banking services, is so critical. including the poor and rural for other countries around the world working to achieve a similar positive.
96 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 97 Utility bill payment is a service showing impressive volumes as the population, and the country as a whole, moves away from manual, paper-based solutions.
Utility bill payment is a service showing Thinking outside the box needed a model that customers could aimed at achieving the much greater impressive volumes as the population, use and appreciate, and one that financial goal of financial inclusion. Against this and the country as a whole, moves away At HBL we have piloted the two services, institutions could also afford. We considered backdrop, mobile banking is just part of from manual, paper-based solutions. remittances and utility bill payments, and IVR, but dismissed that since it required a larger portfolio of capabilities that would It is a huge jump for the economy and, have plans for a commercial launch in Q3 institutions to invest in stable systems allow Pakistan to close the gap with other more importantly, paves the way for a 2013. The pilots, which we did not brand and speech-recognition software. We therefore countries in the region and offer a blueprint new ecosystem and a change in attitude or market actively, were quite successful decided to develop a telco-agnostic approach for other countries around the world working that will combine to create ideal conditions and far exceeded our expectations that utilizes a smartphone application to achieve a similar positive outcome. for the introduction of additional mobile in terms of volume and results. accessible via mobile data and Wi-Fi. banking and payment services in the But first it is important to understand our near future. The pilots also demonstrated the The realization that banks and mobile vision for financial inclusion. importance of putting the customer, operators must work together for the As customers come to understand the not technology, first. People want ease good of the country has prompted At its core, financial inclusion is sharply benefits of bill payments using their mobile and efficiency, and this is what mobile regulatory authorities to seek dialogue focused on providing all people access phones they will be open to considering technologies deliver. Unfortunately, and demand mobile operators develop a to quality financial services, at affordable the many other ways mobile banking can meeting these customer requirements has concrete roadmap that will allow financial prices, that allow them to make good, improve their lives. They will ask themselves: been a bit of an uphill battle for HBL. While institutions to offer mobile banking services informed decisions about their financial Can mobile banking allow me to save money the financial regulator in Pakistan is very supported by their mobile networks. Of future. However, in Pakistan, a big part of on my account? Is it possible to do other supportive of our efforts, and the efforts course, financial institutions, including HBL, financial inclusion is also about creating transactions or even invest using my mobile of the entire financial services industry, are not waiting. HBL is planning to launch the capabilities and infrastructure that phone? This acceptance is critical since we to transition Pakistan to a higher income the services outlined above, and there are will allow government and multinational have learned that change is accelerated economy by empowering the unbanked to many more in the pipeline. organizations to manage and distribute when it has the support of the people. participate in society, the same cannot be aid to victims of natural disasters such as said for the country’s mobile operators. floods and earthquakes. In other words, the interest — even eager- Greater goals ness — of people everywhere to use mobile In fact, the mobile operators chose not to To date Pakistan has made great strides, banking and payment services can be seen provide banks the USSD channel for the At HBL we perceive more than a chance to providing a prime example for other as a first step that will allow Pakistan as a delivery of mobile banking services to mass deliver a broader range of mobile banking countries, including the U.S., to follow whole to transition to a new era marked by market feature phones. Obviously, this services. We also see a clear opportunity to as they work to provide disaster relief to great progress and huge efficiencies. required HBL to rethink its approach. We introduce innovative products and services people in the wake of Hurricane Sandy,
98 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 99 Part 3: Banking In Developing Markets: Plotting The Course For Financial Inclusion And Financial Success
Creating New Pathways For The Poorest By Abul Kashem Md. Shirin, Deputy Managing Director, Dutch-Bangla Bank Limited for example. Of course, there is work to be Faiq Sadiq has been with HBL for 22 years, done and everyone is learning by doing. The where his principle activity is to lead and In Bangladesh some 3 million Bangladesh is a country full of contradictions. last natural disaster showed that Pakistan direct the strategies for HBL’s Payment people have made mobile banking With a population of 160 million and is still limited in its ability to provide relief Services Group and work on client sales a mobile penetration of just around services an integral part of how and must build an ecosystem that allows origination, cross-sell and ensure client 60 percent (or 95.5 million) it would appear all organizations, not just a few banks or satisfaction for the HBL’s corporate and they plan and live their lives. that Bangladesh should be lagging in the institutions, to distribute aid to all strata of financial institution clients in payments The country continues to witness development and delivery of mobile banking society when disaster strikes so they can arena. Faiq has held a variety of management strong growth and the government, services. However, a 2012 report on Mobile buy food, medicine, or rebuild their homes. positions within HBL, and has served on Financial Services by the Bangladesh Bank in tandem with the central bank, the panels of United Nations and UNESCO (Central Bank), reveals the rapid introduction If you consider that, after 60 years of responsible for innovative financing options is determined to drive mobile and uptake of mobile banking services independence, the 45+ banks operating in for education and gender specific issues. banking services as part of a wider over just the last two years, has allowed Pakistan count only 18 million customers agenda to achieve financial inclusion. the country to boost the overall access out of a population of over 190 million, to accounts among adults significantly. Dutch-Bangla Bank Limited (DBBL) then you begin to understand the critical importance of financial inclusion. Empowering was the first to launch mobile This progress is due in part to the strong the unbanked to participate in the financial banking services targeting the commitment of the government, in tandem system, not only improves their quality unbanked. It reports an average with the central bank, to create an enabling of life because they can save and plan for environment, which is essential for a of 100,000 customers have been necessities like housing, education and life commercially viable, competitive and safe after retirement. It also allows Pakistan to signing up each month since the market. To date 25 banks have obtained the look forward to a safe and stable future commercial launch in 2012. To central bank’s permission to provide mobile because all people are stakeholders and are date these customers have made banking services. Of these, 15 banks have determined to work toward a common goal launched some kind of mobile banking offer. more than 150 million transactions of prosperity and growth. valued over US$300 million and Another important driver has been the early deposited more than US$8.5 decision of the regulator to allow a bank-led million using the mobile banking model, permitting only financial institutions to offer mobile banking services. As a result, platform, and the bank is planning mobile operators and banks must seek to a slew of new services paired with cooperate, not compete head-on. new authentication approaches to grow that number exponentially.
100 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 101
Pioneer approach vendor, which we operate as a separate financial services to the 87 percent of platform from our core banking system. the population that does not yet have a While regulations clearly encourage all However, there are plans to link these bank account. At DBBL we have 126 bank players to invest their efforts in seeking systems in the future. This platform uses branch offices, and some 2,400 ATMs solutions to reach and serve the various technologies (SMS, IVR and located in urban areas, not rural villages. unbanked, not all are eager to cooperate, USSD) to open accounts and process rather than compete. payments. The main service is a menu- You might argue that we could drive driven service accessed through USSD financial inclusion by simply installing ATMs In the case of DBBL, the bank had negoti- channels provided under agreements in villages. However, there is a physical ated with each of the country’s six mobile with our mobile operator partners. coordination between ATMs and physical operators separately. Initially, the mobile branch offices that are needed to feed the operators were reluctant to share the USSD This mobile operator agnostic approach machines with money. In other words, to channel with us. After months of negotiations, allows DBBL to reach the entire population increase the number of ATMs we would also two mobile operators — Banglink and of unbanked, regardless of their mobile need to build new offices at each location. CityCell — agreed to partner with us. provider. Thus subscribers of any mobile operator can do banking transactions You might then argue that the work to DBBL launched its service branded “DBBL through the bank nominated agents, be achieve this is costly, but do-able. However, Mobile Banking” in March 2011, providing they Bank recruited or Telco nominated. this logic leaves out an important variable: customers financial services including: In practice customers don’t need to open Bangladesh Bank regulations limit the airtime top-up, cash-in, cash-out, real-time a traditional bank account with DBBL to number of branch offices a bank can open ATM withdrawal, debit interest payment, access the mobile banking services. An per year. Imagine that DBBL is only allowed merchant payment, utility payment, salary individual can open a mobile account by to open 15 physical offices per year and keep disbursement and remittance — to name presenting the proper identification and in mind that there are at least 460 towns and a few. This mix of services has allowed paying a deposit of only Tk 10 (US$ 0.13) villages where we should be present in order us to attract one million new customers at agent outlets. to meet the local needs of the unbanked. since launch, and we are optimistic that this number can grow to 3 million by Do the math, and it would take 40 years end-2013. In fact, several services we Mobile benefits to build this banking infrastructure. And offer are ones our competitors are still even then the poor would have to travel not able to provide their customers. When it comes to serving the unbanked at least 30 kilometers on foot to visit the mobile is not a choice, it is an imperative. nearest physical branch office and use Our suite of mobile banking services use In our view, no other approach can extend our banking services. a technology platform from our solutions
102 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 103
We are also exploring new technologies, such What’s more, having a huge network of Innovate — often ATMs would not address the real obstacles as biometric or fingerprint recognition that will that prevent an estimated 60 percent of the Access is often seen as the goal of financial allow people who don’t know numbers or read country’s population from having access to inclusion. However, it’s widespread and the alphabet to use mobile banking. banking services in the first place. According repeated usage that is needed for Bangladesh to the Bangladesh Bank,1 poverty and a to grow and prosper. In fact, providing access lack of education are the chief challenges to to financial services should be understood an NGO, that provides microfinance loans, mobile service on physical cards. Instead, financial inclusion, which it defines as “the as a first step in a journey that will ultimately to use mobile banking to collect monthly we opted to enable a cardless transaction process of ensuring access to appropriate require product innovations in insurance, installments. To date the NGO workers must and introduced a service called ATM financial products and services needed by credit, pensions and government payments. travel around the villages and physically Withdrawal Service. the vulnerable groups of the society at an collect the money. Mobile would simplify affordable cost in a fair and transparent To drive usage and also to compete the process, and also make it much safer. The positive response to this service alerted manner by banks and financial institutions.” successfully against the many banks lining us to yet another opportunity, prompting up to steal our lead, DBBL continues to DBBL was first to the market with bill us to be the first to partner with Western Clearly, mobile is the only way to deliver innovate and test the waters for path- payment, a service we introduced when we Union to provide a channel for remittances. mobile banking services at an affordable breaking new services. Unlike banks in other saw that customers demanded a way to Of course, Western Union is not an account cost to both the unbanked, who have been developing markets, DBBL is not focused on pay all their monthly bills — electricity, gas, service, which means customers still have left out of the mainstream financial system, enabling models that allow P2P payments water — using their mobile phone. However, to go to a bank and collect the money and the banks that have invested to offer and the like. The goal of our strategy is we soon observed that customers also in cash. To this end we are working with them in the first place. It’s also the technol- financial inclusion and developing a savings wanted a service that would allow them to Western Union to introduce a new kind of ogy that will transform the entire country, habit among everyone that will ultimately buy and pay for goods in a store with their ‘pull’ service that would provide customers boosting rural economies and national GDP benefit the Bangladesh economy. mobile phones. In response to this we with a PIN number so they can literally ‘pull’ by scaling up money circulation in towns introduced merchant payment services. money from Western Union into their mobile and villages and bringing new creativity to For example, DBBL is currently involved in banking account. Once this money is depos- banking services to benefit the poor — and a pilot with the World Food Program (WFP) Then we found people also wanted to use ited into their account, they can withdraw the the poorest — of Bangladesh. to use mobile banking to deliver assistance their mobile phones to withdraw money money — in cash — from our ATMs or agents. and allowances to the poor directly onto from an ATM. Since customers lose their their mobile phone. It is in the early stages electronic banking cards, or simply fail to In the meantime, we have also partnered right now, but there are plans to extend this. keep them in a safe place, we determined with many remittance companies all over the In yet another pilot we are working with that the risk was too great to base this world to introduce the remittance through
104 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 105 Having a huge network of ATMs would not address the real obstacles that prevent an estimated 60 percent of the country’s population from having access to banking services in the first place.
DBBL Mobile Banking Services. Under these This is further confirmed by a recent months. Obviously, we cannot educate just to grow its customer base. In fact, we are on arrangements, wage earners and employees consumer survey documented in a policy over one million customers, so we must track to grow our customer base to 3 million are able to remit their money to DBBL paper issued by the Bangladesh Bank.1 equip our agents to take on this task. They and reach break-even this year. Our approach, Mobile Banking Accounts from the counters While the sample size, one hundred must teach customers, in their native Bengali, which has been to set up our own offices of various exchange houses abroad. Upon unbanked across the country, was too to use and remember a PIN, for example. and deploy our own employees to train and receipt of money in their mobile accounts, small to be considered statistically monitor agents, has been a little costly but the beneficiaries can withdraw cash from an significant, the report said it does provide But we are also exploring new technologies, it will begin to generate a profit this year. ATM or from agents. They can also use the an important indication that mobile such as biometric or fingerprint recognition money deposited on the mobile account to banking services are reaching a growing that will allow people who don’t know Mobile is a new channel allowing us to reach conduct commerce or pay utility bills. proportion of the population — and numbers or read the alphabet to use mobile new customers. Therefore our strategy is leaving a lasting impression. Interestingly, banking. In this scenario customers will squarely aimed at customer acquisition, and Moving forward, DBBL is exploring how it the vast majority of respondents have authenticate themselves using their finger we are convinced that customer retention can use mobile to extend lending services, a positive view of mobile banking and print and local agents will be equipped with will not be a challenge if we observe and in the form of microfinance, to the unbanked 75 percent said their primary use of the the readers and remote connectivity to scan listen to customer needs and behavior. and the underbanked. service is to send or receive money. Rural and accept a finger print as proof of identity users stressed that the security mobile for deposits and withdrawals. Innovation is key to encouraging use and offered, allowing them to save money in building lasting customer loyalty, which is The road ahead a safe place, was a huge advantage. The government of Bangladesh is now why DBBL is determined to launch new disbursing allowances to some 20 million of products every six months. Customers that Being a pioneer has allowed us to be To ensure the unbanked use the services the country’s ‘ultra poor’ on a monthly basis. are presented with choice, and a line-up of new the country’s leading provider of mobile DBBL offer we have sharpened our focus on Most of these beneficiaries have no mobile products to help them better plan and manage banking services. More importantly, it education and innovation that will empower phone and are illiterate. Thus, the biometric their futures, will choose — and stay with —us. has provided us deep insight into what the poorest of the poor and the illiterate to solution will help us to open accounts for works, and what doesn’t, allowing DBBL use mobile banking to better their lives. those beneficiaries although they do not Abul Kashem Md. Shirin has over 28 years to focus attention on improving usability own a mobile phone. This approach will of experience in financial services. Since and increasing the value it delivers. A big part of this has been our effort to pave the way for the government to use 2008, he has undertaken a variety of roles educate our agents to help our customers. our system to disburse the allowances to within DBBL, where he is currently Deputy Overall, we have noticed that our customers To date DBBL has a network of just over the beneficiaries quickly and directly. Managing Director. Prior to that, he was appreciate simple services that help them 24,000 agents in place to serve around 1.10 the Head of IT and Cards in both DBBL manage their lives. Among these are million customers with 60 percent of them Mobile banking is new to Bangladesh and has and BASIC Bank and 8 years with the top-ups, cash-in and cash-out services. making at least one transaction in last three opened up new opportunities from our bank Government of Bangladesh.
FOOTNOTE
1. www.bangladesh-bank.org/pub/research/policypaper/pp072012.pdf
106 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 107 Part 3: Banking In Developing Markets: Plotting The Course For Financial Inclusion And Financial Success
Targeting Tomorrow’s Mass Affluent By Wan Razly Abdullah, Strategy and Finance Director, PT Bank CIMB Niaga Tbk
New choices It makes business sense for banks than a technology; it is also completely in developing markets to drive aligned with the lifestyles and life stages Clearly, the impact of this progress on of our customer base. our society, and our banking business, financial inclusion, but it takes will be profound. vision to plan for a day when Put simply, mobile is part of the fabric of today's unbanked will be part of Indonesian society. It's a must for youth, Obviously, when people are earning the burgeoning middle class. CIMB a life-simplifying tool for the urban and US$10,000 per year, they can plan seriously middle class, and a life-saving tool the and diligently for a stable financial future. Niaga, the number five bank in poor, disabled, and unbanked. It is also Housing, education, travel, credit cards— all Indonesia, is preparing for that the channel that will trigger a new phase of this and more is possible. future now by rolling out a platform of growth and innovation in mobile money that will allow it to deliver mobile and commerce. And, when people fully understand what they can hope to attain, the market for banking and commerce services to Currently, only 50 million, of a population banking services will explode and expand. this new demographic. The effort is of 200 million, have access to a bank The outcome: popular demand for services supported by proactive customer account. The number of bank account that enable much more than person to education that harnesses social holders is expected to rise to 70 million person (P2P) payments. Customers will banked by end of 2013. Additionally, the require mobile commerce, microfinance media to reach Generation X and number of mobile phone users in Indonesia and services that allow them to plan and Generation Y customers across is forecast to exceed 150 million unique track all their personal affairs using their all social strata. mobile subscribers. mobile phones.
Mobile is simply the most effective way Key economic indicators suggest this At CIMB Niaga we are not waiting for to deliver banking services to Indonesia's decade will see many unbanked move this future; we are pursuing a strategy to population of some 250 million spread quickly up the social ladder to emerge as accelerate this change and —ultimately out across 13,600 islands, a territory that tomorrow's middle class. Reports from the — position the bank as the market leader. is nearly impossible to serve with physical World Bank, confirmed by our own analysts, branch offices. But reach is not the only predict the per capita income of the average At one level, our strategy is sharply focused reason for our decision to offer mobile Indonesian citizen will rise from US$3000 on driving financial inclusion. However, we banking. In our view, mobile is much more per year to US$10,000 by the year 2020.
108 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 109
are also well aware of the benefits For the unbanked, Go Mobile is delivered phenomenal. Go Mobile counts 300,000 associated with offering mobile banking using the SMS channel provided by mobile users as of December 2012 — and the services now that will cement customer operators. Some services will also be momentum shows no signs of slowing. trust, encourage loyalty and ensure that delivered by USSD, if the handset supports In an average month we see around introducing the other products in the it. It is important that the unbanked can 1.5 million log ins to the service and years to come, such as credit cards and access these services using any make some 250,000 financial transactions. insurance, will not be such a hard sell. or model of mobile phone. Smart marketing For the mass affluent, Go Mobile is also Double vision available as mobile application across all Clearly, our mobile banking services operating systems that customers can have been well accepted by our customer To ride the wave of opportunity coming download to their smartphone. With it they demographic, but the real driver has been CIMB Niaga launched Go Mobile in February can check balances and make transactions. our promotion of the service to the 2012. The mobile banking service enables They also benefit from an additional customers of tomorrow. bill payments, mobile airtime top-ups and location-based feature that allows them to P2P payments to recipients with domestic search for ATMs or branch offices nearby. Mobile banking is in its early stages in bank accounts. While it perfectly matches Indonesia. However, we also recognize that the needs of the unbanked for basic mobile What's more, our pricing model is simple, a large number of the early adopters are banking services, it also caters to the and appeals to both the unbanked and also concentrated in a demographic that requirements of time-strapped urbanites price-conscious customers across all social includes Generation Y consumers and young for simple, convenient services that help strata. A transfer between different domestic urban executives. To communicate our value them manage their finances. banks incurs a small fee of US$ 0.50, but is proposition to these customers CIMB Niaga free of charge between CIMB Niaga account has chosen to use the media they Since putting the needs of one customer holders. Likewise, bill payment incurs only understand and embrace. segment over the other would be like small fees (around US$ 0.35) and only with leaving money on the table, our strategy certain billers. Service fee for purchase We have invested in digital display is designed to satisfy the needs of both, of mobile phone airtime top up is free. advertising online, and we have also supported by proactive marketing to produced commercials for YouTube that capture the attention of trendy Millennials The rapid uptake of the services has customers can view and share. We have also who consider it a hassle to go to a physical exceeded our expectations, and growth been active organizing road shows that we bank for service. from a customer base of zero has been take to shopping malls, university campuses
110 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 111
Obviously, when people are earning US$10,000 per year, they can plan seriously and diligently for a stable financial future. and popular events where we demonstrate Rekening Ponsel, our mobile wallet that to transfer or receive amounts up to the service. To encourage interaction and launched in March 2013 after a successful Rp 5 million, or US$500. Housing, education, travel, interest we invite customers to make pilot phase, is a service that builds on our credit cards— all of this their own commercials and post them platform that enables customers to make Complete commerce and more is possible. on YouTube, and we award prizes for the domestic P2P transfers across all mobile best commercials for our services. networks by just knowing the recipients Our next focus will be on offering mobile mobile phone number, not their account. payments and enabling mobile commerce. Social media is certainly effective, but it It is also possible for customers to withdraw Building payment capabilities in a mobile is equally important to educate customers the money from our branch ATMs using phone will bring about new ways of doing about the benefits of the service and a registered phone number. An ATM card things. Along with our passion to be the applications in everyday life. To accomplish is not needed for this transaction. market leader in mobile banking, we believe this we have trained all our staff in all that mobile commerce is an important our 974 branch offices to use the mobile Because this mobile wallet does not require piece to enable end-to-end mobile application and explain it to customers users to have a bank account, the amount solutions to our customers. who have queries. This approach also they can transfer or receive using their bridges the gap, allowing CIMB Niaga mobile phones cannot exceed Rp 1 million, There are several options in the develop- to teach the unbanked, customers who or around US$100. When the transfer is ment stage, and we are working to ensure can then go out and show others in their complete the recipient receives a text that the design of these services is one community how to use our services. message alerting them that the amount that is also easiest for our customers to has been transferred and directs them to understand. In the future we envision the nearest ATM or CIMB Niaga branch to that our customers will take their mobile Mobile roadmap withdraw the funds. At the ATM the recipient phones, not their wallets, with them when can make the withdrawal by pressing a they leave their home. Our experience shows continuous education button at the ATM and them inputting their and marketing is key to rolling out mobile mobile phone number followed by a PIN. Wan Razly Abdullah has held the position banking services successfully and at scale. of Strategy and Finance Director of PT Bank The effort also paves the way for CIMB Niaga Customers who want to transfer greater CIMB Niaga Tbk since July 2009. Prior to to offer the other services in the pipeline, amounts must register themselves with the this he held a variety of senior positions at beginning with a mobile wallet and extend- branch, so that means completing the KYC Maybank Investment Bank, Northern Trust ing to mobile commerce. Both have a firm process and showing ID. Once they have Company and PriceWaterhouse Coopers. position in our roadmap. done this, the Central Bank permits them
112 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 113 Part 3: Banking In Developing Markets: Plotting The Course For Financial Inclusion And Financial Success
Branchless Banking Driven By ‘Disruptive Innovation’ By Donny Prasetya, Head of Business Development, btpnWOW! Mobile readiness factors in Indonesia
Indonesia is in the early stages technology is the only way to extend the of a journey that could see the provision of financial services to the mass market of unbanked. However, there is a country’s unbanked advance past catch. Consumers in Indonesia need to be Mobile coverage mobile wallet services offered by convinced of the value of mobile money 90% mobile operators in the region to services on the whole. embrace branchless banking With mobile network coverage pegged services, provided by local financial at 90 percent, the Mobile Payments Mobile phone prevalence institutions. Bank BTPN discusses Readiness Index compiled by MasterCard 48% the distinction between the two points out that Indonesia 1 “is somewhat types of services and reveals its behind the average”. Specifically, penetration at 48 percent in the key 15- 64 demographic plans to disrupt the market with is lagging behind the index average of a new and cost-effective model 57 percent. aimed at empowering people at the Figure 1: Based on data from MasterCard Mobile Readiness Index mobilereadiness.mastercard.com/country/?id bottom of the pyramid to manage MasterCard stresses that the total number of people who have mobile phones and an interest-bearing bank account. access to networks “needs to increase Indonesia is a large untapped market in order for mobile payments to develop Services skewed Reports also note that many of the that offers even greater opportunities commercially going forward”. commercial banks operating in the for first-movers able to make the match To date mobile banking has been made country have been involved in some kind between the value proposition they offer Much is at stake, according World Bank available in Indonesia, but it has primarily of mobile banking initiative, and almost all customers and the services people Group reports the gap between bank been offered as an additional channel for have been focused on customer retention. genuinely need and appreciate. account holders and mobile subscribers those customers who already hold a bank Put another way, commercial banks serve is only going to increase over the next few account. Services have been disproportion- a relatively small proportion of households With a population of 250 million, of which years as the mobile subscriber population ately concentrated on large and developed and their financial services are heavily only 50 million are estimated to have continues to grow. urban areas including Jakarta, the capital, skewed towards urban areas. This approach a bank account, it’s clear that mobile and Bandung, Surabaya and Denpasar. neglects a large — and potentially lucrative
FOOTNOTE
1. mobilereadiness.mastercard.com/country/?id
114 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 115
— market of unbanked, the majority of Traditionally, mobile banking services refer Indeed, branchless banking is where we whom work, earn money and are considered to financial transactions undertaken using will see the forces of disruptive innovation creditworthy by MFI1 standards. a mobile device against a bank account collide and create new opportunity. Clayton accessible from that device. However, Christensen — an influential business Of the unbanked poor who seek credit, mobile banking services have evolved to thinker and author of the milestone book about half are deemed to be too small to include mobile payments and mobile money The Innovator’s Dilemma1— writes that be commercially viable. transfers, activities where an electronic disruptive innovation is an innovation store of value is linked to the mobile that helps create a new market and value Since most of Indonesia’s banks aim to serve number of the holder. Thus, the holder is network, and eventually goes on to disrupt the middle income and above segment, not required to have a bank account. What’s an existing market and value network (over that leaves a large market for BTPN, which more, the value stored in a mobile wallet a few years or decades), displacing an earlier is resolved to reach deeply into the poorer can be used as a payment instrument and technology. The term is used in business and strata of Indonesian society. Clearly, mobile a transfer instrument. technology literature to describe innovations is the only efficient and cost-effective way that improve a product or service in ways to reach and serve this mass market, but Branchless banking is a different kind of that the market does not expect, typically mobile technology alone cannot achieve this animal. It harnesses mobile to do more than first by designing for a different set of ambitious end. It calls for an approach that is deliver services; it empowers unbanked consumers in the new market and later radical and disruptive. to open and manage an interest-bearing by lowering prices in the existing market. bank savings account and improve their standard of living. While it is easy to think Of course, banks are called on to think Differences and opportunities of branchless banking as a service enabled of new business models, and not just by mobile technology, it misses the impor- jumble branchless banking into the existing But, before detailing precisely how BTPN tance of having an open mind to develop and electronic banking channel. Another word of plans to upset the status quo, it’s important embrace new models. In my view, any effort caution here: this new branchless banking to explain the distinction between mobile made to see branchless banking as a subset might not necessarily be complementary banking services, widely available in Indonesia, of traditional banking potentially imprisons with the traditional retail banking business and branchless mobile banking services, the new service within old paradigms. and could even end up cannibalizing it. poised to transform the country’s economy and commerce.
FOOTNOTE FOOTNOTE
1. Monetary Financial Institutions 1. www.claytonchristensen.com/
116 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 117
Moving forward, we see huge opportunities in
WOW factor in June 2011 and experienced some delays We are mobile operator agnostic in our commerce, enabling large due to a lack of regulation. In November approach and currently deliver the pilot companies that buy For this reason, branchless banking may not 2012, however, this changed dramatically service using the network belonging to commodities like coffee be for every bank to implement. It requires and in our favor when the Central Bank one of Indonesia’s mobile operators. a radical approach and visionary leadership formally announced its intention to introduce We are confident that our service will be to pay for those goods that can see beyond today to a tomorrow regulations paving the way for branchless available on all the country’s GSM mobile directly to the farmers where widespread financial inclusion can banking services in 2013. Take advantage of networks in the course of the year. and merchants on their benefit all people. At BTPN we are pursuing this window of opportunity we plan to launch a strategy to introduce pure branchless commercially in this timeframe. Essentially, btpnWOW!, which is slated mobile phones. banking for the mass market of unbanked to launch in Q3 2013, is designed to be at a price point that undercuts the competition. Assuming that the appropriate set of a ‘market-first’ service that offers mass This is extremely disruptive and allows us regulations will be introduced by Bank market unbanked customers a full-feature to break new ground. Indonesia, btpnWOW! will also be the first bank account paired with low price and commercial branchless banking service to a radical value proposition. btpnWOW! By way of background, BTPN, which allow customers to sign up by completing will not charge monthly fees, nor will we was founded in 1958, has 1,600 points of the KYC process at non-bank agents. This require a minimum balance. We are presence including ATMs and branch offices, is a service we will build extensively in the confident this offer will be rewarded with and serves over one million customers. next 12 months. long-term customer loyalty toward our Our customer base includes 800,000 brand and bank. We also see btpnWOW! microbanking and the so-called ‘productive In a nutshell, btpnWOW! will deliver all as a tool that equips us to identify individual poor’ customers, customers at the bottom the standard capabilities associated with customers, who would be good candidates of the pyramid to whom we also hope to interest-bearing bank accounts including for our more traditional lending products extend loans as well as financial services account opening, cash-in, cash-out, going forward. moving forward. bill payment and remittance as well as communication features such as CUG1, To accomplish this goal we began a pilot of allowing a group of customers to interconnect Sustainable success branchless banking services in November via a mobile network at Ultra Low Cost, while 2012 called btpnWOW! Planning for the pilot, at the same time enjoying the convenience Pegged at around 70 million, the unbanked which now involves approximately 14,000 of of full-service banking over their mobile devices. market is huge. However, banks do not need our own employees across Indonesia, started to make huge investments to serve this
FOOTNOTE
1. Closed User Group
118 119
At BTPN we are pursuing a strategy to Moving forward, we see huge opportunities Donny Prasetya is a Senior Vice introduce pure branchless banking for the in commerce, enabling large companies President with PT. Bank Tabungan mass market of unbanked at a price point that buy commodities like coffee to pay Pensiunan Nasional in Indonesia, that undercuts the competition. for those goods directly to the farmers and currently heading the business merchants on their mobile phones. To date development aspect of btpnWOW!, companies that do raw material buying for a pioneering branchless banking segment. Forget sophisticated — or that would save money with banks — if they companies like Starbucks or Mars, have to service in the country. Prior to BTPN, complicated — products. Our focus group only could. We are on a mission, supported go through the remote farming communities, Prasetya was an Associate Operations research shows the services the unbanked by senior management, to innovate banking lugging cash along with them. It’s hardly an Officer with IFC who managed the want most center on cash-in, cash-out, bill by using new technology and new models efficient, let alone secure way to conduct Indonesia Mobile Banking Project. payment and airtime top-ups. Fortunately, to reach new customers and inject new business. We are therefore involved in a pilot our vendor solution allows us to deliver dynamism into Indonesia’s economy. to provide these independent smallholder these basic services, enhanced by mass farmers an interest-bearing bank account, . customization, at large scale and low cost. The first item on the agenda is to convert thus allowing them to accept payments our existing customers to btpnWOW! After on their mobile phones and — ultimately Research also shows that banks can reap we achieve this milestone we will target the — build their business. huge business benefits if they offer the broader unbanked market. Our aim is to right product mix at the right price level. grow our customer base from one million, We will round out this virtuous cycle by The right price level is critical since the where it is currently to 5 million by 2016. using mobile to deliver the unbanked the fee structure offered by most banks information and advice they need to plan discourages — and even devours — small We will also rely on our existing customer their futures and make business decisions. deposits. High monthly fees, which banks base to recruit more customers and — It may seem quite a stretch for a traditional must charge to offset administrative costs, ultimately — entire communities for our bank to host an information portal targeting can reduce an account balance to zero in branchless banking services. To accomplish customers at the bottom of the pyramid, just months. Little wonder that one third of this we will incentivize certain customers to but we are convinced that this is the path Indonesians don’t save at all. work as agents for the bank, and thus solve we must take to help our customers achieve some important issues around distribution sustainable performance and a more stable We at BTPN see an opportunity to extend and marketing. In both cases our customers financial future. financial access to a huge, untapped market will be our representatives.
120 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 121 Part 4: Mobile Operators: Paving The Way For Mobile Payments And More
PART 4: MOBILE OPERATORS: PAVING THE WAY FOR MOBILE PAYMENTS AND MORE
With over half of the world’s population using a mobile phone, nearly twice the number of people who use a bank account it is no surprise that mobile operators are lining up to launch services that enable mobile payments. Mobile wallets and bill payment are just the start, as mobile operators scramble to build a capabilities mix that will allow them to play a leading role in mobile commerce and secure a central position in the emerging mobile money value chain. The strategies are many and the rewards are high. Ooredoo, for example, is positioning itself to be a leading provider of mobile money services and one of the world’s top 20 mobile operators by 2020. Celcom is mapping a plan to integrate its mobile wallets into its larger customer loyalty program. From NFC trials to comprehensive strategies aimed at creating commerce ecosystems, we examine what mobile operators are doing and invite mobile authorities to evaluate progress to date.
122 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 123 Part 4: Mobile Operators: Paving The Way For Mobile Payments And More
SIM-Based NFC: Enabling A New Level Of Interaction For Latin American Big Events By Valter Wolf, Market Development Director, GSMA issuer) and several mobile operators in In Nice, France, for example, visitors Brazil. The idea is to replace the existing can 'touch' a tag with their NFC-enabled plastic card with an NFC- enabled mobile GSM phone and actually hear an audio Excitement grows as Brazil gears hosting the FIFA World Cup, Rio is well phone app. This app, which resides in the description of a point of interest such as a up to host the FIFA 2014 Soccer known for its beauty and tourist attractions. GSM SIM card, behaves as a secure, digital landmark. They can also access Internet As they prepare for their trip, travelers to wallet holding the bus tickets. Companies links for the places, artwork and points of World Cup and the 2016 Olympic Rio will be able to charge their NFC-enabled like Gemalto, NXP and Samsung are also interest that interest them by just touching Games. However, the main attraction mobile phones with the tickets they will use participating in this trial, which will start the tag with their mobile phones. Just may be the NFC trials taking to take buses to popular destinations includ- with 250 handsets delivered by RIOCard imagine the potential of these applications place in Latin America, which are ing the Copacabana beach, the Sugar Loaf by the beginning of 2013. when they are deployed in all of the cities and, of course, the Maracanã Stadium. hosting the 2014 World Cup and the 2016 supported by the GSMA. These People use plastic cards in a wide variety Olympics Games. trials will enable users to make The GSMA is supporting technology trials of scenarios. They have a card to collect payments and access information in Latin America to show the possibilities loyalty points from their gas station, a with an NFC-mobile phone. More of NFC-based interactive experiences and card to track rewards from retailers where NFC in big events the business opportunities this technology they buy, an ID card related to their health important, these NFC trials will affords the telecommunications industry insurance and one card for every bank NFC is one of the technologies enabling highlight business opportunities and other sectors. NFC maturity was account they hold. All of these cards can the Internet of Things, where people can and inspire companies across running just a few months behind when the be replaced by smartphone apps. click or touch elements in the real world all verticals to think of new ways London Olympics happened. But now we are and bring them into their social Web. The in sync for the next big, worldwide event. Just imagine the amount of paper and NFC-enabled smartphone is the device to harness NFC to connect with plastic we will be saving by doing this and that connects the virtual and real worlds, consumers in the context that the positive impact in our environment. Of allowing a new dimension of interactivity. matters most. NFC trials in Rio course, for this to happen the point-of-sale technology and other kinds of NFC readers Rather than pay for the bus ride using Soccer fans coming from all over the world One of the trials involves RIOCard (a card must be in place first. This is why the cash and change, people can pay by simply will land in Rio de Janeiro in 2014. Besides offered by the public transportation ticket GSMA is supporting these proof-of-concept tapping their mobile phone to an NFC trials, allowing the potential providers to reader. People will use the same mobile explore the possibilities and set up the phone to access more information about NFC is one of the technologies enabling the right partnerships. tourist routes, receive restaurant discount Internet of Things, where people can click or touch elements in the real world and bring them into their social Web.
124 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 125 Part 4: Mobile Operators: Paving The Way For Mobile Payments And More
Open Solutions Could Help Fulfill The Promise Of Mobile Money By Sal Karakaplan, Vice President, Mobile Money, MasterCard GSMA is supporting technology trials in Latin America to show the possibilities of With over half of the world’s Kenya’s M-Pesa is considered the most population using a mobile phone, successful mobile money solution so far NFC-based interactive experiences and the and a good place to look for key success nearly twice the number of people business opportunities this technology factors. The success of M-Pesa is reflected who use a bank account it is no affords the telecommunications industry in the numbers. M-Pesa provides mobile surprise that mobile money is the commerce used by over 70 percent and other sectors. next big thing in payments and of country’s adult population and now processes more transactions domestically financial services. But, mobile than Western Union does globally 2. coupons, collect loyalty 'points' based on games they watch or play can be combined money has not yet lived up to places they visit and the games they watch. in many ways. This brings creative and its promise. This collection of What caused M-Pesa to be so successful By doing this, people will also be able to exciting business opportunities to players successful mobile money solutions where other solutions have not? Three unlock badges, get free goodies, qualify across the ecosystem — sponsors, service important factors are: answer key questions and offer for backstage passes — and much more. providers, mobile operators — which are yet to be discovered and explored. valuable learnings. 1 Compelling Value Proposition. M-Pesa Every big event is made possible by did a phenomenal job in understanding sponsors wanting to interact with their Valter Wolf joined the GSMA in 2012 and With over 100 mobile money deployments the biggest market need – a better option customer base in the best and closest way. is responsible for engaging key ecosystem globally, only a handful have reached any for urban workers to send money home to NFC lets sponsors link with customers right stakeholders, developing and facilitating meaningful scale. Even bullish forecasts their family in rural areas – and developed on the spot. In other words, NFC allows traction for selected strategic initiatives for mobile payments, 100 percent annual a mobile money solution that was materially sponsors and service providers to make of the mobile industry, including SIM-based growth reaching US$500 billion for 20151, better than existing options. M-Pesa also this connection with people — in the right NFC, Rich Communication and Connected are small compared to the US$10 trillion kept the initial solution simple to under- context — when people are holding the Living. He has broad experience in that flows through payment cards or the stand and effectively communicated the NFC smartphone at a given time and place. telecommunications in the Marketing & US$20+ trillion being paid with cash2. value proposition in a way that resonated Strategy area, with working experience in However, learnings from some of the with consumers. The amount of data generated by the Germany and Brazil. successful mobile money solutions are interaction between people using raising hope that an open network approach 2 Ubiquity. Like all new payment form NFC-enabled mobile phones and the buses to mobile money could achieve global factors, mobile money must overcome they take, the places they visit and the scale in the same way as the global card the chicken/egg syndrome. Enough stake- networks achieved with payment cards.
FOOTNOTE
1. “Pathways to growth in mobile Payments”, June 2012 by McKinsey 2 “ MasterCard Advisors Analysis 2012 3. “Mobile money: Getting Scale in Emerging Markets”, June 2012 by McKinsey
126 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 127
In many markets creating an ‘open loop’ mobile money solution could make an important difference. holders must utilize the mobile money important difference on the three critical this experience will access a proven to enable it to reach scale but many success factors. framework for value sharing between stakeholders will not use it until they are the different ecosystem players. This confident it is ubiquitous enough to be 1 Compelling Value Proposition. The solves complex tasks given the divergent worth their effort to use. In M-Pesa’s case, success of open loop card payment interests and objectives. Additionally Safaricom’s significant national market solutions (credit, debit, prepaid) has ‘open loop’ mobile money solutions coverage, over 60 percent1, delivered on largely been driven by the rigorous and are also likely to be more cost efficient the promise of ubiquity. Safaricom did the disciplined approach for developing creating more value for stakeholders to have to enhance its agent network to compelling value proposition referred share. This is because of the significant create ubiquity for M-Pesa funding. to as program management. ‘Open loop’ infrastructure investments the card mobile money solutions will also benefit networks have already made and the 3 Business model that creates value for from this approach and are likely to ability of these card networks to leverage all stakeholders. It sounds trivial that a create compelling value propositions existing banking infrastructure for the new business model should create value on a sustained basis. banked population to move money in for all stakeholders to be successful, but and out of the mobile money ecosystem. many payment solutions fail because 2 Ubiquity. The card networks already of their inability to address this issue. have the broad connectivity in many The transition to ‘open loop’ mobile money M-Pesa did benefit from a simple ecosystem markets. Mobile money solutions that solutions is already underway. ‘Closed loop’ with fewer players, but also ensured all leverage this infrastructure can achieve solutions including M-Pesa, Neteller and ecosystem participants benefited. For instant ubiquity. Moneybookers are realizing the value of example, it paid special attention to the ‘open loop’ and offering open loop payment needs of its agent network, aligning it 3 Business model that creates value cards linked to their mobile wallets. with customer growth to ensure its for all stakeholders. The card networks agents are profitable. have also invested heavily to arbitrate Several ‘open loop’ mobile money solutions large ecosystems of stakeholders equitably have also been launched such as by Western While M-Pesa benefited from specific sharing the value of card payment solutions. Union in Italy, Etisalat Nigeria in Italy and market circumstances, the three success The franchise rules, risk management MasterCard in Africa. Payment system factors are relevant in every market. In policies and rich information content governing bodies like the National Payments many markets creating an ‘open loop’ ensures the integrity of this value share. Corporation of India are also emphasizing mobile money solution could make an Mobile money solutions that leverage interoperability in their mobile payment solution guidelines.
FOOTNOTE
1 “Pathways to growth in mobile Payments”, June 2012 by McKinsey
128 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 129 Part 4: Mobile Operators: Paving The Way For Mobile Payments And More
Preparing To Deliver ‘Advanced’ Services By Rambert Namy, Head of Mobile Financial Services, Ooredoo M-Pesa did benefit from a simple ecosystem with fewer players, but also ensured all ecosystem participants benefited. In February 2013 Qatar Telecom, Taking a pragmatic approach, the group or Qtel, made the decision to determined early on that 7 of its 17 markets were ready for mobile money services. change its brand name to Ooredoo, And mobile money is not the only place Sal Karakaplan is a Vice President in the It then focused its efforts on developing where this transition to ‘open loop’ is Mobile and Industry Alliances group of which means 'I want' in Arabic. a service offer that matched the needs happening. Transit payment systems MasterCard. He leads MasterCard’s Mobile The move doesn't only allow the of customers in these regions based on globally (Suica Card in Japan, Octopus Money business globally in charge of multi-country carrier to create and a keen understanding of local conditions Card in Hong Kong, Metro Card in New strategy, product development, product and requirements. communicate a coherent identity. York) are already recognizing the benefits commercialization and partnerships. of open payment solutions and are Prior, Karakaplan was part of MasterCard’s It marks a new phase in the group's This approach has allowed Ooredoo to transitioning towards them. Mergers and Acquisitions team, and led strategy to deliver mobile money identify two distinct customer segments, MasterCard’s equity investments in the services that are aligned with what markets that span large geographic areas, Mobile money solutions that are based on emerging payments arena. not just individual countries. This is its large and diverse customer base open network based solutions as those obviously a great benefit when it comes offered by the global open card networks genuinely 'wants' and appreciates. to executing the next step in our strategy are likely to address the key success factors From enabling merchant payments to develop a turnkey solution that will allow demonstrated by success stories like to driving financial inclusion, our Operator Companies access to the M-Pesa. And they are not limited to local technology and know-how that will allow Ooredoo is positioning itself to be boundaries, the global interoperability of them to roll out mobile money services the card networks could make the mobile a leading provider of mobile money quickly and confidently across their footprint. money solutions expand beyond the services and one of the world's top national boundaries. 20 mobile operators by 2020. Fulfilling needs With over 85 million subscribers across 17 counties Ooredoo has had to make In the first market, which includes countries some tough choices in order to meet like Kuwait, Qatar and Oman, many of our — and exceed — the expectations of customers are migrant or ex-pat workers who its diverse customer base. desperately need a service that allows them
130 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 131 However, we also strive to trigger a shift in customer behavior that will encourage savings and spark interest in services around personal credit, microfinance and lending.
to remit a portion of their monthly salaries to The second market we serve, which includes so improve their lives. Obviously, Ooredoo But it's not just about adopting the skills their families in their home countries. countries like Indonesia, Iraq, Tunisia and is also a profit organization that must and mindset that will allow us to offer Algeria, is one where mobile money services consider the huge benefit around offering mobile money services. It's also about We answer this need with a mobile money are squarely focused on driving financial services to our mobile customers — the learning to do what no business school service, linked to a mobile wallet, that allows inclusion. Put simply, our offer addresses vast majority of whom are pre-paid users taught us: how to market successfully this customer segment to transfer money the two issues countries in this market have and multi-SIMers who change from one to the bottom of the pyramid. back home directly from their mobile wallet. in common: a lack of infrastructure and a mobile network to another based on the This is a huge convenience for the millions of growing population of unbanked. Thus, our promotions, prices and bundles on offer A big part of this is educating people about workers — approximately one million in Qatar aim is to enable what this population needs — that will encourage lasting loyalty. the service, which must be done on-location, alone — who would normally have to queue most: P2P payments, utility bill payments not from behind a desk. At Ooredoo up for hours in temperatures of around 50 and airtime top ups. Put another way, mobile money services are experience has taught us we must go out in degrees at a money exchange house. Cost an effective way to combat churn. Customers the field, meet with community leaders and is another benefit of this market approach may switch operators for a better bundle, encourage word-of-mouth marketing by since Ooredoo can offer its service in these Agenda 2020 but they will hardly change bank accounts connecting face-to-face with customers and countries at a price point significantly lower every day. Providing our customers a bank fans who can help us recruit new customers. than organizations like Western Union charge. At Ooredoo our goal is to build trust in our account will keep them loyal to our brand. mobile money services, boost customer Of course, this takes time, even years, To put this into perspective: the outgoing loyalty through frequent use and — The aim of our initiative is clear, but it is also which is why it may seem that uptake flows of remittance in the three markets, ultimately — offer services that will grow a complicated undertaking that will require and usage of mobile money services is Qatar, Kuwait and Oman, total over US$25 to include microfinance. It is part of a larger new skills and deep commitment. Since we slow. However, in reality, uptake of mobile billion. However, a mobile wallet situation group-led initiative we call 'the 20-20', are essentially asking telecoms professionals money services is healthy and growing. only addresses one side of the transaction. because it is the plan Ooredoo will follow to become bankers we are supporting our Now it's up to Ooredoo to implement a Ooredoo must also build an ecosystem to be one of the top 20 mobile operators Operator Companies through programs to model that will get the services — and of partners and players in the receiving worldwide by 2020. Mobile money has been share our best practice, and through the education — to the people faster. countries. Another challenge is the strict identified as a key capability that will allow partnerships with companies across the regulation regarding international us to reach this goal. ecosystem. This allows us to gather valuable remittance and the requirements for KYC, know-how and share this expertise with Turnkey innovation which are naturally needed to prevent At one level, it is about cultivating a every Operator Company across the group. money laundering. customer base of unbanked whom we will It's all about reducing time to market, which empower to access financial services and we at Ooredoo will accomplish by offering
132 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 133 This is a huge convenience for the millions of workers — approximately one million in Qatar alone — who would normally have to queue up for hours in temperatures of around 50 degrees at a money exchange house.
our Operator Companies a turnkey solution. Under the new partnership, Ooredoo in customer behavior that will encourage them to offer couponing, loyalty programs Our first step in this direction has been customers are able to send money to savings and spark interest in services around and gift cards. to build a group platform together with 284,000 local agents in 196 countries in personal credit, microfinance and lending. our vendor partner, which is fully hosted. Europe, the Americas and Asia including After all, the unbanked is not unbanked Because the platform is cloud-based it India, Pakistan, Nepal, Sri Lanka, Bangladesh Offering so-called advanced financial because they have no money. They are provides the Operator Companies a variety and the Philippines. In practice the transfer services is the next step on the group unbanked because they live — and work of benefits. Chief among these is the of the money is almost instantaneous and roadmap. It makes sense to offer insurance — in areas where there is no physical bank guarantee of security and quality of recipients can collect the cash safely and linked to a remittance service, for example, branch office that they can visit. Or they service, and the cost is low because reliably from the MoneyGram local agents. because if someone is transferring simply don't earn enough money to pay the the infrastructure costs are shared. hundreds of dollars, they may also want fees and charges to maintain a minimum The deal is the first in the world of its kind, to consider purchasing health insurance deposit. There is a huge market opportunity Additionally, we are building a team of and represents another improvement in or car insurance. Mobile allows us to for mobile operators if they forge the right experts that — similar to a SWAT force — the customer experience delivered by our leverage our networks, perhaps even in partnerships. However, the key to success comes into the Operator Companies and mobile money services, which is incidentally partnership with microfinance institutions, is to move from becoming experts in selling help them in the implementation phase by the fastest-growing financial transfer service to extend a broader range of financial value-added services — which is what providing them expertise and best-practice. of its kind. In parallel to this partnership, services to the unbanked. operators have traditionally done best — The Operator Companies have indicated Ooredoo will still work to build its own to demonstrating the value of mobile money they are very pleased with our approach remittance solution, one that will see us Moving forward, we are also exploring services to the unbanked, a huge and sceptical and the results, which is quite encouraging. establishing a bilateral agreement with services to enable commerce, using demographic that will only embrace these the countries in question and so own the technologies such as NFC to allow people services when they show real benefit. Our partnership with MoneyGram, which customer base. However, this partnership to make merchant payments. In this we announced in November 2012, will also achieves this goal faster, allowing us to claim scenario we would provide the merchants Rambert Namy heads Mobile Financial allow us to reduce time-to-market for our a bigger role in the remittance value chain. with the capabilities, starting with a Services (MFS) for the Ooredoo Group, remittance service. Rather than have to terminal, to accept payments from our which operates in 17 countries and territories build a remittance solution from scratch, customers. In fact, we are looking at mPoss, and counts 85 million customers. Namy or partner with providers in every single Real progress which is a dongle that merchants can plug has more than 15 years of experience in the receiving country, we have signed an into any handset, turning their device into a electronic payment space, with specialist agreement with MoneyGram that makes Clearly, our efforts are focused on extending card reader terminal. Once this framework knowledge in financial services such as it possible — in one go — for our customers financial services to people who have been is in place to accept payments, it's easy Electronic Payment and Mobile Commerce to transfer money to almost every country excluded from the formal banking system. to imagine how we could enrich the value and all aspects related to stored value in the world using their mobile phone. However, we also strive to trigger a shift proposition of the merchants by enabling applications. Previously, Namy headed This service is currently available to our the Mobile Money program for the customers in Qatar. France Telecom Group.
134 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 135 Part 4: Mobile Operators: Paving The Way For Mobile Payments And More
Expanding Mobile Wallet Capabilities To Encourage Customer Loyalty By Afizulazha Abdullah, Chief Digital Services Officer, Celcom Axiata Berhad
Experience and remittance Celcom has also been granted a license to Currently the largest mobile progress on mobile infrastructure conducive operate remittance services with a focus broadband and corporate services to mobile payments coupled with the Celcom, which has over 12.7 million on international money transfer. In practice, existence of a robust ecosystem has subscribers, has been quick to see the AirCash customers can use the service to provider in Malaysia and part of helped make Malaysia an international potential of mobile payments. In 2009, make outbound remittances, especially the the Axiata Group of Companies, and respected Islamic financial center. we launched AirCash which provides large population of migrant workers who Celcom is now moving towards customers the convenience of having work in Malaysia and who regularly send integrated multi-access and Malaysia benefits from three key factors: a virtual mobile wallet for cashless their salaries to family abroad. The use of high mobile penetration, increasing transactions such as money transfer, mobile phones makes these transactions multimedia services, in line customer interest in mobile commerce airtime transfer, bill payment, and very fast and secure. with evolving technologies and offerings, and an enabling regulatory soon, the ability to purchase consumer behavior in the country. environment that grants mobile operators physical goods. To date, outbound remittance from Malaysia A big part of this vision is about with the necessary permissions and licenses is enabled via corridors with two receiver to issue mobile wallets and conduct money With AirCash, customers can deposit countries: Indonesia, where our parent advancing mobile payments, an transfers. Celcom secured a license in 2008, money into their Celcom AirCash account company Axiata’s Operator Company XL area where Celcom has made its making it a pioneer in the market for mobile from over 1,000 touch points including operates, and the Philippines, where Celcom mark with AirCash, one of the first money services. online channels, Celcom branches and partners with Globe Telecom. Remittance mobile wallet services to launch outlets, and Celcom Payment Kiosks. recipients can perform over-the-counter Nevertheless, in such a mature and Customers can also withdraw their cash outs or store the amount in their in Malaysia. While its uptake is advanced market, the provision of a mobile AirCash balances at Celcom branches. mobile wallet. In Indonesia, XL – another significant, the real innovation wallet service alone is not a differentiator Axiata Operator Company – offers a mobile may be Celcom’s current plan to as the concept is not yet widely accepted Through AirCash, customers can pay for wallet service under the brand XL Tunai. integrate AirCash into its larger in Malaysia. To stand out, Celcom must their utility bills and Celcom accounts, offer additional value and services, which check their balance in real time, view their Currently, airtime top up is the most popular customer loyalty program. is why we are focused on building an last three transactions on their mobile service AirCash supports. However, Celcom Malaysia boasts a strong banking sector and ecosystem that will enable convenience, phone. They can also top up airtime in working to market remittance services a vibrant economy where the government easy access, and ultimately encourage Malaysia or 10 selected countries where aggressively to customers by first creating estimates only 20 percent of the population more utilization and loyalty. Celcom has partner networks. Prepaid more cash-in outlets in relevant areas to are unbanked or underbanked. Significant users on AirCash can also transfer airtime serve customers best. We are hopeful that to other users. this ecosystem will be in place in 2013, Currently, airtime top up is the most popular service AirCash supports.
136 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 137 If we consider that online commerce took around five years to take off, it will likely take the same amount of time for mobile payments enabled by NFC to cross the chasm.
and are also confident that the subscription This is the key reason why Celcom launched not limited to certain devices or dependent Consumer behavior will also change of remittance services will increase a series of NFC trials last year that provides upon a critical number of NFC-capable with time, as smartphone penetration significantly as a result. users an NFC sticker for their mobile phones. devices in the market. grows and consumers grow accustomed The trials involved closed communities of by the ease and convenience of mobiles. several hundred users including Celcom The key challenge is people – specifically Payment options company employees and local high school Driving loyalty how to boost consumer readiness for mobile and university students. The aim was to commerce. In a mature market like Malaysia Payments are a huge part of Celcom’s enable seamless NFC payments for food Celcom sees the AirCash mobile wallet as a where most people have a bank account, strategy moving forward. To this end, we and beverages in cafeterias and school key tool in retaining our existing customers. customers have to be convinced that this have partnered with iPay88, an Online supplies in school shops. Its convenience combined with the extensive new way of making payments is better than Payment Gateway partner and provider of ecosystem of partners we are orchestrating just paying a bill or making a purchase online a one-stop online payment service. Some To enable the actual payments, users “tap” to enable the convenience of mobile or with their bank account card or credit card. 2,000 online merchants use the company’s the NFC stickers on their mobile devices on payments goes a long way to encourage gateway and we want to enable these the terminal at the point-of-sale. In the back- customer use. With this in mind, Celcom is No matter when and how it happens, we merchants to accept AirCash as one of ground, the terminal communicates with the exploring models that provide bonuses to at Celcom want to be ready for it. Achieving their payment methods. So far, Celcom point-of-sale server, which then communicates our prepaid customers in the form of airtime ‘platform readiness’ is our main focus has targeted around 10 of the leading online to the AirCash mobile wallet. After this live credit that is transferred directly to their because it is the only way to be prepared merchants in Malaysia and hope to extend online connection was made, the amount AirCash wallet. Additionally, these customers to drive, or even lead, Malaysia’s coming this to include merchants with physical was deducted from the user’s AirCash have the option to use their rewards and cashless society. stores as well in anticipation of the variation account and the payment was completed. loyalty points to pay at one of the many in the e-money license approval we will destinations or merchants that accept Afizulazha Abdullah (Afiz) is Chief Digital receive from the Central Bank this year A key learning from the results of the trials AirCash as a payment method. Services Officer of Celcom Axiata Berhad to offer mobile payments via NFC. which lasted several months was the and spearheads the development and importance of reducing the time taken for From our mobile wallet to recent NFC growth of Celcom’s Digital Services and It is early days for mobile payments in payments to match the benchmark of credit trials, Celcom’s overall strategy leverages VAS business by providing leadership and Malaysia and it is important to be flexible cards. We also plan to work closely with our position as a mobile operator to play a strategic guidance for four business pillars; and be prepared by enabling the many credit card merchants or card associations central role in the value chain. The end-game Digital Commerce, Digital Payment, Digital platforms that enable this service. Smart- such as MasterCard or Visa this year to is all about building key capabilities to enable Advertising and VAS/Content. Prior, Afiz was phones will no doubt be a big part of this in enable AirCash as one of the payment mobile payments. If we consider that online the Chief Operations, Advanced Data Officer the future, but with just under 30 percent sources in their respective networks. commerce took around five years to take off, responsible for the data access and VAS/ penetration in Malaysia, it is important for it will likely take the same amount of time for Content business. He has over 22 years’ us to enable payments on all mobile This tap-and-pay approach is an interim mobile payments enabled by NFC to cross experience in the Information Technology phones and not just high-end devices. solution that allows us to go-to-market the chasm. and Telecommunication industry. with a cashless payment service that is
138 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 139 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
The technology components of a winning strategy are quite clear: your toolbox of capabilities must include messaging, mobile apps, QR codes, NFC, and much more. However, competitive advantage comes from getting the mix right in order to develop and deliver an integrated experience that will move the would-be buyer from ’I intend to buy‘ to ’I will buy‘. In this section we draw from real-life examples, leading industry research, and a new best-selling book to show how you must evolve your retail strategy to enable direct interaction between you and your customers to boost loyalty.
140 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 141 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
Mobile Shopping And Coupons Transform Retail By Yankee Group
geo-fencing—utilizing virtual perimeters for Largely driven by smartphone ways to not only engage with loyal real-world geographic areas. This technology growth and greater adoption of customers, but also avoid ‘showrooming’, helps retailers target customers in the whereby consumers use their phone in-store physical domain, shifting the power from a data services, consumer behavior to scan product codes and find a better defensive price-shopping mode to offensive is revolutionizing the overall retail price online. To foster loyalty and curtail customer engagement. In fact, Yankee shopping experience. Yankee showrooming, retailers need better insight Group’s 2012 US IT Decision-Maker Mobile Group’s 2012 US Mobile Money to determine whether a purchase has been Money Survey, September, finds that 56 made by a new or existing customer, then percent of respondents say personalized Survey, September shows 41 percent understand how they can best serve that offers based on location are a high priority, of respondents use their mobile customer moving forward to build up a true while 43 percent say they plan to deploy phone in-store for a variety of relationship to keep him or her coming back. personalized offers using location data over shopping-related tasks such as the next two years. From a retailer perspective, the value price comparisons and product proposition of mobile payments is in itself Social sharing and engagement. While reviews. Mobile shopping applications rarely sufficient since in almost all cases Facebook looks to add gifting capabilities are also a top downloaded m-payment systems simply use existing to its social network, other social gifting application—right on par with networks such as Visa, MasterCard and companies such as Wrapp and Boomerang PayPal. Mobile couponing provides the are using Facebook integration to offer social networking applications. value addition that is needed to persuade similar services (see the October 2012 What’s even more interesting is the growth consumers to divulge personal data, in the number of consumers using smart- allowing ever more targeted and timely Personalization is the holy grail phones to access product information and incentives to shop. of business strategies from coupons. Between 2011 and 2012, consumers using their phone’s camera to scan or use a Today, we see mobile coupons becoming marketing to customer service, bar code almost doubled, with roughly 25 the gateway to lure shoppers with offers or and mobile transactions percent of consumers now engaged in added value. Three especially hot areas are: provide new opportunities mobile couponing (see Figure 1). Location-based offers. Businesses today for better customization Why is the mobile couponing trend need to think locally. It’s not just about than ever before. important? Retailers are looking for new location-based applications, but also
142 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 143
Consumers increasingly turn to mobile coupons Cellular retail m2m devices will experience strong growth through 2016 Millions Retailers are already rolling out connected ATMs, PoS Systems, Kiosks and Vending Machines Have you completed the following tasks while physically shopping? 33.2 35 30% 27.4 26% 30 24% 25% 22.4 25 20% 18% 2011 18.3 15% 14% 20 12% 15.0 2012 12.2 10% 15 6% 5% 10
0% connections cellular Millions of 5 Tapping the phone Using the phone’s Using the to wirelessly grab camera to scan phone to 0 information and get images/bar codes receive more details on a to get more coupons via 2011 2012 2013 2014 2015 2016 product/service or information on a SMS or MMS receive coupons product/service to get coupons Future outlook: Mobile retail leverages back-end data to get even more strategic
Figure 1: Based on Data from Yankee Group’s 2011 US consumer survey, December, and 2012 US consumer survey, September Figure 2: Yankee Group’s global connected view forecast, March 2012
Mobile Money Strategies Perspective applications. We also see augmented Connected devices. Retailers are just is a wired or wireless connection used to “Facebook Gifts Is No Social-Mobile Savior”). reality mobile apps coming to the fore. beginning to integrate specialized machinery transfer product or promotional information Beyond pure-play social firms, however, we These create a more engaging experience such as POS terminals, digital signage, and transactional information to enhance see retailers getting into the social gifting that lets shoppers use their smartphones kiosks and smart vending machines into the retail operation, as well as the retail game. Retailers have very little barrier to to scan items or even store shelves to the brick-and-mortar shopping experience buying experience for customers. At the entry in enabling Facebook-integrated social receive personalized product tips, (see the June 2012 Yankee Group report other end of the connection, data is then gifting, and they can readily deliver the recommendations and coupons. “Reshaping Retail With Connected Devices”). stored and mined for near real-time goods via their e-commerce or even mobile The common thread between these devices intelligence on buying patterns, inventories
144 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 145 Mobile couponing provides the value addition that is needed to persuade consumers to divulge personal data, allowing ever more targeted and timely incentives to shop.
and consumer demand trends. Retailers are responding to what offers, enabling them Data will be more tightly integrated. Devices will become increasingly also looking toward self-service solutions to make better decisions. Using mobility Overall, retailers will start tying their various interactive and ubiquitous. We see and mobile POS as a way to decrease overall improves retailers’ understanding of their mobile initiatives to their own customer low-latency, high-bandwidth broadband service costs, reach new demographics and customers and the best offers to provide data. Retailers will start providing special networks such as LTE integrated with provide differentiation at the point of sale. them with competitive differentiation. In offers aligned with specific customer supportive M2M connectivity modules In the past year, we’ve seen several large- the next few years, retailers will continue attributes, behaviors and preferences at opening the door to new devices such as scale rollouts of each of these solutions and to build on these early initiatives and the right time and right location. A broad self-service kiosks that integrate human expect the trend to continue in the future as move toward streamlining the mobile range of promotion types, including local interaction. In this example, customers evidenced by our latest forecast numbers. retail experience. Key examples include: limited-time offers, point incentives and walk up to a kiosk and have the option to Yankee Group expects a high rate of growth social-networking-based motivations, will interact directly with an agent standing in this segment, from 15 million connections Social will become measurable. In the give businesses additional opportunities to by to exchange information and/or help at the end of 2012 to 33.2 million connections next few years, we see social intermediaries engage mobile consumers with tools such drive a transaction to completion. These in 2016, a CAGR of 22 percent (see Figure 2). continuing to muddy the mobile mix with as cardless loyalty programs, social gifting, collaborative kiosks will serve as a robust broader offerings targeted toward loyalty. inventory availability, real-time personalized augmentation to existing retail staff, But we also see offer-oriented companies offers, personal shoppers and self-checkout. increase sales capacity and improve the FUTURE OUTLOOK: MOBILE RETAIL including Groupon, LivingSocial and even overall retail customer experience. While LEVERAGES BACK-END DATA TO GET major financial institutions such as Bank of Frictionless processes will ease consumer we will see these kiosks pop up in fixed EVEN MORE STRATEGIC America with its BankAmerideals moving and retailer adoption. In the future, the locations, integrating an LTE connection toward measurable transactions. They will talk won’t be about technology and whether also opens the possibility to deploy kiosks The future will be about measurement and realize it’s not about check-ins or deals per QR codes, NFC, cardless apps or mobile in temporary locations such as malls or engagement. Within the next two to three se, but engaging customers across the life commerce apps are used. Instead, the at festivals. The widespread availability years, we will see not only more adoption cycle, from first coupon to commerce to focus will be on how businesses can use of 4G connectivity will also catalyze the by consumers, but also more retailers care (see the February 2012 Yankee Group seamless execution to differentiate their market for digital signage solutions enabled successfully integrating their personalized report “Mobile Transactions Across the mobile initiatives and drive revenue, enhance with real-time streaming of advertising offers into cardless loyalty programs. Mobile Customer Life Cycle: Coupons, Commerce loyalty and improve care. Retailers and content and store/warehouse surveillance loyalty apps with coupons offer the capability and Care”). Personalization is the holy grail brands need to ensure back-end systems applications via 4G connected cameras. of delivering a unique identifier to each of business strategies from marketing to remain flexible from offer to redemption. specific coupon and/or customer. customer service, and mobile transactions This allows retailers to gather more CRM provide new opportunities for better intelligence about which customers are customization than ever before.
146 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 147 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
Opportunity At The Intersection Of Retail And Mobility By Colin Haig, Program Principal, SAP Retail
commerce, messaging and mobile payments information in exchange for value. Thus, in Shoppers with smartphones are As a retailer or consumer-centric company, can change how retailers connect with con- their dealings with retailers, they want time- leading the greatest change in you’ve likely recognized your brand is not sumers, build loyalty, empower employees, liness, transparency, and expect retailers entirely under your control, but the and increase sales with lower risk. to operate with as much ‘tech-savvy’ and retail since the adoption of the customer experience you deliver can be. openness as they do. barcode, over 40 years ago. How In the late 1990’s, e-commerce made the will your business navigate the industry adapt to selling via new channels, Commerce call-to-action way in the new, uncharted territory but it led to silos and differing visions of how Reinventing customer loyalty best to connect with the shopper. Retailers Leading retailers are starting to offer solu- created by this consumer-led that survived the financial downturn since tions that enable the curb-side pickup of There is a resurgence of interest in customer sea-change? This overview will help 2008 got better operationally. As a result, grocery orders placed on a smartphone, loyalty, but it is being reinvented in the mobile you plot the transformational path most chose to deliver a better customer as well as cross-channel activities that allow world. Mobile allows consumers to download your business needs to succeed in experience, with some achieving this by ‘click and collect’, enabling consumers to loyalty apps to their smartphone, replacing breaking down the silos to unite store buy online and pick up in store. the plastic card they have in their wallet. Even mobile commerce and retail. point-of-sale and e-commerce processes. your existing loyalty programs can benefit by Consumers have more influence and impact Again, the customer doesn’t think in terms adding this mobile component to extend your on a retail brand than ever before. They are Unfortunately, customers do not think in of modalities or channels. They naturally use brand to the consumer’s phone, in place empowered by the smartphone, inexpensive terms of channels, and most do not think their tablet, PC or mobile phone to research of their wallet. data plans, the Internet, and social about the shopping process. Retailers must. and select what they want to buy. They just networks. Shoppers have unprecedented, One approach you can use to map their know they want to order and pick it up later. But it’s not just an opportunity for retailers. instantaneous access to competitive pricing, journey, and improve your capabilities to They don’t think about how it happens – and Smart marketers in transportation, utilities reviews, advice, and product availability. The satisfy your customers every step of the they demand it to be seamless. and consumer products companies are smartphone has given shoppers fingertip way is to use a methodology called design exploring how they can deliver relevant, access to information that can either tarnish thinking to understand how shoppers This ‘instant gratification’ is top of mind with timely information, promotions, and special your brand or unearth new treasure. People connect with retailers. Millennials, a customer segment of digital offers right to the consumers’ smartphone, use social networks that span the globe, natives that have grown up with technology at their request, using geo-location, purchase and in milliseconds a consumer can sink Taking this approach allows you to discover and the Internet. Customers in this segment and payment history, and the consumer’s your brand’s reputation or put wind in your how people, processes, and systems can not only expect a good experience, they also declared preferences and interests. sails and more cash in your sales. They are eliminate boundaries between the channels care deeply about our planet and causes, connected. Are you? and improve your brand experience. This is and they are willing to volunteer personal key since the advent of mobility, mobile
148 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 149 The advent of mobility, mobile commerce, messaging and mobile payments can change how retailers connect with consumers, build loyalty, empower employees and increase sales with lower risk.
This isn’t about deploying simple loyalty prescription renewals, parcels for pickup, Although the handheld barcode scanner Real-time advantage software. Organizations are harnessing or promotions of interest. we used to call an ‘inventory gun’ is still very advanced analytics and a learning commonplace, best-run retailers are We are also seeing a revolution in POS. engine designed to deliver value to the Banks in the last decade have also adopting solutions to equip and educate In some stores today you can use a mobile consumer, insight to the marketer — and embraced mobile. They use it to create store staff to improve the service and advice device to complete a transaction without mutual benefit. better customer engagement supported by they offer customers in the aisle. With a queuing up at the checkout. Retailers using highly interactive, beautiful apps that allow smartphone, tablet, or other handheld, mobile POS and other in-store solutions customers to check their account balance, there is no reason for staff to ever leave the are seeing higher customer and employee Tapping the touch points transaction history, and more. We envision customer’s side to get more information satisfaction. They are also able to maximize retailer credit operations that will harness or ask a superior. Store staff can use their sales because mobile functionality provides The use of gift cards are reaching new this as well, potentially combining it with devices to check stock price, availability, and real-time inventory information anywhere in peaks, in part because they are a staple of other functionality in a branded app. locations to ensure that the customer gets the store. Thus retailers can meet shoppers’ holiday sales. Stores love the power of the instant answers and instant gratification. needs and encourage sales because the gift card, and the sister concept of returns visibility mobile provides shows and cards, where retailers can issue a plastic Retail revolution Managers can also use mobile to monitor confirms products are in stock. card as a credit in place of cash, is also store performance, key indicators and gaining traction. Consumers always have their mobile goals. Other solutions with mobile at the Mobile empowers consumers to shop phones with them, especially while center give staff and managers guidance on their terms. But mobility isn’t just Like loyalty cards, consumers are eager to shopping. Although the showrooming trend on fast-moving items that need to be about making life for the consumer better. clean their wallets of plastic cards and look of visiting a store to investigate a product reordered, with timely alerts, and all It also equips employees — and the entire to a day when they neither have to fish them before purchasing online continues, there is needed information on their tablet. organization — to serve the customer out of their wallets, or know if they even have no reason retailers can’t turn this habit of This eliminates the drudgery of walking better by streamlining processes, enabling one on their person. researching products in-store into a new the aisles and counting product, and new loyalty programs and ensuring that opportunity to connect with the consumer waiting to reorder until the day’s sales consumers get quick and helpful answers Emerging mobile wallet technology also while store staff are at hand to help. are done. It saves hundreds of hours in to their questions in real-time. answers this requirement with convenience, most chains, reduces inventory carried, allowing a retailer to deliver stored-value Of course, store staff need to be as and helps eliminate out-of-shelf and Empowered employees are also engaged card capability on a smartphone, with the empowered as the shopper has become. out-of-stock situations. employees, and that means greater inherent security of the mobile network, and Many retailers have yet to map out a productivity, pride in their work and the ease of text messaging. Retailers are mobile strategy to engage and enable improved retention. This has a profound using this approach to remind customers of their store team and the regional and district managers that support them.
150 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 151 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
Store staff can use Fast Shopper, Slow Store: their devices to check A Mobile Playbook stock price, availability, By Gary Schwartz, CEO of Impact Mobile. and locations to ensure that customer gets impact on staff turnover. What’s more, a mobile strategy can even help retailers win There is only a small window of register? Twitter’s microblogging, Facebook’s instant answers and the war for talent, ensuring that Millennials engagement on a mobile phone. community building, Foursquare’s crowd joining the business are much more excited sourcing, and Google Offers are all valuable instant gratification. Selling requires quick one-liners. to go to work and aren’t embarrassed by tools, but any brand or retailer that is outdated current store technology. How can you make a value statement committed to executing a digital strategy within the first few seconds, when across all its customers’ screens needs to Inevitably, the Information Technology you have the consumer’s attention? establish a direct relationship with shoppers. team has to make it all work, and work well. How can you connect with your Building a mobile optimized Website isn’t While one would think that the social enough. You need to build a comprehensive consumer on a fast-moving mobile nature of shopping today, where consumers mobile strategy that covers all aspects of screen? And how can you move connect with friends in both the real world your business – from warehouse, through the would-be buyer from ’I intend and their social networks to get feedback the shop floor, to the hands for the consumer. on what they should buy, or a second to buy‘ to ’I will buy‘? opinion about purchases they are about to Colin Haig is a domain expert for retail Farhan Ahmad, the director of emerging make, would give social networking giants industry trends and store strategy with payments at Discover Financial Services, the ability to compete with Amazon.com 25 years of experience in store systems, the issuer of the Discover Card, the third and PayPal. However, this success has so high technology and telecommunications. largest credit card brand in the United far not materialized. He focuses on mobility, store operations, States, explains that “Mobile payment is business development, thought leadership, a small subset of mobile commerce. Mobile Though Facebook’s director of business and acts as an advocate for retailers commerce is primarily about shopper development, David Fisch, has correctly of all sizes. engagement and marketing.” To paraphrase acknowledged that 'social' and 'commerce' Farhan: We need to develop a ‘pickup are a perfect combination, Facebook has strategy’ to court the consumer before not delivered on its promise to leverage we can close the sale. its millions of customers to shop cross-channel. Nonetheless analysts and What mobile marketing mechanisms will pundits forecast that sales of physical engage with mobile shoppers and stay con- goods through Facebook and other social nected and relevant all the way to the cash networks is set to jump from US$5 billion to
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US$30 billion by 2015. But these numbers Why is mobile so powerful? Because once clear that activation needs to be on the are hard to swallow. Facebook folk are a direct, permission-based relationship is shopper’s terms and accommodate all the there to meet and socialize, not to shop. established between a shopper and a brand channels the consumer has at their disposal. or retailer, it cannot be disintermediated. North American retailers Banana Republic Activation triggers include 2D barcodes and Old Navy learned this lesson the hard In other words, competitors who want to (QR), tapping NFC tags, and direct-from- way. They tried to monetize their Facebook own the customer — Facebook, foursquare, mobile-phone text opt-ins. Opt-in channels community by opening stores inside the Google, Apple — cannot insert themselves can harness an app download or follow on social network. After underwhelming results between you and your shopper. directly from a Website. Increasingly, the they shut their virtual doors. Other retailers, products themselves are part of the picture, including Nordstrom and JCPenney, that Once there is a direct, trusted relationship, as an on-shelf call-to-action. tried to cash in on community have also the brand or retailer can refine how it uses failed. Even GameStop, the world’s largest mobile, and take steps to develop mobile With so many formats and approaches it video game retailer with over 6,600 stores in as a targeted and personalized communica- is important to understand the differences 15 countries worldwide and online and more tions channel. This effort pays measurable Here are some tips to guide retailers and than 4 million Facebook fans, shut down dividends, improving brand recall and brands as they develop an activation shop after six months. conversion rates. The results are even better strategy to drive engagement — and sales. Harness NFC to create new if the brand or retailer is up front about the value exchange (that is, the benefits to the use cases and engagement Start it social, keep it direct consumer when they agree to opt in and 1. Click scenarios: Tag a product receive messages/offers) and clear about or poster to enable Clearly, it’s key for brands and retailers to the expectations (that is, delivering a clear The Web is probably the most logical place cultivate social ties with consumers and shopping call-to-action that consumers can to start for most brands, as it extends their ‘Tap2Opt-in’, ‘Tap2Web’, start a relationship in the social Web to kick understand and appreciate). existing consumer relationship manage- ‘Tap2Coupon’, ‘Tap2Shop’. off the conversation and develop a direct ment (CRM) opt-in and offers shoppers The possibilities are endless. relationship with the consumer. But that is a choice of channel. As in all marketing, precisely the point: it must be direct. Freedom of choice shoppers should be given a choice of channels. Enabling opt-ins through Web This is where the mobile channel Success is all about activation. When Amazon. forms facilitates the change from large- excels, as the only two-way method of com designed its Price Check app, it offered screen to small-screen messaging that is communications (and more) that allows comparison shoppers several activation closer to the point of purchase and point of companies to connect with the shopper channels: MMS, SMS, voice, scan, and manual decision. The key is to immediately engage across all the retail touch points. form input. Read between the lines, and it’s on the mobile channel after the Submit
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button is pressed. (For a good example of is a just an anonymous click meaning you 3. Tap 4. Text this, go to www. maccosmetics.com and cannot know who the shopper is and you view the sign-up page.) Mozilla (Firefox) have no opportunity to reengage with Near Field Communication (NFC) is Text messaging is the only two-way and Linux (Tizen) are going head to head this potential customer. native to newer Android smartphones communications channel that has widespread to capture next-generation developers in the market, which automatically limits adoption. Surveys show that a whopping with their WWeb-based operating system. An alternative activation channel that the size of your consumer audience to 74 percent of smartphone users use SMS, Mobile-Web tools will allow retailers and also requires a scan is image recognition. smartphone owners. To date NFC seems as opposed to email at 14 percent. Text brands to increasingly use WWeb-based This technology allows consumers to take to be all about payments, but it also messaging is native to the mobile phone HTML5 applications and not rely on mobile a photo of a product or advertisement has huge applications around proximity — all mobile phones — and enables brands apps for their consumer engagement. and send it to a cloud-based service that marketing. Harness NFC to create new use and retailers to deliver a ‘rich content’ recognizes the image and sends back an cases and engagement scenarios: Tag a relationship with shoppers that can offer or communication related to the product or poster to enable ‘Tap2Opt-in’, drive brand loyalty and measurable sales. 2. Scan product. Augmented reality (AR) is an ’Tap2Web’, ‘Tap2Coupon’, ‘Tap2Shop’. Significantly, the two direct marketing extension of this technology, enabling more The possibilities are endless. Think of channels — text and email — also work 2D barcodes, also called QR codes, are virtual interactivity and animation around tap as a more frictionless scan, enabling very well together. Text complements email showing up on paper media (magazines, the image recognition technology. What contactless marketing that does not by providing an actionable reminder that newspapers, circulars and flyers), presenting you see is what you get? It’s not quite that require an app and is native to the handset reinforces the email blast. Focus on driving a possible way for companies to bridge the simple. While we wait for Google Glass — keeping the consumers always-on and text-based opt-in to a monthly or weekly physical (paper) and digital (Internetworlds to become a mainstream add-on to our always a tap away from activation. subscription with brand loyalists, and use text and inject new dynamism into old media eyewear, there are substantial barriers to messaging to mobilize existing promotions (TV commercials, for example). They’re consumer adoption. The biggest marketing Samsung’s NFC TecTiles, which allow and engagements that lead to purchase. cheap and easy to implement, and a scan hurdle is that most AR solutions require a consumers to program stickers with phone on the part of the consumer using their bespoke application, one that is (presently) commands, are the first step to what I refer In-app push notifications are often viewed smartphone moves the shopper to the Web. not standard or native to the mobile phone. to as ‘CommerceTiles’, which will enable as being similar to text messages because In many cases you need to educate the tap-to-buy activation via any media. they emulate the SMS function on a phone. However, the long-term goal is to move consumer to download your mobile app first The only caveat about this messaging shoppers to a two-way opt-in relationship. or force them to use your application as a The challenge is around building a critical channel: it has an in-built limitation of sorts. If you want to move the shopper directly visual interface which is buried behind many mass in the marketplace. Handset The in-app alert is tied to the mobile app, to the mobile Web, make sure you enable mobile clicks and swipes. So ask yourself: penetration has a way to go. And many in which is where the platform provider calls messaging opt-in on the landing page when If you are required to spend marketing the industry are politely waiting for Apple to the shots. Thus, the relationship behind the they arrive. This will encourage the shopper dollars to drive an application download, include NFC into their next handset launch. alert is owned by Apple or Google. If the to grant permission for you to continue does it detract from your effort to drive your phone owner deletes the app then you have interacting with them. Without opt-in, this product and services? lost this relationship with the consumer.
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Activation dashboard off any media. Perhaps the best activation strategy is to create an activation ‘dashboard’ that enables shoppers to enter into a relationship with your brand or store on their terms.
TAP TAP TAP content can be updated seamlessly by and tracked and become what I refer to the brand and drives commerce activity. as an ”offline interactive” strategy.
Finally, Twitter is a very effective communi- Once a brand or retailer has acquired a SCAN SCAN SCAN cation tool but can confuse the messaging shopper’s opt-in, it can profile the shopper strategy belonging to your brand or store. based on geography or call-to-action. Think of text is an activation channel for It can run mini surveys to hone and deepen your targeted, always-open customers. the customer relationship. Additionally, Twitter is a more of a microblogging channel the brand or retailer can close the circle that addresses a generalist community. by providing SMS offers and deals with embedded trackable URLs so they can see TEXT TEXT TEXT the results for themselves. These deals can MAY761 TO MAY761 TO MAY761 TO UTEXT UTEXT UTEXT Reduce friction to reap be multiple-use or single-use, depending (8398) (8398) (8398) business benefits on the bricks-and-mortar point of sale (POS) or online redemption mechanism. Perhaps the best activation strategy is As contactless wallets reach critical mass to create an activation ‘dashboard’ that in the near future, tap coupons will also enables shoppers to enter into a relationship be a viable, more seamless option. Figure 1. Based on data from the author with your brand or store on their terms. But don’t think you need to jump in firing on That is why, in July 2010, Google’s YouTube Apple’s Passbook, on the other hand, is In this scenario NFC, QR codes and text can all cylinders. Simple activation and conversion jettisoned its Apple-bound phone applica- an interesting hybrid. It has aggregated be combined into a single call to action. All strategies continue to deliver amazing results. tion (and nascent community) and moved coupons, tickets, and vouchers into a super activation channels can be serialized and SMS coupons, for example, are achieving up into the phone’s mobile browser. In the case app. It allows brands to send a message to tracked back to the media location to enable to 10 times the conversion rates associated of Android, the push notifications appear the phone with a ZIP file (digitally signed and the brand to affiliate identify the store, with email coupons. Offers sent to shoppers’ out-of-channel and can often become lost blessed by Apple) that inserts a dynamic media, and location. This allows for all your mobile devices are consistently three times in the bevy of service notifications. coupon, ticket or voucher into the Passbook. traditional media assets, MDF (media devel- as likely to be redeemed as the same offers While the relationship is not two-way, the opment funds) and products to be activated sent to a shopper’s email address.
158 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 159 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
Survival Guide: Evaluating The App Vs. Web Debate By Panagiotis Papadopoulos, Retail Mobile Lead, SAP
By creating a frictionless small-screen between you and your customers. But be experience for the shopper, national retailers careful not to get distracted, or overwhelmed Mobile apps vs. mobile Web is However, mobile-optimized Websites also such as Hot Topic, specialized in music and by technology. Your strategy must be the topic of heated debate in have many advantages, allowing retailers to pop culture inspired fashion, have repeatedly customer-focused first. As technology address the needs of all their customers, not the industry today. But could it harnessed mobile in the mix to achieve changes, the principles of loyalty marketing just smartphone owners. From the customer measurable increases in store-based and remain the same, and so does the require- be that the question, and the perspective, the mobile Web experience also cloud-based checkout. In 2011, for example, ment to court the customer with care. discussion around it, misses provides additional comfort (user-friendly Hot Topic managed to generate nearly ten the point completely? After all, and familiar interface) and confidence, times (!) the incremental sales off its loyalty Article inspired from insights contained in in many cases taking the hassle out of commerce is about customers, community by leveraging the mobile channel. Gary’s new book, Fast Shopper, Slow Store: researching products and inputting data A Guide to Courting and Capturing the not just technology. A closer to complete the transaction. Hot Topic believes that adding mobile Mobile Consumer. examination of the components messaging to existing CRM / email marketing key to delivering an integrated So, should a retailer build mobile apps into programs can produce a significant return Gary Schwartz has been named the Mobile their arsenal of capabilities? Or should they experience to customers shows on its marketing investment, especially Commerce Evangelist of the Year 2013. focus efforts on ensuring their mobile Web during holiday marketing efforts. Indeed, Schwartz has been at the frontlines of the that a successful approach is presence is optimized to remove the Hot Topic concludes that mobile messaging, mobile industry for over a decade and is the one that uses mobile apps and the friction from finding and buying online and deployed in addition to email, increases author of two books including The Impulse mobile Web in the right combination on the move? overall purchase intent and activity. Economy. Schwartz is also a chair at to make shopping across all emeritus mobile for the Interactive Advertising It’s not a case of ‘either-or’. To get to the real But it’s not just retailers like Hot Topic. We see Bureau and the Mobile Entertainment Forum channels seamless and personal. answers you need to think about what your the same strategy deployed by My Starbucks NA. As president of Impact Mobile for customers really want out of their mobile Rewards [See article: "Starbucks: A Mobile the past 12 years, he has helped retailers A heated debate rages in the industry, one commerce experience. The customer must Payments Case Study"] by using a clear SMS leverage mobile technology to advance their that has spread to mobile commerce. The be your starting point. activation channel on its push advertising. marketing goals. avalanche of mobile apps have indeed whet consumers’ appetite for apps that can assist So, let’s begin with an examination of Messaging, mobile apps, QR codes, NFC — them every step of the shopping journey, the mobile commerce use cases that are these and more can and must belong to your allowing them to make orders, check prices relevant to your business. toolbox of capabilities. Get ready to evolve or put together shopping lists at the your strategy to enable direct interaction moment of inspiration.
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Hence, there are many good reasons to suggest that mobile
apps and mobile Web live in kind of symbiosis, where each supports the other and both benefit in the end
Weighing the Benefit of Apps and Web Mobile connects commerce in-store, signage) together in one integrated
experience. It is also the one channel retailers must get right to deliver a true omni-channel To better understand the benefits Order to home Store pick-up Scan and pay experience to their customers. and how retailers can apply them to enhance the overall commerce • Based on existing • Access of products • Check in stores experience let’s compare some of the e-commerce and availability key capabilities associated with mobile Prepare for the mobile journey in stores • Self-scanning and apps and mobile Web. • Adds usage of Self-checkout mobile capabilities, • Set an order So, let’s apply observation to the apps vs. Web scanning, offline for pick up • Payment in store debate. Smartphones have unique capabilities •• Native apps access features and etc. • Offers in • Alerts for pick functionality deep in the hardware real-time and and retailers should carefully evaluate them in up readiness (such as location) as well as use contextual based order to make the best use of the features offline data. • Extension to and functions built into the mobile phones up-sell/cross • Signage customers have at their fingertips. sell in stores • POS integration •• Development costs to build a mobile The advance of smartphones has made Web presence are less than invest- Figure 1. Based on data from the author mobile apps very popular among consumers. ment needed to design, develop and Mobile apps, as I will show, harness the distribute a mobile app — and there is no need to worry about updating There are three basic scenarios. The first marketers in-store using their mobile phone. unique capabilities of mobile, thus delivering the app to keep in step with frequent scenario is all about finding ways to extend In this case, often described as 'scan and benefit and value to shoppers on the move. changes in devices, operator systems online commerce into mobile commerce, a pay', consumers use their device to scan However, the advance of the mobile Web and or user requirements. use case I call the 'order to home' scenario. a barcode to access information, offers, the arrival of HTML5 offer their share of The second scenario is where fulfillment is coupons or just fun content related to the business advantage as well. made in the store. An example of this is the physical object. •• The user experience offered by a 'store pick-up', when the customer uses Hence, there are many good reasons to native app is far more consistent (and smoother). mobile to order ahead and then pick it up Significantly, all these scenarios have one suggest that mobile apps and mobile Web later in a physical bricks-and-mortar location. thing in common. They show that mobile live in kind of symbiosis, where each supports by definition is the only channel that has the other and both benefit in the end. This is Finally, the third scenario is where consumers the capability to connect all the other especially true for commerce, whereas the interact with brands, manufacturers and channels that retailers operate (online, scenarios I mentioned can be powered by mobile apps, mobile Web — or both.
162 163 Consumer surveys suggest that some customer segments, like Digital Moms, mobile-savvy mothers on the move, appreciate the convenience of an app to check prices and offers on the go.
Mapping the best approach mobile-savvy mothers on the move, Indeed, a mobile app, because it is on the many retailers are missing out on the mobile appreciate the convenience of an app mobile device and can tap into key phone opportunity. But the endgame is not just Mobile app or mobile Web? The decision to check prices and offers on the go. As features, helps cement a closer connection about enabling mobile commerce; it’s about also depends on the use case. A raft of a result, many customers view apps as a between the retailer and their customers, encouraging lasting customer loyalty. recent research and consumer surveys utility, one that complements their mobile and thus encourages loyalty. from companies like comScore, a premiere Web experience, but doesn’t replace it. Panagiotis Papadopoulos has more provider of audience analytics, and Flurry, In practice, the offline use that the mobile than a decade of experience in the Retail a mobile app analytics company, suggests app allows also provides customers a unique sector, working with global retailers helping that some consumers might have a Climbing the transaction trail and fluid experience. In other words, this them to define and implement their mobile preference depending on what they want feature makes it possible for consumers strategy to enable mobile commerce as to accomplish. Specifically, Internet users Connect the dots, and the ideal mobile to shop in places where connectivity is not well as employee -facing scenarios. At SAP tend to favor mobile Web for shopping and commerce journey starts with a mobile available, or in-transit, where coverage is he is responsible for product catalog, searching. Mobile apps are popular when the optimized Web presence, one that is open not always reliable. e-commerce, mobile commerce and SAP’s task at hand is related to maintaining data, to all consumers, not just smartphone Mobile Platform. navigation and socializing with others. users, and also meets the needs of the more A mobile app experience also respects the traditional customer demographic that role of the consumer in deciding when and With this in mind, many retailers drive prefers to shop online. This should be closely how they want to shop in the first place. mobile commerce by cultivating a followed by a more personalized experience, The consumer must have the flexibility strong presence on both mobile apps best delivered by a mobile app. to decide the suitable moment to shop — and mobile Web. Indeed, recent research and have the option to pause the process from companies including Acquity Group1, Perhaps the biggest advantage of an app (perhaps to start the morning commute) which measures ‘mobile readiness’ across is it’s in-built ability to make the best use and then continue at a more convenient major retailers shows the race is on, with of device features including the camera, moment. To close the loop a mobile app respondents revealing they are determined GPS (for location and the delivery of should also enable the consumer to make to build a mobile Web presence, supported location-based services and offers), WLAN an order on-the-move and select the right by a mobile app offer, by end-2013. (for Internet access), accelerometer (which time slot for pick-up or home delivery. detects motion and gesture) and data Why both? To satisfy the customer. storage (allowing consumers to save all Convenience is key here, and retailers are Consumer surveys suggest that some the information related to products and well advised to support an experience that customer segments, like Digital Moms, shopping that matters to them). puts customers in control. It is no secret that
FOOTNOTE
1. www.acquitygroup.com/News-And-Ideas/WhitePapers/2012-Brand-eCommerce- Audit%E2%84%A2/
164 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 165 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
Mobile Retailing 2.0: Connect With The Customer At The Point of Decision By Mickey Haynes, Global Principal, Mobility Solutions in Retail at SAP
experience. This approach will help retailers The problem with apps is that customers are Consumers now expect, even combating showrooming. Many retailers to improve customer loyalty, increase sales, bombarded with apps to choose from. Once demand, personalization. The aim start in mobile commerce by optimizing and compete with online retailers. The they do make a choice they must manually their online websites for mobile, others following scenario is an example of Mobile download them. Naturally, customers are of Mobile Retailing 2.0 is to leverage develop a mobile app. In both cases the Retailing 2.0 in action. It combines digital inclined to keep only their favorite apps on mobile and enable personalized result is the same. They are mobilizing the commerce capabilities with the power their phones. Put simply, customers don’t shopping experiences that build e-commerce channel. I refer to this stage as of the physical world by adding highly want to download 100 different apps from customer loyalty and drive relevant mobile e-commerce, or Mobile Retailing 1.0. personalized mobile in-store shopping. 100 different retailers. In many cases they will only download the two or three apps content to customers at the point This strategy fails to leverage the many With Mobile Retailing 2.0 this routine is from the retailers where they shop most of decision. Since the point of de- advantages brick-and-mortar retailers already becoming reality. Wal-Mart, for frequently. And they certainly do not want cision is usually in the actual store have over their online counterparts, such example, has already begun allowing to re-enter their credit card and personal for brick-and-mortar retailers, the as physical stores, showrooms, employees, customers to use their smartphones to data several times in every app. inventory, and distribution networks. Most pre-scan items and upload them to the key focus of Mobile Retailing 2.0 of the benefit of mobile commerce will be self-checkout. Mobile websites are effective at reaching is to enable the in-store shopping realized when shoppers are using devices the masses because customers don’t experience via mobile devices. while they are in the store, at the point of have to download an app to access them. A day in the life of the average decision. But very few retailers have built Make way for the ‘Super-App’ However, the experience of the mobile Web mobile apps that are designed for the falls well short of reaching the objectives of consumer shows how retailers in-store experience. Unfortunately, there is still a major hurdle Mobile Retailing 2.0. can realize the full potential of to getting Mobile Retailing 2.0 capabilities the greatest marketing tool ever What if retailers could add the digital in the hands of the customer. After a retailer So how can a retailer build something with invented to win the battle for the recommendation power of, say, Amazon. has developed the infrastructure and a great the complex capabilities of a mobile app, com, to the in-store shopping experience? Mobile Retailing 2.0 app, they launch the but still manage to make it extremely easy customer and get the edge on app on the marketplaces to find a few for a customer to discover and use, even online rivals in the process. This is what I call Mobile Retailing 2.0. months later that only a few customers if it is the first time the customer has have downloaded the app. Even fewer end entered the store? The mobile strategies that retailers have By adding digital commerce to the physical up using the app on a regular basis. been using have not proven effective at store through a mobile device you can deliver capturing loyalty, boosting sales, or a highly personalized in-store shopping Has the retailer wasted time and money?
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Most of the benefit of mobile commerce will be Mobile Retailing 2.0 in action realized when shoppers are using devices while they are in the store, at the point of decision.
When Mary enters the grocery store, Even if customers do not want to download Real-time retailing in the store, at the point her mobile device reminds her to many different apps, they would likely of decision, will enable brick-and-mortar launch the store app. She is rewarded download a single app that helps them retailers to maximize their advantages in the with 100 loyalty points and receives a shop at many different retailers. physical world to compete with e-tailers and few personalized offers based on her other competitors. This is Mobile Retailing preferences, buying habits, and trends. Conceptually, if there was a single app that 2.0. The best way to deliver this is to develop Mary reviews the store specials and had a standard API for Mobile Retailing a standard platform for retailers to create adds a few items to her shopping list. 2.0, many retailers could then build to this a Super-App together. Software companies standard and publish to the single app. The and partners will develop this with them to single app would recognize the store that the spread the investment across the industry. customer is in and launch the mobile app, or storefront, for that retailer. This concept is Mickey Haynes leads business development called an app-within-an-app, or a Super-App. globally for mobile in the Retail and Consumer Products industries at SAP. As she walks through the store to The Super-App concept would normalize In this role, he consults with key global collect the items on her shopping list, and standardize the unexciting, routine Retail and CP customers to develop mobile the app guides her from item to item shopping functionality like adding items strategies, architects mobile solutions with like a GPS device. She taps each item to a shopping cart, displaying offers, and internal and partner development teams, with her phone before adding it to her paying for items from a mobile wallet. and evangelizes strategy within SAP. cart, which builds her electronic Previously, Haynes was the Principal checkout list. Occasionally, the app Retailers could differentiate themselves Mobility Architect for The Home Depot, reminds Mary about things she needs, by creating their very own experience and the fourth largest retailer in the U.S., where or lets her know if there are special maintaining their own brand. To achieve this he initiated the mobile commerce program deals on items that are related to the they could develop custom components and led the enterprise-wide mobile strategy. ones she is buying. through extension points within the Super-App. Retailers would then have complete control of the customer experience while the consumer is in the retailer’s mobile storefront.
168 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 169 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
Showrooming, Deconstructed By Nikki Baird. Managing Partner, RSR Research Occasionally, the app reminds Mary about things she needs, or lets her know if there are special deals on items that are related to the There are two schools of thought While I agree that showrooming has ones she is buying. about showrooming these days. always happened (we used to call it ‘cherry picking’), I also believe that the practice The first states that showrooming is having an impact on retail in ways that will single-handedly bring about the industry has not fully anticipated or When Mary walks near the wine the demise of the retail store. accommodated. So my goal here is two-fold: section, a store associate, Tim, greets Supporters of this theory look to to lay out what I know about the trend, and her by name and asks her how she then provide a few thoughts on how retailers Best Buy as the prime example enjoyed the wine she bought last week. can respond to the showrooming threat. Tim notes her comments on his mobile of a retailer about to be brought device and suggests a couple of other to its knees by showrooming - for options, which Mary appreciates and a retailer that has outlasted the Context adds a bottle to her cart. demise of CompUSA and Circuit In RSR’s benchmark survey on mobile City stores, it still struggles to in retail, 88 percent of our retail survey compete in a world dominated respondents reported that staying on top by Amazon. of how consumers use their mobile phones while shopping is a top-three business The second school of thought points out challenge for them - the highest response When Mary completes her shopping, she that Best Buy has stepped to the fore in by far of any option on the list. However, in pays with her mobile device and does not embracing showrooming not as a challenge, the same survey, 52 percent of respondents have to wait in the queue at the POS. All of but as an opportunity. Supporters of this also reported that they believe consumer her coupons, loyalty card, and credit cards theory say that showrooming has always use of mobile phones influences less than are stored in her mobile wallet. She chooses happened in retail. The only thing that is 25 percent of the shopping that happens in to pay with her store gift card which is very different is the speed at which it is happening their stores today.1 convenient and earns her extra loyalty points - that mobile phones help shorten the time when she uses it. She receives a digital it takes to do comparison shopping, when it According to our pricing benchmark survey receipt that is automatically uploaded to her can be done on a screen in your hand rather respondents, 32 percent say they haven’t personal finance software for budgeting and than via a day’s worth of trips to a bunch of seen showrooming happen in their stores tracking. Mary heads to her car without ever stores. The behavior hasn’t changed; it’s just yet, and another 13 percent completely going through a checkout line. gotten more efficient. FOOTNOTE Figure 1. Based on data from the author 1. The Impact of Mobile in Retail, RSR Research, January 2013. www.rsrresearch.com /2013/01/10/the-impact-of-mobile-in-retail/
170 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 171 The irony is that store-based retailers don’t lose out to showrooming - particularly the online aspect - as often as they might think.
What is your policy for responding to mobile price comparisons in stores? It’s a Matter of Trust The irony is that store-based retailers don’t
lose out to showrooming - particularly the Either way, retailers are missing out on online aspect - as often as they might think. the driving factor behind what compels a ShopSavvy reports that only 30 percent of Be ‘competitive' 36.7% consumer to showroom. To me, it comes first-item scans in their app are transacted down to trust. If a consumer doesn’t trust outside of the current store the shopper is that the retailer is looking out for her best standing in, and of that 30 percent, about We haven’t seen it yet 31.7% interests, she’ll pull out her phone and start half accrue to another local store - not comparing prices. online. Where online retailers make the most competitive inroads is on the second Ignore it 13.3% What is distressing is that most retailers item to be scanned - half of those won’t don’t seem to realize how often they typically convert in the current store, and break their customers’ trust, and how these have a much higher likelihood of Price match 13.3% much that might ultimately hurt them. converting online.1 Only 15 percent of retailers in our pricing
Beat it 5.0% benchmark report that they maintain one price across channels as a response Avoiding Pandora’s Box to consumer price comparisons. The 0% 10% 20% 30% 40% majority of respondents either ignore So how do store-based retailers avoid that
Figure 1: Based on data from RSR's 2013 Pricing Benchmark,to be published April 2013. price conflicts completely (43 percent), first scan, the one that opens up the whole or continue to maintain channel-specific basket to showrooming? pricing (23 percent). When your primary ignore any price comparisons that happen at all. The problem is that both of these showrooming competitor is your own First of all, maintain consistency in pricing in their stores.1 (Figure 1) Thankfully, only mindsets lead to responses that don’t help online site, how do you think that makes across channels. Retailers complain all the 13 percent fall on their swords and price match, either the retailer or the consumer - by a store shopper feel? And if they can’t trust time that stores have a different cost structure while 37 percent strive to be ‘competitive’. letting the sale walk away in the case of you to get them a good deal within your than online, so they have to price differently those who choose to ignore it, or panicky own channels, how long do you think it to accommodate those costs. And yet, Just like industry pundits, retailers seem to price matching or erratic policies that vary takes them to think they’d better check merchants for years have averaged their be of two minds about showrooming - some from store to store and customer to around to see how others compare? margin across categories or lines so that see it as a threat, and others just don’t see it customer from those that fear it. they can maximize their selling opportunities.
FOOTNOTE FOOTNOTE 1. RSR’s 2013 Pricing Benchmark, to be published April 2013. 1. Reported by Alexander Muse at RIS News’ Cross-Channel Retail Executive Summit, October 2. Reported by Alexander Muse at RIS News’ Cross-Channel Retail Executive Summit, 2012. October 2012.
172 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 173 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION
Consumer Focus Key To Closing The Mobile Commerce Loop By Rakesh Gandhi, Senior Director, Mobile Application Solution Management, Consumer Mobile, SAP Channel-based pricing is channel-based finds the reviews next to a lower price, this is thinking in a world where consumers don’t where the cracks in the customer experience care about your channel constraints. Run become chasms and the retailer will lose. Gaining an understanding of preparing for the worst, predicting the channel-specific promotions if need be, Again, if the phone is going to come out consumer trends, challenges, unfortunate phenomenon will cause a drop consumers can understand those for the anyway - and in a context that has nothing in sales and — more importantly — a decline influencing factors is the first most part, but inconsistency across channels to do with showrooming - where do you want in customer loyalty. breaks consumer trust - and as soon as they that shopper to look for the information she critical step towards addressing don’t trust you to help them, the phone comes seeks? Your site? Or Amazon’s? And once the key dilemmas and questions Innovative retailers will turn a problem into out and the comparison shopping begins. she gets to your site, what will she find? The facing retailers. Chief among these an opportunity, using mobile to equip their easier you make it for her to trust that you’re stores and empower their staff to deliver is the search for solutions that Second, be proactive about your online there to help, the less likely she will be to turn an omni-channel experience personalized assortment. Most retailers these days offer that phone against you. will provide a solid foundation to each customer. a much larger assortment online than in upon which retailers can build a stores, and yet few do a good job advertising Yes, there will always be shoppers that successful consumer mobile What will distinguish these leaders from the that larger assortment at the shelf. This is as cherry pick the best prices from the long list of also-rans in retail? Their singular strategy and effectively close the much a break in trust as pricing inconsistency. lowest-cost providers, but no one will keep focus on architecting comprehensive When a retailer only has three toasters on those shoppers for long (as even Wal-Mart, mobile commerce loop. This article omni-channel strategies focused on: the shelf, their tendency is to want to push the low price leader, has found in competing provides some guidance as those toasters on the consumer standing with dollar stores), and only the most careful retailers embark on their mobile • Attracting and retaining customers there. But if that’s not meeting her needs, retailer can make their margin objectives • Gaining wallet share and growing revenue journey to accelerate revenues where do you want her to go? The phone is while serving the cherry-picking customer. • Increasing customer engagement and going to come out at that point - is it going For the rest, the vast majority of shoppers, and deliver customer value. boosting loyalty to be pointed to your site, or to Amazon, showrooming is much more about trust: what some Millennials have started calling can your shoppers trust you to provide them The mobile explosion has taken the retail However, as retailers begin to create a sound ‘the Google of product search’? A simple with the best information alongside a good world by storm. It has empowered mobile strategy they also face many questions sign with a QR code can save the day - deal? If they can’t find that even within your consumers, making them more informed and challenges. This article will explore these and the sale. own channels, the game is lost. and demanding. As a result, showrooming topics, providing useful recommendations has become one of the biggest challenges for organizations whether they are just Finally, be proactive - and transparent - about Nikki Baird is a managing partner at retailers face today. Many retailers are your product information. This is probably the Retail Systems Research, a market number one reason why consumers pull their intelligence firm providing insight into phones out to begin with - to get ratings and the retail industry’s business challenges reviews. If a shopper goes to your site and and technology investments.
174 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 175
A good mobile app incorporates the following simple features. jumping into the mobile fray, or are looking perform shopping activities (research, read Provides value and • Saves time during shopping by assisting users to find products in to take their program to the next level. reviews, make purchases while in store. convenience store, social research, product information, etc. literally at their finger tips Mobile is not just another bubble Mobile drives brand loyalty • Provides easy and collaborative way to plan shopping with and revenue family and peers For mobile shopping and commerce 2012 • Eliminates need to carry coupon clippings was a decisive year. It was marked by a Mobile with targeted marketing offers flurry of activity as several retailers started a solid ROI toward brand marketing and Provides relevance • Surveys show vast majority of online shoppers prefer leveraging mobile commerce to engage sales. However, it would appear that many retailers that use personal information to improve the consumers. Against this backdrop, companies are failing to realize the full shopping experience research firms reckon mobile commerce potential of mobile to reach and influence • Boosts the store experience (an area where online retailers transactions will reach impressive heights their target demographic. Indeed, over can’t compete) by 2015. Predictably, the advance of 60 percent of best in class companies smartphone penetration and usage is (companies already using mobile marketing) • Enables shoppers to access assistance, often in the form of driving a sea change in consumer attitudes aren’t yet using customer behavior information smart personal assistants and smart associates, that help around mobile commerce and shopping. to target and segment messaging find more information about products and options, pay for throughout the mobile channel. purchases and collect points/perks at checkout The numbers speak volumes. According to a 2012 Ericsson Mobility Report1, by 2018 Indeed, research firms stress that mobile Provides • Offers best-suited products, promotions and coupons based almost all handsets in Western Europe can make a huge difference, allowing personalization on shopper buying habits and preferences features and North America will be smartphones, organizations that harness mobile for this • Harnesses other factors, including location, to deliver compared with only around one third of purpose to achieve massive improvements contextual relevance handsets for Middle East and Africa and in campaign click through, for example. Asia Pacific. In addition, the report revealed • Draws from profile and other information to understand user mobile data traffic doubled between Q3 Mobile apps also play an important role needs, make product recommendations, and present products, 2011 and Q3 2012. Meantime, comScore, in the daily journey of the mobile shopper. offers, coupons based on personal needs in its 2012 Mobile Outlook report2, found While reams of research show that consumers • Supports a superior shopping experience, one that is well- that more than half of smartphone users may download dozens of apps, they only designed and intuitive — and which adds value, saves time, in the U.S. reach to their mobile phones to use the apps that offer value. Put another and money for users and helps drive loyalty, brand image and adoption for the retailer FOOTNOTE
Figure 1: Based on data from the author 1. www.ericsson.com/res/docs/2012/ericsson-mobility-report-november-2012.pdf 2. www.comscore.com/Insights/Presentations_and_Whitepapers/2012/2012_Mobile_ Future_in_Focus
176 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 177
Put another way, a proper strategy has a lot way, consumers are more likely to buy from super markets and hypermarkets from retailers that offer a good mobile app. to fashion outlets and specialty boutiques. of moving parts — all related to the target Each caters to its own unique consumer customer audience, the nature of business segment, in its own special way. Put and the brand marketing objectives. The key building blocks for a another way, a proper strategy has a successful mobile-first strategy lot of moving parts — all related to the target customer audience, the nature of business planning. This means integrating key capa- These four strategy elements signify the Consumers have multiple choices where and the brand marketing objectives. bilities that enable a smart shopping list, a importance of closing the loop of mobile they shop. Also, in this day and age, personalized product catalogue, access to commerce to provide a compelling and consumers are well informed or have tools However, one common thread running product information, social ratings, mobile immersive shopping experience. They also and access to carry out research prior to through all these strategies is the desire loyalty, and wallet features. Delivering this provide a checklist for retailers creating strat- shopping in a physical store, as well as when to leverage consumer mobile trends to utility helps drive purchase decisions and egies to assist consumers at the most critical they are in the premises. The behavior is drive revenue. encourage ongoing interaction and loyalty. stage of the journey, what is also described driving showrooming, a phenomenon that as “moment of truth”, when the customer highlight the importance of a key question: A successful consumer mobile strategy is Transact and self-service. Use the is in your store and considering a purchase ‘How can retailers turn the tide to attract the one that takes the following four strategy convenience offered by mobile commerce decision. It is here that your efforts to assist consumers to retailers, drive loyalty, reduce elements into account: to provide consumers the ability to shop in planning, shopping and post shopping will engagement cost, drive personalization and anywhere and anytime: out of store, in-store, be most appreciated and valued. gain wallet share?’ Market to the consumer. Build consumer and with their smartphone device. This awareness by providing personalization with means making sure key capabilities — such Finally, the fourth strategy element is Many retailers have adopted a simple path relevance. Examples of this are personalized as mobile shopping, in-store product scan, essential as it is aligned with mobile’s ability to optimize their e-commerce Websites for product recommendations, personalized shopping cart, POS integration, mobile to capture consumer data, allowing retailers mobile devices. This is no doubt the fastest and relevant offers, and coupons that are payment, digital receipts, place order, store to analyze consumer insights and behavior way to offer a mobile access and represents based on shopper in-store location, prefer- pick-up or home delivery — are supported. in real-time. For marketing and sales, it a relatively good first step. However, this ences, and past shopping behavior. supports their efforts to drive agile and approach must be supported by a holistic Consumer Intelligence. Collect and innovative marketing programs, raise mobile strategy to effectively engage, market, Engage with the consumer. Strengthen integrate real-time data and insights into brand awareness, and achieve sales ROI. and transact with mobile consumers. relationships, drive loyalty, and improve consumer behavior to drive new programs brand image by providing the consumers — and evaluate their effectiveness — to help The retail industry is broad and is made with tools for shopping research and drive sales and high performance. up of shops of all types and sizes, ranging
178 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 179 Connect the dots, and mobile commerce is not a fad; it’s a fact.
The benefits of taking a platform should bring order to the chaos, But it’s not just about building the capabilities Rakesh Gandhi, responsible for Consumer platform approach providing retailers an effective way to to deliver a seamless, omni-channel experience. mobile solutions and Mobile Commerce consolidate and seamlessly render data Feedback from consumer surveys clearly portfolio for SAP, works closely with customers Successful execution of a consumer mobile to mobile devices and delivering an indicates that customers appreciate a in Retail, CPG, Telco, Hospitality and the commerce strategy hinges on having a omni-channel experience. convenient experience that harnesses the Travel industry, to help realize the consumer unified enterprise mobile platform that helps capabilities of their personal devices in order mobile vision. He has over 20 years industry mitigate risk of rapid technology and device Agile, scalable and low cost. TCO is to deliver relevant offers, not meaningless and business process knowledge with Retail, platform evolution. It provides an effective a major concern especially when it is promotions they can dismiss as spam. CPG, Chemical and High Tech. way for retailers to make their mobile imperative that the complete experience, offering agile, offer omni-channel presence including mobile Web and mobile apps, Thus the key success factor for marketing and stand resilient — even as the mobile work across all target mobile devices. and sales departments at retailers landscape changes. everywhere will be to develop and drive a Feature ready: The platform should ready to well-defined mobile strategy that provides We believe that taking a mobile platform support access to new mobile capabilities an immersive, ubiquitous and omni-channel approach is therefore a critical success such as augmented reality, location-based consumer mobile shopping experience factor in executing a mobile first strategy for services (including indoor location services), (outside the store, in-store and on-device). consumers. The right mobile platform should and barcode scanning. be able to offer the following key capabilities: Moreover, this offer should close the mobile commerce loop by enabling retailers to Rapid change and innovation. The platform The way to an omni-channel future deliver offers that are closely tied with the should provide rich re-usable solutions and data and insights they glean from all services (such as payment, wallet, etc.) Connect the dots, and mobile commerce customer interactions: via mobile, online, for retailers to develop and deploy new is not a fad; it’s a fact. Expect it to be an Web, and in-store activities. Pursuing an consumer solutions in a modular way similar integral part of a comprehensive channel omni-channel strategy that grants mobile a to Lego building blocks. This helps support strategy for retailers, particularly as the central role in the mix allows retailers to drive standardization and speed time-to-market. advance of connected devices smartphones agile mobile commerce solutions that meet and tablets blurs the barrier between — and exceed — the requirements of retailers Coherence. Most retailers have a myriad shopping online and in-store. for operational excellence and the increasing of backend systems and multiple channels demand among for consumers for shopping for interacting with consumers. A mobile assistance when they need it most.
180 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 181 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS
PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS
Mobile is transforming how consumers interact with organizations throughout their daily journey to shop, conduct commerce and self-serve. In this section we explore how retailers, utilities companies and transport authorities show how you can beat the competition by fighting smart and placing mobile at the core of a customer-facing, omni-channel strategy to capitalize on the data and insights mobile delivers to delight customers with personal and relevant offers sure to boost their loyalty to your brand.
182 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 183 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS
Gateway To The Future Of Customer Relationship Management By Michael J. Becker, Managing Director North America, Mobile Marketing Association Growth of mobile payments in 2012 from 2011 Percentage of cellular connections
There is much more to mobile This is followed by: What exactly can it do commerce than technologies and for our business? How and what do we execute a mobile strategy? What kind of transactions. Marketers may be 400% money should we put in to mobile? And, slightly confused by the many finally, what can we get in return? 350% 350 ways payments are enabled — by 300% mobile messaging, mobile apps or While these are great questions, with 300 answers far too detailed for this article, proximity payments, to name a few 250% there are two inalienable truths about 250 — but there is a clear consensus 200% 233 mobile to understand: 1. Consumers are 218 214 200 that a mobile wallet is more than mobile 2. Mobile gets you closer to your 150% coupons and currency. Indeed, consumer than any other media or sales channel. 100% 127 the reliance of consumers on 108 100 their mobile wallets to conduct When you are close to your consumers by 50% commerce will offer marketers a creating awareness and driving engagement, window into consumer preferences you will earn their loyalty to accelerate the 0% growth of your business. That is why it is and potentially fulfill the promise Orbitz Target PayPal
vital to understand and embrace mobile as Amtrak Fathead SubHub Amazon of one-to-one marketing. a key element of your business strategy. It Fandango Marriott Int
is not just good for business; it is critical for RueLaLa.com The world is a buzz with mobile. It is every- long-term survival. Figure 1: Based on data from the author where and omnipresent in every commercial conversation, from the boardroom to the Today, Pandora makes 55 percent of its showroom floor. A key question that is US$425 million of revenue from mobile, addressed in these conversations is: What while Google makes 17 percent of its According to the Internet Retailer Mobile The Framework: Mobile and the exactly is mobile? US$41.5 billion in revenue from mobile. 400 Guide the top 400 retailers in mobile path to purchase The list goes on. racked up a combined $12,135,864,798 in sales via mobile in 2012! Now that is a big To be clear, mobile is not just a smartphone number, one that speaks volumes. or a tablet. Nor is mobile just a phablet, that
184 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 185 As consumers use their mobile device as a tool of transaction, marketers reap the benefits with a wealth of data with every swipe, click or purchase.
Mobile marketing path to purchase framework As shown in Figure 2, there are many steps The Lower Funnel are the steps the consumer
along the path to purchase, which can be engages in following a purchase or value divided into two groups, the Upper Funnel exchange with a marketer, including: and Lower Funnel. These are separated by the Point of Conversion. Service consumption and/or product use. Upper funnel Lower funnel The first step in consuming a service or good, or installing a good. The Upper Funnel refers to the decision Awareness Preference Loyalty making milestones a consumer encounters Loyalty. The process of repeat purchase or use. prior to making a purchase, including: Advocacy. The process of sharing one’s Support Advocacy Consideration Conversion Awareness. A consumer becomes aware of experience with the product or good with the products, goods or services through paid, marketer, as well as the overall relationship. owned and earned media. And, in the middle of all of this is the point Consideration. A consumer considers or of conversion. A consumer purchases the Figure 2: Based on data from the author researches a product via means including good or service. the search and the review of paid, owned and earned media. Examples of activity at mid-range device between the smartphone channels and media. It is the connective this stage include watching a video or Understanding mobile commerce and tablet. Mobile encompasses all of these tissue that binds the consumer with the subscribing to alerts and notifications. within the framework devices and more. Mobile is also the feature brand. Toys ‘R’ Us said it best, in a world of phone, the passive monitoring device (i.e. mobile we need to leverage the omni-channel Preference. A consumer develops a prefer- It is critical to realize that, while the purchase Jawbone UP), the second screen experi- and enable our customers to “buy from ence for a good or service and expresses funnel may look like a linear flow of consumer ence, the eReader, the games console, SMS anywhere and fulfill from anywhere.” this by an action such as adding the product milestones, life is not linear. Rather, we must or MMS, apps or mobile Web experience. to their shopping cart, inputting it in their remember that consumers will engage in any To understand mobile in the broader context wish list, ‘liking’ it in their social network or of the steps, regardless of the order. In fact, mobile influences and powers a of consumer engagement, I find it is best to posting a comment. unique, untethered, interactive consumer illustrate the dialog through the lens of the For example, a consumer could discover experience as people engage across all path to purchase and/or purchase funnel. your product before they search, or are
186 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 187
even aware of the brand. From there, Analysts forecast that mobile payments credit card to a unique QR code displayed Apple will also be playing a major role in the they will need to be educated, usually via usage will skyrocket in the next five years, within the app, or pay via a LevelUp card mobile wallet with its Passbook offering that mobile Web browsing, before they are with proximity payments accounting for as on which their unique QR code is printed). features a number of apps all dedicated to sold. Consumers will also jump around much as half of all transactions. mobile commerce. There is so much that milestones on the path to purchase and so Additionally, consumers may wave their has happened and will continue to happen it is imperative that marketers adjust and mobile device across an NFC-enabled in the near future. We’re just getting started. remain agile across the funnel. Mobile wallet and mobile commerce point-of-sale terminal. Again, just like it would be using a real wallet, making a Finally, we have to remember that a mobile Assume the consumer is ready to buy a This view of mobile commerce is powered purchase pulls from cash consumers have wallet will contain more than just coupons product, so they are at the Point of Conver- by what is commonly referred to as the stored in a pre-paid account like a credit and currency. The mobile wallet is also a sion or the transaction point. At this point, mobile wallet. The mobile wallet — offered card or debit card. window into our identity, a tool for managing the marketer and consumer exchange value by players like Google, Sprint, Isis, PayPal, our relationships, a storage for our political for a product. Generally speaking, analysts Square, LevelUp and others — is a software, Also, let’s not forget the incentive element preference and donor status, a hideaway agree there are three forms of mobile cloud-based, version of a physical wallet. of the wallet. Prior to a payment being for a key or password, and so much more. commerce or payments: processed, the mobile wallet can deduct Indeed, the mobile wallet is an extension of Like a physical wallet, the mobile wallet can relevant coupons, store rebates, Facebook self and a gateway to the future of customer Proximity payments. Where payment is assume any number of forms and styles. It credits, linked loyalty program point totals relationship management. made at the point-of-sale and initiated from can hold cash, credit cards, debit cards and that can be converted to real currency. a mobile phone that uses NFC technology. loyalty cards. A mobile wallet may also hold A prime example is Swift Exchange, which coupons, advertisements and promotions, allows rewards from multiple programs to More than the transaction Remittances. Where customers use their rebates and more. be used in various combinations and spent mobile device to send and receive monetary like cash - in places consumers already There is more to mobile commerce than value - or more simply put, to transfer These assets in the wallet can be used to shop, online or in-store. the processing of a transaction. Mobile money electronically person-to person purchase goods and services, and use a commerce is like sunlight in that it is often (P2P) using a mobile phone. variety of methods to complete the payment Importantly, these deductions are made in defined by how it is measured. Depending and offer rewards. They can send an SMS real time without the need for consumers how you measure sunlight you’ll either get Remote Payments. Where the retailer is (as in the case of Shopkick, first mobile app to fumble around for discounts or coupons a particle or a waveform. The same thing remote and payment for goods and services that gives consumers rewards and offers post-transaction, as in the case of American happens with mobile commerce. Depending occurs via a mobile device enabled by simply for walking into store), or require Express crediting a charge after a Foursquare: on how you measure it you’ll either get mobile media like mobile Websites, apps a consumer to click a button or scan a Check In. a particle (measuring a transaction at a and messaging. barcode (as in the case of LevelUp, a mobile point in time), or you’ll see waveform (the app that allows users to link their debit or process of commerce from the consumers
188 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 189
Mobile commerce window The mobile wallet is an extension of self and a gateway to the future of customer relationship management.
Upper funnel Lower funnel
For example, on the commercial front, there have the capability for one-to-one marketing Awareness Preference Loyalty are inter-related capabilities around the with mobile. However, it is early days. As we mobile wallet that need to be considered. continue to peel back new layers of value This includes the integration of retail with mobile, we should move forward. Consideration Conversion Support Advocacy elements like a mobile-enabled point-of- But we should also remain cautious so sale or Website and app, which may include to not misuse emerging platforms and physical goods and services, but may also opportunities. From now on, marketing
Mobile commerce window cover virtual goods. and commerce will never be the same. Welcome to the mobile world. And, as consumers use their mobile device Figure 3: Based on data from the author as a tool of transaction, marketers reap Michael Becker is North American point of preference to their initial use of marketing. As a result, few are executing the benefits with a wealth of data with every Managing Director of the MMA, where the product and service). I refer to this against a fully integrated mobile marketing swipe, click or purchase. With the appropriate he oversees the association’s regional waveform of mobile commerce as the strategy throughout their marketing mix. permissions, brands can leverage the membership, research, strategic ‘Mobile Commerce Window’ within the It is a missed opportunity for seamless context of a consumer’s mobile life. From initiatives, events and education businesses. overall Mobile Marketing Framework. consumer engagement. where and when, to specific consumer He is also Founder and Strategic Advisor behaviors or event ambient conditions to Archer Mobile, an industry-leading Understanding this distinction is incredi- (such as, speed, elevation, temperature mobile marketing solutions provider, as bly important since it will help define how The richness of mobile and possibly even temperament), mobile well as founder and publisher of the MMA you integrate mobile marketing into your is going to change everything. International Journal of Mobile Marketing. business strategy and the steps you take. Beyond the Mobile Marketing Framework He has authored two books (Mobile and deciphering the value of mobile, it is Don Peppers in his seminal work in 1992 Marketing for Dummies and Web Marketing Some analyst reports suggest that most crucial to understand that we are just coined the term one-to-one marketing. All-in-One for Dummies) and written more brands rely solely on upper funnel mobile scratching the surface. For the last two decades this concept has than 100 articles on mobile marketing. advertising initiatives or lower funnel mobile been science fiction, but no more. We now
190 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 191 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS
Reaching The Mobile Consumer By Jason A. Oglesby, Director Mobile Solutions Management, SAP
experience for the consumer or not, the support and connect them are going to Mobile is changing the game that they intended to use their devices to consumer is creating their own experience. be transformed by the mobile consumer. for manufacturers, and retailers research and purchase gifts, décor, food Ironically, there is an upside since research items, and more. A raft of research since Shoppers are creating lists online and shows shoppers who use mobile and alike. Empowered consumers underlines the pivotal role of mobile in accessing them while walking the aisles via online channels to research and make are reaching to their mobile holiday shopping, and in making routine their mobile device. Furthermore, the retail purchases actually tend to spend more than phones every step of the journey, transactions the whole year through. storefront has become an access point in-store shoppers. It would seem that more to research products, check for where the consumer is assembling recipes, opportunities to shop using more channels This also represents a significant shift in putting together outfits and reviewing increases convenience and encourages reviews and make purchasing where, when and how consumer engage- recommendations via social media. consumers to shop more. decisions. Clearly, mobile ment occurs. Contrary to the approach that applications must assist them many companies are taking when they opt Clearly those organizations that can in the process, adding value to to simply tack mobile onto their existing Mobile changes the retail rules successfully evolve and create meaningful channels, mobile is not just an extension to engagement with the mobile consumer, the experience. But organizations online interaction. Showrooming, the practice of evaluating maintain relevance and keep pace with the should not miss the opportunity to items in store and subsequently purchasing ever-changing mobile landscape will outpace build mobile into a wider strategy, Mobility occurs in continuity with the user as online, is shifting to real-time at the expense their competition over the next five years. that is cohesive across all opposed to the session-based interactions of the retailer. Shoppers are comparing characteristic to online technologies. Put products, reading reviews/social media In order for organizations to effectively channels, to enable meaningful — simply, mobile devices are an extension of and price shopping with 'Over the Top' engage the consumer via mobile they and ongoing—customer engagement. the consumer. The mobile phone is always retailers or directly with manufacturers first have to understand what experience(s) with the consumer, much like a wallet or a on their smart phone while they are in the will deliver value that is significant enough Mobile is transforming the way consumers handbag. Based on this behavior the mobile store. Against this backdrop, research and to justify taking space — and thus discover, research, shop and purchase. phone may replace wallets and purses in the services paint a dismal picture, documenting capturing mindshare — within the user’s According to the 'NRF Consumer Holiday future (though I'm not certain when we’ll that the vast majority of retailers expect to mobile universe. Spending Survey', a report published by see the arrival of a mobile device that can be impacted by showrooming and see sales the National Retail Federation, the world’s carry spare lipstick and sunglasses, so the drop as a result. As mentioned earlier, the mobile device is largest retail trade association and the voice handbag is safe for the time being). an extension of the user. It contains their of retail worldwide, over half (52.9 percent) Mobile is changing the game for personal information and contacts, serves as of those who own smartphones and As a result, mobile devices serve as the pivot manufacturers and retailers alike. The a line of communication, perceives the world 64.1 percent of those who own tablets said in point between online and in store interac- traditional relationships between these around them and provides instantaneous advance of the last holiday shopping season tions. Whether companies provide a mobile organizations and the agencies that information access and feedback. Accordingly,
192 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 193
Organizations that can successfully evolve and create meaningful engagement with the mobile consumer, engagement via mobile should be highly Important questions to ask are: Is the your consumer and how they view their maintain relevance personalized and relevant to the user. consumer savvy enough to take advantage relationship with your business, and how and keep pace with the of a QR scan to reach your mobile presence, they interact (physically and digitally) with ever-changing mobile or do they need a more step-wise approach? you today based on their requirements. How often does the consumer interact You also need to ask yourself: How do landscape will outpace Delivering personal value with your brand and products? Not every you take that information and, based on their competition over retailer should be the main attractions in it, provide your customers services and the next five years. Broadly focused interactions quickly the shopping mall, nor should they behave interactions that are the most intuitive and become background noise and are filtered like this when they approach mobile. comfortable fit with their mobile universe? or completely discarded. Research from Accenture, a global management consulting, Ecosystems (that is, the shopping mall However, finding the best way to connecting technology services company, confirms that concept) will be just as applicable via the with the consumer is just the beginning. consumers value advertising and offers that mobile device. These ecosystems will You must also find a way to deliver value on are aligned with their personal preferences. present game-changing opportunities a personal level to them as an individual. Among the findings: for the small retailer, allowing them to create alliances with manufacturers Interestingly, providing value doesn't just • 3 in 4 online shoppers prefer retailers that where there is the opportunity to have mean offering consumers a discount or use personal information to improve the those close relationships. giving something away for free. shopping experience • 73 percent want 'relevant' ads on their Ecosystem opportunities will arise not Research shows that consumers genuinely mobile device only from the traditional brick-and-mortar appreciate a mobile shopping experience • 65 percent like to receive offers to their organizations that support shopping malls that gives them convenience ease of use and smartphone based on past purchases today, but will arise from banking, telecom, confidence that the transaction is secure. while in-store communities (think chamber of commerce), social networking and alliances. Based on these insights I have identified Consumer engagement begins with creating five critical engagement technologies that a delightful and simple way to connect with Much of this is being driven by the current support the delivery of a retail experience the consumer that is aligned with your brand race to own the mobile wallet, but that that offers mobile shoppers value because and understands how consumers perceive is a topic well beyond the scope of this it is personal, relevant and convenient. the relationship. article. The key here is to understand
194 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 195
1. Interactive shopping lists consumer experience? In an age where a tate the way the consumer would naturally want the opportunity to find the perfect raft of recent consumer surveys point out engage with your brand. This is the user choice. But in reality, what we really want 2. Product location, availability that shoppers increasingly consult their engagement that should determine which is a great choosing experience. To have and research tools social communities, or read other customer mobile technologies are employed in the the confidence in our preferences. To reviews, before making a purchase, it's clear overall consumer experience. feel competent rather than questioning 3. Contextual 1:1 personalized marketing that shopping has become a social activity. ourselves, 'Did I really get it right ?'” Mobile experience guidelines 4. Simplified payment options In addition, it is certainly useful to have With so many options in the market it access to targeted and personalized offers, Too many mobile applications put is often impossible for the consumer to 5. Immediate rewards offers perfectly tailored to a specific spouse technology, not people, first — an approach feel that they have adequately evaluated, or relative, delivered via a mobile device that can backfire because an organization is compared and selected the right products Significantly, these types of services are when gift shopping. This is also where more committed to delivering an innovative from all the products available on the decoupled from the mobile client and can collaborative shopping lists that incorporate experience as opposed to providing the market. As a result, retailers and manufacturers be leveraged across a variety of channels the wishes and interests of the entire consumer an intuitive and elegant design are seeing a decline in brand loyalty as well as across product lines and family, which can come in to enhance they can use and appreciate. attributed to the fact that consumers brands. In fact, this engagement should the mobile experience. are becoming less sure of their buying cohesively cross channels so that the mobile Beyond engagement via user experience, decisions. Successfully engaging the experience becomes effortlessly integrated In both scenarios the user interface itself one must also consider the forces mobile consumer should provide the tools with the individual consumer’s lifestyle. should be easy to use, intuitively designed competing for consumer mindshare. With to reverse this trend and deliver a great and deliver a delightful experience to the global competition and the unparalleled choosing experience. Shopping is social consumer. This experience should be availability of information the consumer is immediately identifiable with your brand presented with an overwhelming variety of Consumer fatigue is particularly evident in While it is important to offer a mobile and create interfaces that are relevant and options in the market. loyalty and reward program participation. experience that is seamlessly integrated into engaging to the consumer. There are only so many loyalty membership the consumer’s lifestyle, it is also important Sheena Iyengar, Professor at Columbia cards or keychain dongles that a consumer to examine the opportunities introduced via It is important to engage methodologies Business School and author of The Art is willing to carry with them. Mobile social media and community. like Design Thinking to work directly with of Choosing, has studied the impact of applications also appear to have lost their the end-user, or consumer, in defining choice on consumers. She concludes, luster. In view of this, organizations that Are there ways to leverage social circles in specific mobile use cases and how those “Most of us aren’t experts in everything. have invested in a mobile presence must the mobile application that will enhance the interactions should be structured to facili- We say we want more choices because we develop a strategy that protects their
196 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 197 Organizations are challenged with developing mature mobile engagements in an environment where the target is continuously changing.
investment and maintains their relevance Furthermore, we find that many of these Consumers in control Furthermore, by de-coupling the complexity in the consumer’s mobile universe. applications are not part of a larger strategy, from the client tier these organizations as they should be. They have been released A significant paradigm shift that we are will avoid technology lock-in and enjoy the as little more than a mobile novelty, seasonal seeing in mobile is linked to the emergence flexibility to rapidly uptake new devices, Fast-moving mobile or promotional 'Throw away' application, of the empowered consumer. In other words, technologies and support new channels as one that rapidly loses relevance and mobile the consumer is demanding and defining they appear in the market. Those that do this The pace of mobile is moving at a velocity mindshare. Rather than strengthening the their mobile experience. well, will redefine how we think about loyalty that has not been seen before, with new brand message these applications achieve and brand awareness in the years to come. devices released on a yearly basis and the opposite, becoming chaff and diluting Indeed, catering to this new kind of significant revisions to mobile operating brand value in the app stores. consumer, one empowered by advances Jason A. Oglesby is part of the SAP Mobile systems happening as frequently as 2-3 in online and mobile technologies, is a new Solutions Management organization times a year. Organizations should therefore seek to experience for many companies. In order to focused upon Consumer Engagement and create a more durable mobile presence engage the mobile consumer and capture Mobile Consumer Applications. Previously, As device manufacturers deliver new that provides a consistent foundation of their mindshare on their personal mobile he was with Kony Solutions where he served innovation in every release to stay relevant engagement services (such as loyalty and device, organizations must deliver value as a senior sales engineer in Banking and in this super-competitive market, it becomes rewards, personalized offers and coupons) and a relationship that is personalized and financial services. His first experience very difficult for organizations to build and de-coupled from the end presentation layer intimate, mirroring the relationship users with mobile was building an application maintain exciting and engaging mobile on a specific mobile device, or for that have with their mobile devices. to control a ceiling fan on a Windows CE experiences on those platforms. matter the engagement channel itself. device while in college. This foundation should serve as a platform But organizations can't stop there. In order Additionally, organizations are challenged for innovation, allowing an organization to maintain and grow that mindshare, with developing mature mobile engagements to deliver iterative seasonal layouts as the mobile presence needs to evolve and in an environment where the target is well as promotional experiences across innovate in lock step with the changes made continuously changing. Thus, many multiple device platforms, while the base by device manufactures and the changing organizations find themselves today in interactions with the consumer remain attitudes of consumers. By employing a possession of several disjointed mobile consistent and cohesive across channels. reference architecture and building mobile applications, all too frequently that have engagement around a foundation of durable been built within different teams on services that deliver cross-channel coherence, different platforms. organizations can create a platform to reduce risk and promote innovation.
198 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 199 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS
The Engaged Retailer: How Mobile And Big Data Improve Revenue, Retention And Profits By Maribel Lopez, Founder and Principal Analyst, Lopez Research
customer viewing merchandise in a physical the right information or service, at the point Mobile technologies have become are also more advanced and have more retail store only to then purchase the of need to a retailer’s customers and employees. an integral part of the shopping capabilities than their simpler counterparts merchandise online or from another retailer. of the past. Today, there are over 1 billion Right-time Experiences differ from what process. Retailers are under smartphones deployed globally, and Apple While showrooming has created challenges retailers deliver today because they are pressure to take proactive action alone is expected to ship nearly 100 million for retailers, mobility also provides tremendous adaptable, learning, and predictive. RTEs to turn mobile into an asset that tablets in 2013. In many countries, mobile opportunity to reach the customer will analyze a person’s transaction history, delivers revenue and customer adoption has also exceeded 100 percent wherever they are and frequently at the analyze mobile data such as location, and as many individuals carry multiple point of decision. The challenge is building respond with information that is relevant to engagement. The challenge is connected devices. an information technology and customer the individual at that moment. huge, but the solution is clear: -facing strategy that capitalizes on mobile building an information technology The widespread adoption of mobile has attributes such as location, activity, and The best services will learn and adapt to a and customer-facing strategy that changed customer expectations across sensor data. user’s behaviors over time. For example, a every industry, especially retail. Consumers customer may always prefer to begin their capitalizes on mobile attributes expect to research, locate and purchase interaction with a retailer by clicking on the such as location, activity, and products wherever they are. Adaptive and personalized’ sales page of the mobile Website or app sensor data to delight customers belonging to that retailer. An RTE would and convince them to come back Consumers also expect real-time data that Leading retailers will use big data processing learn this user’s behavior and automatically is accurate and consistent across a retailer’s and real-time analytics software to analyze load the sales page whenever the user — again and again. Website and its physical locations. Today information from mobile devices, mobile launches the app or Website. Consumer adoption of mobile devices has consumers are using smartphones while in applications, and prior transactions. This will grown exponentially with mobile subscribers the store to check pricing, inventory availability create adaptive and personalized services If the user’s context changes, the RTE now amounting to more than 5 billion and product reviews. Retailers now have to that get smarter over time through customer should self-adapt. For example, the user worldwide. The devices consumers carry contend with ’showrooming’ — the act of a -specific data analysis. These smarter experience should adapt as a person services, which Lopez Research defines as moves between devices such as a laptop Right-time Experiences (RTEs), will deliver to a smartphone, or to a tablet. Retailers, such as Best Buy, Sears, and Wal-Mart are now integrating Web and physical retail channels with ‘Site to Store’ options that allow customers to purchase merchandise online and then have it delivered to the store of their choice.
200 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 201 Tesco employs mobile devices and video in order to improve care by preventing items from being out of stock in its stores with a “broccoli cam” that monitors its produce shelves and alerts workers via their mobile devices to refill the produce trays when needed.
Power of push RTEs will also link applications to Web- Commerce. Retailers will improve sales transaction history. Walgreens now offers accessible data that lives outside the company with RTEs that link to external information, email, SMS, and push notifications to With the appropriate opt-in policy, retailers such as reviews, product comparisons, enable mobile commerce, and integrate remind its customers to refill prescriptions. can tailor the type and timing of an experi- transaction clearinghouses, authentication commerce across channels. If a retailer’s It’s also considering using push notifications ence by tapping into contextual items such services, and click-to-call services. price is higher than an e-commerce to remind customers when to take as location, time of day and device type. retailer, the store’s manager could offer a medications, alert customers when a While there are many types of RTEs, there competitive price match to close the sale. prescription is ready for pickup, and notify For example, a grocer could send a push are at least three categories that will help Tesco offered a new mobile commerce customers when photo prints are ready. notification during a customer’s normal retailers increase the average basket experience by using the walls of a Korean commute time after work to remind the purchase, add new customers, and improve metro station located in Seoul in order customer of a promotion on rotisserie overall customer engagement. to create a 'virtual supermarket' where Get ready to excel chicken, hoping to prompt that customer to shoppers can use their mobile devices to stop in on the way home. An advanced RTE Care. Many retailers will begin to improve choose products and have them delivered. Mobile technologies have become an would allow the consumer to pre-purchase customer service by providing their employees Retailers, such as Best Buy, Sears, and integral part of the shopping process. the chicken and pick it up at the store. with on-the-go access to corporate data. For Wal-Mart are now integrating Web and Retailers must take proactive action to turn example, Lowe’s has deployed smartphones physical retail channels with ‘Site to mobile into an asset that delivers revenue By combining information streams, retailers and several custom apps to its employees. Store’ options that allow customers to and customer engagement. Retailers that can learn more about their customers, more The Lowe’s employee app gives staff access purchase merchandise online and then understand and prepare for this paradigm about what services are used, and also to product availability and inventory, as well have it delivered to the store of their choice. shift will create a sustainable, competitive what promotions work. For example, if a as enabling mobile checkout. If a product Wal-Mart also offers a 'Pick Up Today' advantage via mobile and big data technology consumer is using the retailer’s app, the is out of stock, a store employee can locate service, which allows customers to check that will undoubtedly put them in position retailer could learn if the consumer used inventory, order the product, and solve if their desired store has specific items in to excel above the rest. a digital coupon, shared a promotion or the customer’s problem. Moreover, Tesco stock, and, if so, allow them to place an scanned a product code. employs mobile devices and video in order order for the items they want. Maribel Lopez, founded Lopez Research to improve care by preventing items from LLC in 2008. Prior, Maribel was a being out of stock in its stores with a “broccoli Communications. Retailers will use respected analyst for over 10 years at 3 key categories cam” that monitors its produce shelves and mobile to transform when, how, and what Forrester Research, where she provided alerts workers via their mobile devices to refill they communicate to their customers. For analysis on multiple topics including Right-time Experiences require retailers the produce trays when needed. example, a retailer could offer a check-in network and service strategies, enterprise to connect internal corporate data sources option with a mobile app that provides communications and consumer markets such as pricing, inventory, and promotions. relevant offers based on the user’s for voice, video and data.
202 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 203 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS
Detect, Connect And Engage By Mark Dahm, Senior Manager, Business Development, Wireless Networking Group, Cisco Systems, and Jason A. Oglesby, Director Mobile Solutions Management, SA allows consumers to make a purchase at the power of mobility to reach the loyal the all-important moment of decision. customers and market to those consumers Today’s retail environment is execute a profitable strategy. Retailers have in real-time. challenging, to say the least. only a narrow window to make the sale and Clearly, retailers need to find ways to seize the opportunity. Thriving in this reach the customer when it matters most. Detect Connected, informed consumers environment means maximizing the profit Put another way, they need to insert expect the best products at the potential of each interaction, transaction, themselves in the consumer journey where Retailers can start by leveraging the best prices, regardless of channel. and customer contact. they can offer consumers (especially their store’s existing Wi-Fi network to drive a Fortunately, retailers can meet most loyal customers) assistance, advice premium consumer experience in store. To reach the right customers at the right and additional offers they are likely to This is exciting because it allows retailers and exceed these expectations by time with the right offer, retailers must be appreciate. Even better if the store staff can to wring additional value out the same leveraging Wi-Fi networks to cater able to react to events as they happen. do this before the customer asks or knows technology it formerly viewed a cost to customers based on where they At one level, this means having, and using, they need help in the first place. component. Additionally, with the advent of are in the aisles and how they the right information. Most retailers can Next Generation Hotspot (NGH)2 and the access an enormous amount of data via Today, technology has influenced the .11u3 standard, the seamless and secure react to offers around them. This point-of-sale (POS) systems, for example. purchase decision, and consumers are roaming of devices from 3G/4G cellular to approach, focused on reaching the But that is information that documents bringing their own technology – smart- NGH-enabled Wi-Fi Networks in retail stores right customers at the right time outcomes, providing insights into the phones and mobile devices – to help on will make this transition simple and secure. with the right offer, respects personal purchases consumers make, the channels their shopping excursions. In a world they use, and the loyalty schemes they where Cisco findings show 74 percent Previously, retailers that implemented privacy and provides retailers the appreciate. It doesn't arm retailers to of smartphone owners use their mobile Wi-Fi, provided by Cisco and other vendors, analytics they need to deliver influence purchasing decisions or add phones to get real-time location-based focused only on access, allowing customers 'precision at the point of decision'. value by presenting consumers with deals, information1, retailers need to harness sitting on benches in the mall or tables at discounts or useful recommendations. Under any circumstances, retail is an extremely competitive industry. But today, It also doesn't equip retailers to contend FOOTNOTE an uncertain economy and low consumer with “showrooming,” where a customer uses 1. Cisco Internet Business Solutions Group (IBSG), January 2013 confidence, coupled with shorter product their physical retail store as a place to view 2. Next-Generation Hotspot is about solving the security and usability problems of today’s lifecycles and well-informed, demanding products only to then purchase them online hotspots to make Wi-Fi as secure and as easy to use as 3G cellular customers, make it especially difficult to - often with the help of a mobile app that 3. IEEE 802.11u-2011 is an amendment to the IEEE 802.11-2007 standard to add features that improve interworking with external networks. 802.11 is a family of IEEE technical standards for mobile communication devices such as mobile phones and laptops to join a wireless local area network (WLAN) widely used in the home, public hotspots and commercial establishments.
204 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 205 It's easy to imagine many scenarios where the retailer, acting as a kind of concierge, could personalize the shopping experience and deliver assistance — even before customers ask for it.
the food lounge to log on to the free Wi-Fi Connect access and analytics to provide indoor through the mobile app and can even network, branded by the retailer. Some location services, allowing the retailer deep forecast inventory levels based on current retailers also used the network to access The benefit of combining indoor location insights into how customers interact with customer consumption. B2B mobility applications to manage based services with analytics is to deliver their physical environment based upon inventory or activate signage. the capabilities that will allow retailers to where they are in the store and what Engage understand and fulfill customer needs. But they are doing at that point in time. That was then. Today it's becoming increas- its also about arming retailers to accelerate As we have shown, the technology and ingly clear that these Wi-Fi networks aren't insight, act decisively and affect outcomes. As the following scenario shows, insights analytics are coming together to allow an opex cost. They are investments that will This means harnessing network analytics into customer sentiment allows retailers retailers to radically redefine the relation- help retailers reach the next level, equipping and powerful data analysis to optimize to refine their offers in real-time to accelerate ship they have with their customers, them to deliver real-time, context-aware the supply chain (making sure shelves revenue generation and encourage managing even in a high-volume shopping offers and assistance customers will find are stocked) and execute the real-time customer loyalty. situation to have a one-on-one relationship genuinely useful and valuable. decisions that will allow them to competitively with them in real-time. differentiate their retail experience for every Imagine customers carrying a smartphone This capability allows retailers to achieve customer who walks in the store. into their favorite store, instantly connecting Part of this is building the capabilities to much more than the vision of one-to-one to the store’s Wi-Fi network, which prompts enable shoppers to make smart decisions marketing, which is why we call it precision We believe that retailers should treat customers them to launch the store’s mobile app. and receive instant discounts on their marketing. At its core is the capability to like old friends coming for a visit. They The automatic check-in feature rewards mobile devices to put towards their support precision retailing, which is all should be greeted at the door, and they the consumer with loyalty points and the purchases and loyalty programs. about influencing in-store buying decisions should shown around in a way that pays store manager receives customer shopping via special offers based on the consumer's special attention to showing them the details (with opt-in permission), using the But an even bigger part of this is harnessing past purchases and explicit preferences. attractions you 'know' they will appreciate app’s location service. Leveraging the Wi-Fi technology to help customers when they the most. In practice this means being able network intelligence, the store staff can need it most. It's easy to imagine many The next step will be solutions that leverage to analyze customer purchasing history, also get in on the action. They are able to scenarios where the retailer, acting as a kind the indoor-location combined with analytic in store inventory information, customer quickly find and assist customers looking of concierge, could personalize the shopping capabilities to optimize the in-store expe- profiling preferences, along with context- for clothing in their size, or an appliance experience and deliver assistance — even rience for consumers and retailers. This based information to determine what sort that is extremely energy efficient. before customers ask for it. will pave the way for a connected shopping of offers an individual consumer would experience that will bring real-time and value and identify the ways to make it Finally, the shopping experience ends Brands and Consumer Product (CP) location-based deals to shoppers and personal and relevant in real time. with customers scanning a barcode at the companies also benefit because this allow retailers to improve customer register and getting credit for the points approach gives them new opportunities service and more accurately track ROI. The real precision comes when you couple collected. Meanwhile, store management to interact with their customers, and new this with a technology like Cisco’s Wi-Fi tracks the ROI of the deals and offers sent possibilities to work with retailers to create
206 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 207 The next step will be solutions that leverage the indoor-location combined with analytic capabilities to optimize the in-store experience for consumers and retailers.
Efficient operations, shopping experiences that benefit all It's also very exciting for retailers and preferences they established (a combination new opportunities stakeholders, including consumers. their business ecosystem because of consumers' actual consumption and precision retailing equips them to the information they opt in to volunteer). Retailers can harness network analytics and In practice, the brand or CP has the overcome the dilemma that plagues This is the way to build — and deepen — powerful data analysis to improve their rela- opportunity to get closer to the consumer all marketing: trackability. Over a century consumer engagement and break the barriers tionships with loyal customers and track the while they are in the store and thus better ago, the department-store magnate John that exist today in reaching consumers. success of sales tactics. Retailers can also leverage these real-time insights to improve manage their brand and product information. Wanamaker observed, “I know half my their operations. Take a brand like Kraft. Traditionally, they advertising dollars are wasted. I just don’t Mark Dahm is a seasoned professional with control their brand and promotions through know which half.” Real-time information a twenty year history of success in Silicon First and foremost, this technology gives media, using channels that range from print and analytics removes the guesswork, Valley and international markets in the retailers new visibility into customer activity at the aisle level. It's important to stress ads and coupons, to online destinations enabling retailers to deliver personalized disciplines of Sales, Business Development that — out of respect to personal privacy where the consumer logs on to learn new offers and cross-sell based on items and Product Management. He has an and simply because it's good business and interesting ways to use Kraft products customers have in the shopping carts, established track record with Global practice — retailers can only see 'dots' on a in preparing a meal. or in their purchasing history. 100 companies and has held leadership dashboard that represent consumer footfall. positions with four start-up companies. They do not have the capability to identify individual customers as they walk through What a brand can do with the coupons is Finally, the technology that powers precision Mark is a sought after spokesman, panel the store premises. almost radical. Rather than being in print retailing gets smarter over time to satisfy, participant and recognized expert for ads or online, they can be loaded into the meet — even predict — customer needs. Wireless and Mobility strategies in the Retailers are therefore equipped to monitor retailer's system, which is cloud-based and This is possible because of the option Enterprise, Service Provider and “Connected — in real-time — how specific offers and promotions within the store are performing. powered by precision retailing. Imagine a consumers have to rate offers, 'I like this Consumer” markets. One indication is where consumers are scenario where the consumer enters the one' or 'I don’t like that one', when they are going based on traffic patterns, their activity store and can receive relevant coupons delivered. After all, information and insights Jason Oglesby is part of the SAP Mobile speaks volumes about the products and offers directly from the brand via the retail that retailers can gain by just asking their Solutions Management organization they like. All this is visualized on a heat map system and store them in their wallet to be customers has its merits. Through data focused upon Consumer Engagement and that shows where customers ('dots') are spending their time — and money. accessed and redeemed at the checkout. the system gathers and the information Mobile Consumer Applications. Previously, customers volunteer the system learns he was with Kony Solutions where he served Say, for instance, that there is a ‘cold spot’ Revolutionary retail and adapts to consumers over time. as a senior sales engineer in Banking and over by toys. Armed with this insight the financial services. His first experience retailer can experiment with placement and promotions to catch customer interest and This is just one way that the brand or CP Moving forward, instead of being assaulted with mobile was building an application to drive sales. More importantly, retailers can can be part of the shopping experience. It's by thousands of offers and being overwhelmed control a ceiling fan on a Windows CE run these experiments, and adjust their easy to imagine scenarios that completely by choice, consumers will be able to receive device while in college. strategy accordingly, based on real-time revolutionize who engages with the a limited number of offers that are specifically analytics and feedback. They can evaluate consumer and how. tailored to them as individuals based on each promotional campaign and then select the one that delivers the best results for the store — and its customers.
208 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 209 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS
Public Transport Drives Personal Loyalty By Pierre Bourbonnière, Head of Marketing at Société de transport de Montréal
Instant gratification The pilot, called STM MERCI using SAP Loyalty programs are common- system of subways and buses. In addition Precision Marketing, launched in spring place across the retail industry, to storing all fares and monthly passes Given the central role that mobile plays in of 2012, inviting commuters via public purchased by the owner, the card can also the lives of Digital Natives, users raised on advertising in stations, and in some but now other verticals are store customer information, such as email the Internet, as well as time-strapped cases emails sent to Opus card holders, exploring such schemes to help addresses, that commuters volunteer commuters, STM made the decision to to download the mobile app. Once them drive revenue and keep in return for value-added services, such release a mobile app for the popular iPhone downloaded, riders are prompted to input customers. A prime example is as monthly newsletters and additional smartphone, announcing plans to follow their specific preferences, such as their insurance if the card is lost. later with an app for the Android platform. interest in sporting events, cultural arts, Canadian transport authority restaurants and other hobbies. Société de transport de Montréal By 2012 the transport authority reported Interestingly, internal STM company (STM), which has launched an some three million loyalty cards were in research had also determined that the innovative mobile customer rewards circulation, two-thirds of which were used youth demographic, a key customer Context matters by commuters on a daily basis. segment, would be particularly positive pilot program, delivered by a toward a loyalty scheme that could deliver By leveraging the CRM solution of its vendor, smartphone app, to thank existing While STM was quite satisfied by the uptake ‘instant gratification’, and even a few STM can delve into OPUS rider histories and customers and attract new ones. of the smart card offer, it also saw the surprises, along the way. preferences to create and deliver personal- untapped opportunity to take the program ized, geo-localized offers to commuters on In 2008 Société de transport de Montréal to the next level as part of a larger strategy Thus, STM was resolved to launch a pilot the move. The aim is to build an ecosystem (STM), Montreal’s transport authority, intro- to increase ridership by 40 percent by 2020. that would last for a period of six months, of more than 1,500 business partners. The duced the Opus card, a smart card allowing that would create excitement — and value key to success is offering the right individual passengers the ability to load their tickets To achieve this ambitious goal required a — for commuters by offering them relevant the right offer at the right time, and at the and monthly passes and providing for extra revolutionary new loyalty program. STM real-time offers aligned with their preferences right place. That formula is what makes this convenience and security. wanted to avoid being ‘just another loyalty and location. Of course, recognizing that an extremely unique program. card that collected points’. It wanted to build personal privacy is paramount, STM In practice commuters can load the transit an ecosystem of partners and offers that partnered with a vendor that created a Using the mobile app allows commuters smart cards at one of over 200 fare vending would “reward users on the spot” for their firewall between marketers and commuters, to receive notifications about available machines and use it for travel using the STM continued loyalty. making sure the identity of the individual rewards from STM business partners, commuter remained hidden. including the Opera de Montreal, promoters
Against this backdrop, the mobile app approach effectively places the STM at the forefront in the field of customer relationship strategy
210 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 211
To achieve this ambitious goal required a revolutionary new loyalty program. STM of local events, as well as over 125 local This is more achievable thanks to STM’s Clearly, STM is well progressed in developing wanted to avoid being ‘just retailers, ranging from coffee houses to c-level decision to harness mobile to take strategy that will not only generate additional another loyalty card that specialty shops. In the backend STM’s its loyalty programs to the next level. ridership; it will also generate a significant ability to segment geo-localized promotions As Michel Labrecque, STM chairman, amount of revenue from business partners collected points’. ensures that notifications are a match put it in a company press release. and retailers eager to connect with the with the commuters demographics and transport authority’s captured audience personal preferences, information they have “We’ve grown from an era where 1.2 of commuters. volunteered in return for relevant offers. million customers travelled anonymously in public transit to a world where we can Whether they are waiting at a bus stop, or The objective of the program is to under- communicate directly with every person. just enjoying the ride to downtown attractions, stand customer preferences and then The launch of this program responds to a these customers benefit from relevant answer these requirements using a CRM need expressed by a portion of customers. offers — as well as a reward scheme — that solution that delivers promotions that they They’ve told us that they want access to respects their privacy and personal tastes. can genuinely appreciate because they are solutions in mobile technology that will The program, which connects directly with personal and relevant. improve the customer experience. They also commuters on the move has the potential appreciate being rewarded for their loyalty.” in all verticals, not just transport, to seek new ways to use mobile to reward individual Transformational model Against this backdrop, the mobile app consumers for their loyalty. approach effectively places the STM at Precision Marketing is a retention program the forefront in the field of customer Pierre Bourbonnière has served as Director for STM’s most valued customers, and relationship strategy. Having deep insights of Marketing at STM for the past five years. as a way of encouraging the occasional into the habits, behaviors, preferences and Prior to this Bourbonnière held a variety commuter to move up to a monthly needs of its commuters allows STM, and its of marketing positions at Air Canada or annual pass. In addition, Precision ecosystem of partners, to deliver offers and Aeroplan, where he was in charge of Marketing can also help smooth out and notifications that are suitable to the premium services such as Concierge, Maple peak travel by advising customers of real-time situation and personalized to Leaf Lounges, Express check-in kiosks, and better options, and then reward them the individual customer. “It’s our way of Aeroplan benefit packages. for choosing an alternative route or time, thanking and attracting new customers rather than adding to the problem. to public transit,” Labrecque concluded.
212 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 213 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS
Utilities Customer Engagement By Haridas Nair, Vice President, mCommerce Products and Solutions, SAP Typical engagement model
Hurricane Sandy, what is hailed for the impending disaster. Mobile operators advised their customers to text, "don’t call” as the biggest storm to hit the Welcome and validation once the storm hits. Meanwhile, some enter- North Eastern seaboard in history, prising people prepared for the imminent saw those affected turn to their rise in mobile use by setting up services smartphones to get information where consumers could create a Twitter from utilities companies about account, allowing them to send and receive tweets via SMS. In fact, Twitter reported when electricity would be restored. more than 20 million tweets about the storm While during times of crisis and between October 27 and November 1, and power outages, people use mobile we can be sure a significant number originated Confirm restoration Action your desire from people using a mobile device. of service • Request services info devices to gain information to • Start/stop service determine and plan the impact of • View bills For utilities companies, maintaining a • Make payments the disaster, this shouldn’t be the customer link during such disasters has • Update account only interaction between utilities become a challenge. Storms like Hurricane • Analyze consumption companies and their customers. Sandy show that call centers and Websites aren’t effective when it comes to informing Companies should also harness customers. During an emergency, mobile mobile to deliver information provides a perfect channel, allowing utilities and assistance easily and quickly companies to reach out to customers and View outage Report service issue information thus maintain a customer link. • Capture a photo to their customers. Improving • Select an address self-service is key to increasing • Enter information But mobile is not just a robust and critical • Receive confirmation customer satisfaction and channel in the wake of natural disasters. encouraging lasting loyalty. Even during normal days mobile has its Service issue status advantages as a channel that allows these Mobile usage showed a peak in New York companies to extend the reach of their City on October 29, 2012, when Hurricane services to their customers. Indeed, mobile Figure 1: Based on data from the author Sandy whipped across the Eastern sea- offers tremendous value as it reduces the board. Across the area companies prepared burden and cost on call centers and enables
214 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 215
self-service. More importantly, mobile allows An application that can support these capa- transactions across multiple backend provides the robustness required for utilities companies to begin and maintain bilities is more than just another mobile app. systems, and even handle payments. a consumer mobile service. a two-way dialog with the customer. It is a full-fledged mobile consumer service. Utilities companies planning and designing So, what could such an application look like? such a customer-focused mobile service, Key capabilities What functionality would it need to support? Encouraging engagement one that has to handle peak loads, should Unlike a mobile banking app, where perhaps consider the following four requirements: Clearly, the best solution is one that the most used function is checking your Mobile is an ideal channel for interaction and provides richness of functionality required balance, closely followed by bill pay – utilities engagement. What would a customer expect Scope of channels. The service must offer for engaging with customers on the companies must be much more focused on and what should a utilities company need to support for mobile phones, smartphones mobile, backed by a platform that taking customer self-service to a new level. deliver? Figure 1 shows a typical engagement and mobile Web, as well as messaging and model, detailing the relationship between online channels. what customers would want to accomplish SAP utilities and how mobile can support this. Scale of service. The service should be able to scale to tens of thousands even to The functionality that customers expect on millions of users. their mobile or tablet device include services around bill payment, consumption analysis, Support applications. The service needs and the ability to report service issues, as to support Web or mobile Web apps that well as access updates and view outage enable customers to register, update information. In fact an outage provides the their data and change service. Keep in perfect opportunity for a utilities company mind that certain actions that require the to respond using mobile to deliver a push customer to type in data are best handled notification or text message. This represents via the Web channel. an ideal way to initiate a two-way interactive communication, one that also allows the Span of platform. The platform that will utilities company to receive immediate support such a service needs to be a robust customer feedback on restoration. It’s an transaction platform, one which can handle exchange that ensures crews can fix lingering business logic, integrate and orchestrate problems before they leave the area.
Figure 2: Based on data from the author
216 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 217 In fact an outage provides the perfect opportunity for a utilities company to respond using mobile to deliver a push notification or text message.
With this goal in mind, key capabilities be pushed to the app or requested from Once consumers become comfortable Haridas Nair is responsible for driving the necessary for such an application would inside the application. This paves the way consuming information about utilities use strategy and solutions for Multi-Channel need to include: for utilities companies to deliver new offers on their mobile, they will also welcome other Banking and Mobile Commerce spanning and services that are personalized right services that put them in control, allowing Mobile Banking, Mobile Payments, Mobile • View and pay current or past bills into the application — precisely when them to regulate the settings for heat and Money across Banking and Telco industries, • Update Account Information customers are using it air conditioning remotely anytime anywhere and the extension of Mobile Commerce to • View service details and report using their mobile phone. In the background new industries like Utilities and Retail at service problems thermostats connected to the network can SAP. Prior, he was responsible for driving • Display outage information or report Management and engagement work in conjunction with smart meters to the strategy and evaluating emerging a new outage provide customers proactive advice on technologies for the three to five year • Receive important alerts from the Another benefit of moving to a mobile- managing their energy consumption and horizon within Information Technology utility company enabled engagement channel is the provide optimum setting recommendations. Solutions Group at Sybase. data and insights it delivers both The benefits of moving to a mobile-enabled utilities companies and their customers. The future of Utilities Customer engagement channel are many. Customers Understanding usage is the first step to Engagement on mobile is just dawning. can pay at their convenience, be notified managing consumption. By delivering And a bright future it is! The possibilities when payment is due, and manage their analysis of usage customers can better are endless and customers will benefit billing and payment history on the go. manage their consumption. Interactive tremendously from being able to use tools can also be provided in the application mobile to manage their consumption, They are also empowered to use self- to understand the consumption patterns access timely information, and control service and accomplish what they set out of individual rooms and devices. energy use remotely. Utilities companies to do on their own terms. They can even will not only benefit from delivering a report services issues using the in-built As utilities companies deploy such solutions convenient and cost-effective service to camera on their mobile device. Additionally, to customers they will also learn more their customers; they will also reap rich customers have access to their account about usage and interaction. This, in turn, rewards as customers move to self-service anywhere, anytime — convenience they will trigger a move to smart meters as channels to solve issues, report outages or are sure to appreciate. consumers demand more information about simply check their bill. Enabling customers their services delivered to their mobile. to perform a simple task on their mobile The mobile channel also enables delivery goes a long way toward encouraging of important service notices that can either customer engagement and cementing long-lasting loyalty.
218 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 219 PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL
PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL
Innovation around mobile payments has been driven by the desire of ecosystem players — banks, mobile operators and third party providers —to enable person-to-person payments and develop mobile wallet strategies to secure competitive advantage. Fast forward, and mobile commerce has arrived, sparking new excitement around mobile payments opportunities, and creating some confusion around the many different categories and subcategories of mobile payments. In this section, we explore the strategies of leading players and retailers (PayPal Germany, Starbucks) and evaluate the many mobile payments technologies (QR codes, NFC, cloud-based wallets) that organizations are using to enable commerce, involve merchants and empower consumers to pay the way(s) they want.
220 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 221 PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL
Starbucks: A Mobile Payments Case Study By Sam Gellar, Analyst, Portio Research
Starbucks mobile payment solution Starbucks launched its mobile Promoting the channel based payment system, called Starbucks has run a number of campaigns, ‘mobile pay’, as a feature of its iOS One-time setup activity In-store activity and initiated reward schemes to encourage and Android app in January 2011. its customers to switch to using the Customers can associate their new mobile payment channel, and it has Customer Customer She places Handset downloads her order and generates a increased transaction volumes successfully. downloads prepaid ‘My Starbucks Rewards’ Starbucks Or Square Wallet plays using the barcode which is Though the ‘My Starbucks Rewards’ loyalty App on her mobile app on scanned at the cards with this application that on her mobile program already boasted more than mobile phone phone her handset coffee shop then enables them to use it for 10 million members, the majority of whom their day to day purchases at voluntarily receive communications from Starbucks’ outlets. Consumers Starbucks, the enhanced loyalty program offers fully digital rewards, and also makes can also use the application to Customer Customer Customer gets it easier for customers to earn them. Customer enters associates associates her reward points top-up their My Starbucks Or a Starbucks her Starbucks credit/debit in her account outlet with her Rewards card balance, and the Between August 27 and September 9, 2012, card with the card with the which can be download app Square Wallet mobile handset app even helps give directions Starbucks ran a mobile campaign called redeemed later 12 Star Dash to encourage customers to to the nearest stores, explore the use the Starbucks mobile app to pay for nutritional value of food, beverages 12 drinks in order to receive a US$5 eGift. Figure 1: Based on data from Portio Research Ltd and coffees and learn about new In October 2012, Starbucks ran a mobile Note: as of January 2013 rewards program is not associated with Square Wallet offers. In Q4 2012 Starbucks also advertising campaign through its mobile payment channel to increase store traffic, struck a partnership deal with and revenue for its new Verismo System Key Performance Indicators – As shown in figure 2 below, at the end of the Square and launched its mobile home products. Starbucks U. S. first full year of being in service, we estimate wallet service across its stores. that Starbucks customers had carried out Since its launch in January 2011, Starbucks 26 million mobile payment transactions, customer transactions through the mobile with the holiday quarter witnessing a near This is a substantial flow of cash, and payment channel are estimated to have 2-fold increase quarter-on-quarter. Starbucks is leading the way globally in risen more than 20-fold in the last 7 quarters. terms of demonstrating a successful implementation of a mobile payment solution.
222 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 223
Starbucks U.S. mobile payment transactions per quarter Starbucks U.S. mobile payment transactions per month (In million, Q1 2011E-Q4 2012E) (In million, January 2011E-December 2012E)
45 18 40 42 16 14 35 12
30 10 31 8 25 27 6
20 4
2
15 0 16 Mobile payment transactions per month (in millions) per month (in millions) transactions Mobile payment M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12
Mobile payment transactions per quarter (in million) per quarter transactions Mobile payment 10 13
5 7 2011E 2012E E = estimated 4 Figure 3: Based on data from Portio Research Ltd 0 2 Q1 2011E Q2 2011E Q3 2011E Q4 2011E Q1 2012E Q2 2012E Q3 2012E Q4 2012E Thereafter, the number of mobile payment quarter, realizing a more than 300 percent
E = estimated transactions is estimated to have risen year-on-year growth rate. exponentially, crossing the 26 million transactions per quarter mark by the As figure 3 depicts, monthly mobile Figure 2: Based on data from Portio Research Ltd quarter ending June 2012. We estimate payment transactions crossed the that Starbucks ended the last quarter of 1 million mark in March 2011 for the first calendar year 2012 with 42 million mobile time, and quickly reached the 3 million payment transactions during the holiday mark by October 2011 in a short span of only 9 months since launch. Over the next
224 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 225
Starbucks U.S. cumulative mobile payment transactions Starbucks U.S. mobile payments revenue per quarter (In million, January 2011E - December 2012E) (In US$ million, Q1 2011E-Q4 2012E)
September 2012: 160 crossed 100 million 200 140 180 189 120 April 2012: 140 crossed 50 million 120 100 137 December 2011: 100 80 crossed 25 million 80 118 40 60 August 2011: 60 69 crossed 10 million 40 40 53 17 20 8 30 20 0
0 million) (in US$ per quarter revenue Mobile payments Q1 2011E Q2 2011E Q3 2011E Q4 2011E Q1 2012E Q2 2012E Q3 2012E Q4 2012E Cumulative mobile payment transactions (in million) transactions mobile payment Cumulative M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 E = estimated
2011E 2012E Figure 5: Based on data from Portio Research Ltd
E = estimated Figure 4: Based on data from Portio Research Ltd
9 months, this figure is estimated to have transactions took 16 months, and the next quarterly by Starbucks U.S. through mobile in 4Q2012. In line with the number of crossed the 10 million monthly transactions 50 million a mere 5 months. We forecast payments received. transactions, the revenue from mobile mark, implying a weekly rate of more than that the next 150 million transactions payment transactions has also increase 2 million mobile payments transactions thereafter will be completed in less than Revenues are estimated to have first more than 20-fold over a period of 2 years. for Starbucks U.S. 4 months total. crossed the US$ 50 million mark in the 4th quarter of 2011, a year after launch, In total, from the date of service launch Figure 4 shows the various mobile payment As far as revenues driven through the thereafter marching on to cross the and up to the end of December 2012, transaction milestones achieved by Starbucks mobile payment channel are concerned, US$100 million mark in 2Q 2012, and Starbucks U.S. is estimated to have carried U.S. cumulatively. The first 50 million figure 5 charts the revenues achieved inching close to the US$200 million mark more than US$600 million in revenues from
226 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 227
Starbucks U.S. cumulative mobile payments revenue Starbucks U.S. revenue break-out (in percent, 2011E and 2012E) (In US$ million, January 2011E-December 2012E)
2011E Mobile payments revenue Crossed US$ 400 1.3% 700 million in revenue
600
500
Crossed US$ 100 400 million in revenue 300 Non - mobile payments revenue Crossed US$ 50 98.7% 200 million in revenue 100
0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012E Cumulative mobile payments transactions (in millions) (in millions) transactions mobile payments Cumulative 2011E 2012E Mobile payments E = estimated revenue Figure 6: Based on data from Portio Research Ltd 6.7%
transactions carried out by customers solution. The various revenue milestones using the new mobile payment channel. are captured in figure 6.
This is a substantial flow of cash, and As a percentage of Starbucks U.S. total
Starbucks is leading the way in terms revenues, mobile payments accounted Non - mobile of demonstrating a successful for just over 1 percent in its first full year payments revenue implementation of a mobile payment of service, ending December 2011. 94.3%
Figure 7: Based on data from Portio Research Ltd E = estimated
228 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 229
Starbucks mobile payments - way forward Revenues are (In US$ million, January 2011E - December 2012E) estimated to have Benefits and first crossed the success factors US$50 million mark
in 4Q 2011, a year For Starbucks after launch. •• An extremely simplified, aesthetically pleasing mobile POS terminal that facilitates frictionless Ability to pay with the This contribution, however, has grown Tipping payment acceptance customer’s name/ rapidly, and our estimates show that it is hands-free checkout already nearing 6 percent for the second •• Enhanced customer experience during check-out full year ending December 2012. This is shown in figure 7. •• Transparent, simplified, and possibly cheaper, credit card processing fees
Way forward
The Square Wallet will further enhance For customers the payment experience at Starbucks •• Hassle-free payment channel – no Making the My Starbucks Supporting the by including additional features, as more fumbling with cash or credit Starbucks Card as a rewards benefits available cards, and handling a wallet, everyone to the Square Wallet depicted in Figure 8. payment source always has their phone to hand while paying Sam Gellar has more than six years of •• Requires no signature experience in the telecoms space, covering •• Receipts are digitally delivered both the fixed-line and wireless sectors. into the Square app installed Geller specializes in VAS related product on the phone management, revenue planning and industry research and data analytics. •• Enhanced overall customer Figure 8: Based on data from Portio Research Ltd experience during check-out
230 231 PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL
Weighing The Alternatives To NFC By Mickey Haynes, Global Principal, Mobility Solutions for Retail, SAP
of in their wallets, thus requiring minimal In addition, many merchants and retailers Near Field Communications (NFC) the alternative mobile payment changes to the existing payment ecosystem. have their own private label credit cards is an interesting new technology technologies outlines the benefits that they want to encourage customers Unfortunately, when NFC payments were to use because they have low transaction enabling the exchange of data and drawbacks, to conclude designed, merchants and retailers were costs. NFC effectively blocks merchants between two machines. It remains that the ideal solution may be a absent from the discussion. Most retailers from getting these cards to the top of the to be seen, however, if NFC will combination of 'all of the above'. were waiting for widespread smartphone wallet, which tends to discourage rather become the standard for mobile adoption before worrying about mobile than encourage use. Merchants are also Simply put, NFC is a wireless technology payments. Others did not understand the concerned that NFC payment solution payments. Mobile payments with to exchange data between two machines sweeping changes that mobile payments providers would serve up advertisements NFC and the Secure Element was that are close to each other. NFC is much could bring. If retailers and merchants had for products from competitive retailers. designed many years ago, before easier to use and more secure than existing been part of the discussion, they would have wide adoption of smartphones, versions of Bluetooth or other wireless insisted that any payment solution should Interestingly, several industry executives technologies. NFC opens many exciting decrease the costs and risks of plastic have recently voiced these concerns. ubiquitous, unlimited 3G and scenarios for shoppers such as the ability credit and debit cards, such as transaction 4G networks, and public Wi-Fi to tap a product and see a video, interact fees, PCI compliance costs, POS costs, and • Mike Cook, VP and Assistant Treasurer networks. More importantly, NFC with a smart poster, or even pay for goods credit card dispute resolution overhead. of Wal-Mart, stated "…I don't think [NFC payments fail to accomplish the and services. These scenarios, as well as is] becoming a technology that will many others unrelated to mobile retailing, NFC is a good technology for some mobile handle payments." single greatest need of merchants, will help to drive widespread adoption of payment scenarios, especially when the • Keith Rabois, COO of Square, points out which is reducing transaction fees. NFC over time. payer and the payee are not connected to a that NFC has no value proposition for Also, there are other payment network, such as when paying for tickets at consumers and merchants and stated: methods that have evolved that Several years ago, banks, mobile operators, a subway station. However, there are many "I've never met a single merchant in the and technology companies defined the other payment scenarios that NFC cannot U.S. who says 'I want this NFC thing." are far more focused on harness- Secure Element1 to securely store private support, such as prepayment, money • David Marcus, president of PayPal, also ing the unique capabilities of data (such as credit cards) on a mobile transfer and omni-channel payments. spoke out at against NFC at the DLD mobile to enable payments and device and transmit that data using NFC. conference in Germany earlier this — ultimately — encourage The aim was to enable customers to store credit cards on their mobile phones instead engagement. This evaluation of
FOOTNOTE
1. A secure element (SE) is a tamper-resistant platform (typically a one chip secure microcontroller) capable of securely hosting applications and their confidential and cryptographic data (e.g. key management) in accordance with the rules and security requirements set forth by a set of well-identified trusted authorities
232 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 233
year1, arguing that NFC might actually statements and their applicability to • Reduce transaction fees associated with customer’s Cloud Wallet connects to the make the retail experience worse. other markets outside the U.S., it is credit and debit card transactions payment device (POS, ecommerce engine, "Retailers say NFC stands for Not For important to understand what retailers • Work with, not counter to, the retailer’s etc.) through a cloud payment service to Commerce," he told the audience. expect from a mobile payments solution. customer relationship and mobile make the transaction. marketing strategy Pros While it is beyond the scope of this From a retailer’s point of view, the ideal • Facilitate top of wallet capability for the article to examine the merits of these mobile payment solution must: retailer’s private label and gift cards A Cloud Wallet offers great potential. It has • Provide a holistic solution that supports the ability to store all payment types — different mobile and multi-channel credit, debit, gift card, stored value, bank Key aspects of an ideal mobile payment solution payment scenarios accounts, etc.— in the cloud where they can • Improve, or at least not degrade, the be accessed anywhere and by any channel, customer experience at store checkout including mobile, PC, tablet, kiosk, or POS. Pay at POS Pay at POS Aisle buying Omni-channel Pay ahead Nearly any kind of data can be stored in the (offline) (offline) A holistic mobile payment solution must Cloud Wallet, such as coupons and offers, therefore handle the five key payment movie tickets, or any other kind of personal A mobile Customers In some cases, If either the In the payment should be able neither the customer’s Aisle Buying scenarios outlined below. Following is information. The Cloud Wallet can easily solution should to purchase customer’s mobile device scenario, the the use case for each mobile payment be connected to personal finance software be omni-channel. items from mobile device or the POS is customer self- method, outlining the benefits and to upload itemized transaction data and to Customers the store and nor the POS are connected to scans items as should be able pay for them connected to a the network it she shops. She drawbacks to each. manage budgeting and forecasting. Since to buy products in advance. network. This is considered then pays for the customer’s credit card data is never from the A customer is a common an online items form Cloud Wallet actually stored on the phone, she need retailer’s should be able scenario transaction. her phone, eCommerce to pre-order for vending This method bypassing not worry about canceling all her cards if site as well as in and pre-pay for machines, offers a wide the POS. In a Cloud Wallet, the customer stores she should ever lose her phone. If it does store products. items like coffee, train stations, variety of one or more forms of payment in a secure happen, the customer just gets another groceries, food, and other payment etc., and have self-serve options and a online account. Cloud Wallets can be used phone and accesses her data in the cloud, it ready when environments. very high level of to do transactions at the POS, to prepay where it is stored securely. The retailer also she arrives, security, which for goods and services, to bypass the POS, benefits. Since credit card data is never bypassing means lower the queue. transaction to transfer money to other individuals, or transmitted to the retailer, the retailer can costs. to make purchases on devices other than reduce its dependency on expensive credit/ phones. In all of these scenarios, the debit infrastructure and business processes.
Figure 1. Based on data from the author
FOOTNOTE
1. blogs.wsj.com/tech-europe/2013/01/25/nfc-not-the-answer-for-retailers-says-paypal/
234 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 235
A customer who buys a mobile gift card Cons is much more likely to spend faster and is A private Cloud Wallet (one that is built by the retailer for that retailer’s own customers) POS modifications would be required to less likely to go to a competitor. could be very interesting, but customers accept the new tender type. Competition will not want to set up 100 different Cloud for customer mindshare could develop Wallets with 100 different retailers. since PSPs are very interested in Cons collecting data on customer spending While working out the transaction fee Today, Cloud Wallet transactions that are habits and selling advertisements that issue, the Cloud Wallet could be used to Payment as a Service funded by credit/debit cards would be could enable a third party to pop up an fund a stored value account, or gift card, charged at card-not-present rates, which advertisement at the decisive moment to reduce transaction fees. Cloud Wallets In this payment scenario a customer funds are higher than a standard swipe fee. POS in an attempt to steal the sale. could also link directly to bank accounts an account with a Payment Service Provider modifications may also be required to for ACH/EFT transfers, which would (PSP) using the payment method of their Evaluation communicate with the Cloud Wallet. The nearly eliminate transaction fees. Real- choice. If the consumer chooses credit or retailer would need to carefully monitor This solution does have the potential to time debit to checking accounts would debit as a method, the customer pays the the customer experience to ensure that reduce transaction fees. What's more, it be the ideal solution for the retailer. transaction fee. EFT or ACH transfers are it would not slow down the queue. could work with all of our key payment usually free. Once the consumer has funded scenarios. However, it might open up a The Cloud Wallet offers maximum the account, she can begin shopping at Evaluation channel to advertising that could threaten to flexibility to pay with whatever instrument any retailer who accepts the PSP. The PSP The Cloud Wallet scenario does not get between the retailer and his customer. a customer chooses, however they choose, guarantees retailers a fixed rate transaction immediately appear to reduce transaction through any channel. It supports all of the fee that is usually more expensive than This model is very attractive, but it seems fees, which is one of the primary goals four key payment scenarios that we have debit, but less expensive than credit. there is money on the table. The retailer of the retailer. However, new security outlined. To avoid the card-not-present fees, might actually be able to get better rates offered by mobile devices like multi-factor Pros a Cloud Wallet could be integrated with an than the PSP is offering by simply doing authentication and location awareness NFC wallet. This would enable NFC to be The average cost per transaction for the what the PSP is doing. The PSP can make could lead to a much more secure model used for checkout at POS and cloud to be retailer is likely cheaper than what it pays money at both ends, charging both the than mag stripe credit cards. New security used for everything else. Since complex today. This new form of tender eliminates retailer and the customer a transaction fee. features could also lower transaction fees. POS modifications would be required, the dependency on debit/credit cards If customers are willing to pay extra for debit It is widely expected that, in the near future, Cloud Wallet providers need to work with infrastructure and PCI compliance. and credit, then retailers should just build credit card providers will offer new ways POS software companies to integrate their their own Payment Provider system without of handling Cloud Wallet transactions that capabilities directly. the risks of opening the door to a third party. would be charged at card-present rates.
236 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 237 The Cloud Wallet offers maximum flexibility to pay with whatever instrument a customer chooses, however they choose, through any channel.
Mobile Gift Card stored in the cloud or on the mobile phone, payment scenarios. Overall, Mobile Gift transaction fees at card-present rates the retailer must pay a card-not-present Card payments would be much more for some mobile payment scenarios. The most successful mobile payment transaction fee which is higher than a lucrative if the top up transaction were solution so far is the mobile gift card. In the swipe fee (see Cloud Wallet section). If the cheaper (or free); if the POS hardware was To deliver the ideal mobile payment solution U.S. Starbucks, Target, and Dunkin’ Donuts card could be topped up via a direct debit not required (or was cheaper); and if it key players in the ecosystem — including have adopted this strategy. In this scenario (EFT or ACH) transaction rather than to a worked ubiquitously across many retailers. banks, mobile operators, retailers, device a customer buys a mobile gift card using debit or credit card, much of this fee would manufacturers, and others — must come a credit or debit card. The customer can be eliminated. The takeaway together, to solve challenges and maximize top up the gift card, or set parameters to benefits. This will allow them to not only auto top up. To pay, the customer simply There is a hardware investment required to In this evaluation of mobile payment satisfy their specific business needs, but it launches the mobile app and displays purchase barcode scanners that can read technologies, it's clear that there are will ultimately equip them to engage and the barcode. The POS is equipped with a the barcodes off a mobile phone. The app upsides and downsides to every mobile win over the customer. barcode scanner that reads the barcode, would be most successful at retailers with payment method. But rather than focus on which is just a gift card number, and frequent re-purchase cycles, such as grocery advantages and shortcomings of each, it's Mickey Haynes leads business development processes the transaction as it would if stores, restaurants, and gas stations. important to take a Big Picture view and globally for mobile in the Retail and the consumer had an ordinary gift card. see the massive benefits of a solution that Consumer Products industries at SAP. Pros Customers may not want to download an combines them all. In this role, he consults with key global app from every retailer with whom they Retail and CP customers to develop mobile A customer who buys a mobile gift card is want to pay with mobile. Ideally for the Indeed, the best solution would be a single strategies, architects mobile solutions much more likely to spend faster and is less customer, one app (like the Starbucks mobile app that works similarly to the with internal and partner development likely to go to a competitor. Sales velocity app) could be used to pay at many Starbucks app but would work at many teams, and evangelizes strategy within and repeat business increase. The app is different retailers. different retailers and be based on direct SAP. Previously, Haynes was the Principal also very easy to use for consumers. There debit rather than on card-not-present Mobility Architect for The Home Depot, the are no software changes required at the Evaluation transactions. This would dramatically lower fourth largest retailer in the U.S., where he POS since the barcode simply emulates a This solution does not reduce transaction transaction fees for retailers and offer a very initiated the mobile commerce program and gift card number, which the system already fees because of card-not-present convenient payment solution for customers. led the enterprise-wide mobile strategy. knows how to process. transactions. However, it could be changed Cons to use direct debit so that it actually would Meanwhile, an integrated NFC + Cloud reduce transaction fees. This solution would Wallet approach has the potential to Since the customer tops up her gift card work very well with a retailer’s customer offer the most flexibility while keeping with credit/debit card information that is strategy. It could also deliver all of the key
238 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 239 PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL
What mPOS has done is A Serious mPOSition provide a vehicle for third By Sirpa Nordlund, Executive Director of Mobile Financial Services, Mobey Forum party stakeholders, like mobile operators and be able to achieve such volumes in the time In the last eighteen months there with mobile network operator Everything required to ensure commercial sustainability, innovative start-ups, to have been more than 30 mobile Everywhere. The offer enables merchants so it will be no surprise to see many of engage merchants in to accept transactions using an iPhone, these start-ups dropping off the mPOS map point of sale (mPOS) solutions territory that has iPad or Android-based device with a neat as the market continues to take shape. launch around the world. This plug-in card reader. Hot on its heels is O2, traditionally been held article considers the implications a mobile operator that has also announced Out of all the players, the banks have been by the banks and payment of this trend for banks during the launch of a new mPOS service in notably hesitant to engage with mPOS schemes alone. partnership with Visa Europe and Global technology, and not without good reason. what is a pivotal time in the Payments. This service allows merchants to Most of the mPOS devices launched in evolution of their customer accept credit and debit card payments by Europe are chip and signature (or even relationships with merchants. connecting a chip and PIN pad accessory magstripe and signature) and are, therefore, to their existing smart phone or tablet. not EMV compliant. The lack of certified We have all heard predictions of how devices available on which a user can enter emerging mobile payments will reduce a PIN (noting that a mobile phone does not or even kill cash, but in terms of actual Nimble newcomers constitute a ‘certified device’) has been one solutions the market has remained quiet, of the main factors slowing the development with one exception: the mPOS device, which However, there are concerns about how the of this new segment, and will inevitably has begun to launch to market throughout market is developing. Most mPOS device result in an increase in fraud in the market. Europe, North America and Asia. This fast providers are start-ups. To their credit, growing cash killer has not emerged via these start-ups have been able to innovate These are important factors to bear in mind consumer handsets, but through micro in an area where there has been very little when considering a possible roll-out of a new merchants, who have until now, relied on movement for the past 30 years. Most of acceptance infrastructure. The development cash as their primary means of accepting the solutions currently available, however, of this ecosystem is a significant step for all payment. With mPOS devices growing in have been built on newly established stakeholders as the industry moves away popularity, and with merchants showing a payment networks, which may well from a traditional closed-loop environment real interest, you can tell mobile payments increase security risks for a stand-alone to open distribution, where suddenly are starting to get close to the mainstream. payment infrastructure. becoming a merchant simply requires a user to download an app onto a mobile device A variety of stakeholders are getting in on Also, in order to turn a profit for the provider, and respond to a few questions. Distribution the act. Social payments company, iZettle, mPOS devices need to process a high has gone digital. for example, recently launched in the U.K. volume of transactions. Not all providers will
240 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 241 In 2013, it is vital that banks stay close not only to their customers, but especially to merchant customers, investing time strengthening relationships as the MFS landscape evolves.
Tapping new segments Large, well known stores in the U.S., such these practices are unfamiliar to banks, In 2013, it is vital that banks stay close not as JCPenney, Nordstrom and even fast food which have historically enjoyed some of the only to their customers, but especially to New mPOS devices are initially targeting an chain McDonald’s are now using mPOS highest levels of customer loyalty across any merchant customers, investing time untapped segment: the micro merchants. devices to reduce queues and make the industry sector. strengthening relationships as the MFS This segment includes those that have not payment process as pain-free as possible. landscape evolves. Only by doing so can been able to afford an expensive EMV1 Merchants on the other hand, especially they hope to maintain a watch on who else certified point-of-sale (POS) device; mobile high street retailers, are experts. So, just at is approaching them, what they are offering, merchants who do not have continuous Reaching new heights a time when the banks would really benefit and how their customers value the increased access to electricity; and those that for a from forging closer ties with their merchant convenience and opportunities. Equally variety of other reasons have no available As this continues, some of the most customers in order to shore up their important is for banks to stay on top of the payment option aside from cash. successful providers, together with those expertise in MFS, they are gradually being technology evolution and develop and follow with the biggest investors, will climb way squeezed out of the market. a solid technology strategy within product These factors mean that this is a segment up into the clouds. The value chain, which line development. This level of intelligence is with no competition. What mPOS has started from e-receipts that enable Lower cost, convenience purchases from needed if a sound market engagement done is provide a vehicle for third party customer recognition and a direct marketing big branded merchants are also well suited strategy is to be formed, one that will defend stakeholders, like mobile operators and channel, will soon see an mPOS terminal to this model, together with the value based their traditional space and guard against innovative start-ups, to engage merchants capable of integrating a complete merchant schemes that accompany this kind of sale. them being marginalized by other players in territory that has traditionally been held database, along with supporting functionality And to ignore this market, is to ignore a much in the ecosystem. by the banks and payment schemes alone. for customer interaction, marketing, bigger picture. The customer profiling data inventory management, account generated through value added services can Sirpa Nordlund currently serves as Every bank knows that maintaining rock management and more. be hugely valuable to banks. It can enable Executive Director of Mobey Forum, and solid relationships with merchant customers them to refine, personalize and market their is responsible for the direction of Mobey is fundamental to its future prosperity. This erosion of the banks’ corner comes at range of products and services in accordance Forum initiatives and for overseeing the Even though the current market entry point a difficult time. Mobile Financial Services with individual customer preferences. operational management of the group. for mPOS is via micro merchants, we are (MFS) stakeholders widely acknowledge Prior, Nordlund served ten years at Nokia, already beginning to see mPOS solutions that value added services, such as As the hardware continues to develop, where she held several management climbing up the value chain to the bigger e-voucher promotions, mobile couponing mPOS solutions will play a key role in positions and was also involved with and more lucrative high street stores. and loyalty rewards will play a vital role in collecting and channeling this data, so if the business development of NFC. driving widespread consumer adoption of the banks don’t establish a presence here, mobile payments. Unfortunately, many of it is hard to see how they will be able to lay claim to any of the resultant streams of data.
FOOTNOTE
1. Euro-pay, MasterCard and Visa
242 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 243 PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL
PayPal: Enabling Payments Anytime, Anywhere And Via Any Screen By Tobias Zadow, Business Line Manager Mobile DE, PayPal
payment volume. Moving forward it is clear companies jockeying for position. And, PayPal is perhaps best known While PayPal is thought to have its roots that global commerce leaders will be the PayPal is clearly on a path that will also as one of the leading electronic firmly in online commerce, the company was players that build the capabilities to enable see it integrated as a payment method actually founded to transfer money between commerce across all screens, starting with at the point-of-sale. payment providers in the online Palm Pilot PDA mobile devices back in 1998. mobile, of course. e-commerce world. But PayPal The idea was a bit ahead of its time and so To fully appreciate PayPal strategy in this area is also fast becoming a giant in the founders decided to focus energies on it is important to understand how we view the mobile commerce, releasing a e-commerce until mobile finally crossed the Lines blur value chain. It’s really quite simple: there is the chasm. Of course, this milestone has been merchant and there is PayPal. And, depending mobile app available across reached, prompting PayPal to tap back into The lines between e-commerce, mobile on whether the customer uses plastic cards multiple platforms that processed its corporate DNA to power payments using commerce and commerce are blurring. or accounts, there is the bank or the credit US$14 billion in mobile payments the mobile channel. At the end of the day it all becomes card company. Neither mobile operators, volume in 2012, more than 3x the commerce, and the channel through which nor the disruptive players such as Google The first step was the release of PayPal the purchase is made becomes less and and Apple have a role in our value chain. volume it processed the previous Mobile, a mobile app for all smartphone less a distinguishing factor. year. Next on the company agenda platforms that allows users to pay for Clearly, payments — and this value chain is multi-channel commerce, goods and services, send money and In the interim it’s critical to enable — will evolve to bridge commerce in the consumer behavior the company request money immediately through their commerce using the channels consumers digital and physical worlds. In recognition mobile phone. In practice customers currently have at their disposal. To this of this shift PayPal is working today to hopes to inspire — and influence send money without sharing financial end PayPal enables payments through secure its competitive advantage as a first- — by leveraging existing information, with the flexibility to pay using mobile Web or mobile apps. Another area of mover in cross-channel commerce, an technologies such as QR codes their account balances, bank accounts, interest for PayPal is payment at the point- area we feel will be key to differentiation to bridge the physical and digital credit cards or promotional financing. of-sale, where proximity technology plays moving forward. Success is all about a central role. making the right technology choices to worlds. In Germany PayPal has Enabling mobile payments and commerce have huge impact on global commerce completed a successful trial of is paying dividends for PayPal. In 2012 There are no clear winners or losers among and the consumer experience. its PayPal QRShopping solution the company processed US$14 billion in the enabling technologies, but that hasn’t and shares its strategy to change mobile payment volume – more than 3 stopped companies from competing for times the mobile payment volume of US$4 advantage. The space is crowding fast, with the entire end-to-end shopping billion it processed in 2011. In 2013 PayPal banks, mobile operators and credit card experience across all screens. expects to process US$20 billion in mobile
244 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 245 In recognition of this shift PayPal is working today to secure its competitive advantage as a first-mover in cross-channel commerce, an area we feel will be key to differentiation moving forward.
QRShopping we close the circle and create an ecosystem an advertisement in a magazine, a com- awareness increases from its current low that benefits our merchants. mercial on TV or a price tag modified to level. Specifically, the Index finds that PayPal is technology-agnostic. We embrace display a QR code. Merchants have used Germany “scores low on consumer familiarity, everything that makes sense to us as we In the back-end PayPal, through this app, all of these channels — and more — to willingness and usage of mobile payments.” work to provide customers a secure and connects directly to the retailer’s system. enable the purchase of items through the stable way to transact. We also prefer Of course, we also build some integration to shopping window offered by the app. Specifically, Germany scores less than half to deliver solutions based on already their system so that product information is the index average (nine percent versus existing technologies, which is why we synchronized, that way, if the price changes While PayPal prefers not to disclose the 20 percent) in mobile commerce familiarity. have launched a solution using QR codes. in the merchant system, it also changes in volume of payments made using the However, there is a bright spot: in actual our system. Today the item will be delivered QRShopping app, we can say results since usage Germany tracks more strongly than Sticking to our strategy of bringing out to the consumer, but in the future it will be the launch in March 2012 have exceeded its familiarity numbers would suggest, solutions based on existing technologies, also possible for the consumer to take the our expectations. Overall, consumer uptake indicating that a strong consumer awareness PayPal Germany unveiled the PayPal purchase with them, if they so choose. of mobile payments in Germany, where campaign could yield positive results. QRShopping solution in 2012. In practice we count more than 12 million users, is the mobile app allows consumers to scan encouraging. Indeed, mobile payments in For German consumers payments have to the QR code of a given item, choose a Impressive progress Germany at the end of 2012 accounted for be simple and secure. That is why PayPal special size or color and then add it to a over ten percent of total payments volume Germany has focused its efforts on virtual shopping basket within the app, The PayPal QRShopping app is available for processed by PayPal, up from around just providing a simple solution, namely a mobile where consumers can pay directly with the iOS and Android platforms, and there are four percent in the beginning the of the app that allows people to make payments PayPal. They authorize the order with a currently no plans to support other devices. year. We expect these numbers to increase without having to learn — or trust — a totally four digit PIN, one that they set up the first We count over 30,000 downloads and significantly over the next two to three years. new way of transacting. time they connect their PayPal account dozens of pilots involving local merchants, with the app. including major retailers. This growth is truly significant if we consider that Germany is hardly a market Important lessons Importantly, we use a standard QR code, Thus, the app lays the groundwork for a you would associate with high mobile one that sends people who happen to scan larger multi-channel approach that will commerce readiness or awareness of mobile Vast differences between demographics also the code with an app other than the PayPal allow our merchants to use the channels at payments. According to the MasterCard meant that merchants reported mixed results. QRShopping app — directly to a PayPal their disposal — at that place and time — to Mobile Readiness Index1, Germany has an landing page where they can read more encourage commerce. The trigger can be excellent environment for mobile payments Take flower shops. Since the trial took about the app and the solution. This way a poster at a bus stop, a flyer in a package, to grow and flourish — provided consumers place in time for the holiday season,
FOOTNOTE 1 mobilereadiness.mastercard.com/country/?de
246 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 247
Global perspective in consumer sentiment in Germany the merchants benefitted from the fact embraced the idea of scanning a special consumers had gifts and home decoration barcode to order an Apple device from a top of mind. While numbers of orders were location that wasn’t really even a store. processed, this was a clear case where the 100% mobile app was competing head-on with And this behavior also gave us at PayPal an established consumer behavior — namely, idea. While some retailers will no doubt see cash and cards — and a lack of awareness this technology as a great way to enlarge 75% about mobile payments. Interestingly, their store virtually to create more revenues the flower shops did see a jump in online per floor space, our QRShopping solution orders processed by the standard online also provides independent merchants the 50% shop, showing that advertising QR codes on flexibility to conduct commerce when and posters prompted consumers to remember where it suits the customer. In other words, 16% 11% 20% 19% 17% 21% 8% 5% 9% to make their order from the shop’s Website. commerce is not linked to a place in the 25% 3% 4% 9% 4% 9% 12% 2% 5% 6% physical or digital world; it can happen At the other end of the spectrum, consumer where the customer is. 0% electronics shops reported very positive P2P POS m-comm P2P POS m-comm P2P POS m-comm results, confirming our observation that the The next step is to test more shopping Familiar Willing Using customer demographic — tech-savvy con- contexts to identify the variables that come sumers and early adopters — and context are together to encourage commerce on the decisive in driving multi-channel commerce. move. It’s all about finding out what works, Country score Index average Leading country score and then sharing this information with our In one particularly interesting pilot, an Apple merchants. We also want to roll this solution Figure 1: Based on data from mobilereadiness.mastercard.com/germany premium reseller that traveled to trade out to a broader group of merchants and shows in a remodeled school bus to offer integration modules for several types of showcase the newest innovations in Apple shopping carts. That way, shoppers would just Multi-channel commerce But mobile is not the only screen. devices could finally close the circle, need to install a small module, which would providing consumers a chance to literally be free and cater to commerce online and off. Our vision is to enable payments anytime, In our view, mobile is both an additional buy what they saw on exhibit. Predictably, anyplace and by any means. We see mobile payment channel and a bridge that connects this demographic, one that was already payments as a catalyst for innovation. The the different worlds of commerce. Put enamored of technology immediately broad features of mobile devices allow us another way, mobile payments are a catalyst to change the way people are shopping and for all commerce: storefront, online, mobile how merchants interact with consumers. and even purchasing on the go. This is why
248 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 249 PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL
How Apple’s Passbook Ushers In The Third Mobile Marketing Wave By Joe Beninato, General Manager, Digital Wallet, Urban Airship Mobile shopping doesn’t necessarily have to take place on a mobile screen. Last year Apple officially took the smartphones to conduct business and make wraps off Passbook, a new feature daily decisions. Significantly, people also rely on their mobile phones at every stage of its iOS mobile platform that col- PayPal provides payment options that offer More screens means more opportunity, but of the consumer journey. From researching our ecosystem of merchants the flexibility is also means more transparency. The lects coupons and boarding passes products, to shopping, to sharing a product they demand to transact the way they pressure on the transaction price in retail is into an easy-to-use interface on review with their social network, people want, using the channels they choose. significant, and will even grow. That’s where Apple devices including iPhone reach for their smartphones. And it’s PayPal will come in with solutions to support getting easier and easier to engage with and iPod. The app aims to replace PayPal can offer that flexibility because our merchants and enable them, and us, to apps considering the inclusion of GPS, our own corporate DNA, being a bank and take advantage of additional revenue poten- every paper ticket or plastic gift accelerometers, cameras and more. an Internet player, allows us to see beyond tial beyond transactions in value added card consumers traditionally carry mobile to innovate the entire shopping services such as couponing, deals, rewards, in their wallets, thus ‘mobilizing’ Ironically, smartphones aren’t really process. Our focus is to change the whole and instant commerce that can take place smart unto themselves. It’s the mobile many of the loyalty programs and end-to-end shopping experience and because tight integration enables the eco- apps that have given these devices the that means picking up the customers system — PayPal, the merchant and the offers provided by airlines, retailers information and authority to play a major very early in their shopping experience customer — access to up-to-date inventory venues — and more. Apple’s Pass- role in their daily lives. Put another way, by empowering them to find product and product information. book is the new mobile marketing it’s all about communication. information or deals using their mobile imperative: learn how to leverage phones. It also means allowing them to Tobias Zadow started his career at the The consumers’ love affair with apps has choose between different payment methods commerce software provider Intershop, it to drive sales, boost loyalty, and changed the way we think about market- once they make the decision to purchase. where he worked on the mobile commerce increase customer engagement. ing. The rise of these third-party apps has product strategy. In 2011 Zadow joined created the need for a new kind of However, mobile shopping doesn’t PayPal, where he is responsible for driving Smartphones are with us in every situation conversation, one that allows companies necessarily have to take place on a mobile mobile across markets including Germany, — every day, all day. They’re the medium to connect with the people who use their screen. Merchants everywhere, including Austria and Switzerland. that’s with us wherever we go and allows us apps and communicate helpful and relevant Germany, are exploring ways to harness the to record our daily routines, stay up to date, information. Multiple studies find that the many screens their consumers are exposed manage our social and business lives, and use of mobile apps surpasses use of mobile to in a routine day — mobile, tablet, ATMs, figure out what to do next and where. As a Web browsers, and analyst research car navigations systems and smart TVs — result, people are increasingly moving away estimates that the total 45 billion app to deliver their offers and encourage loyalty. from personal computers and using their downloads forecast for this
250 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 251
Marketers can more easily close the loop between mobile acquisition and conversion, while consumers have year — double the number of downloads in messaging has been shown to double app everything they need 2011 — will be nearly seven-fold by 2016. user retention and quadruple engagement, on one device with making push notifications mobile’s primary Fortunately, there are several tools that system of engagement. In 2012, Forrester time-and location-relevant can be used to help businesses build included push notifications as part of its popups automatically mobile relationships with their consumers. messaging mandate, recognizing it as helping them maximize We’ll assume at this point that we all a must have communications channel understand SMS and its power to help alongside traditional mail, telemarketing, their value. acquire customers. email, social media and SMS.
The next step in a mobile strategy is push notifications to help drive customer Turning mobile upside down: engagement and loyalty. For a bit of clarity, Enter Passbook push notifications are messages sent from the app directly to the devices’ ho me screen Solutions like Apple Passbook lower the or to the notification center. Contrary to barriers to entry for both businesses and SMS messages, push notifications are sent consumers. Businesses can more rapidly over the data network, which means no and inexpensively have a persistent presence relationship with the carrier is required. on consumers’ devices through passes that Push messaging allows businesses to send can be dynamically updated on the fly. targeted messages that bring users back to the app to help build loyalty, increase Consumers can easily add passes to their customer engagement and most phone, received through email, SMS, Web importantly, drive sales. pages and banner ads, marrying their intent to mobile loyalty and reward programs. As more companies fine tune their push And for both businesses and consumers messaging campaigns to drive mobile the whole process is more streamlined, relationships with their customers, we integrated and convenient. Marketers can have seen remarkable results that directly more easily close the loop between mobile impact the bottom line. Effective push acquisition and conversion, while
Major League Baseball trademarks and copyrights are used with the permission of MLB Advanced Media, L.P. All rights reserved. Starbucks pass is coming soon.
252 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 253
Global mobile traffic consumers have everything they need on Mobile relationship cycles (Growing rapidly to 13% of internet traffic) one device with time- and location-relevant pop-ups automatically helping them As with any marketing solution where maximize their value. marketers have clear methods for achieving their acquisition, engagement and retention 13% in 11/12 Think of Passbook as a hybrid connection goals, the same can be said for the mobile 15% to your consumers. You extend an offer, relationship. It’s a relationship that spans sending through email, SMS, banner ads, the following phases and stages. and once the consumer downloads the pass to their phone, you now have a direct Mobile discovery. The consumer receives 10% relationship with them on their mobile device a physical promotion in the form of SMS, and you can now message them directly. email, banner ad or a pass. The consumer 4% in 12/10 does a search within the app store or a Another powerful opportunity for companies Web search. 5% is mobile payments. Many analyst reports 1% in 12/09 predict significant numbers of consumer Mobile trial. The consumer downloads the brands will integrate payment into their app or adds a pass to Passbook. branded mobile apps by 2015. We are 0% already seeing customers integrate payment Mobile engagement. The consumer 12/08 6/09 12/09 6/10 12/10 6/11 12/11 6/12 into their mobile wallets. The possibilities are receives a message from the app or endless with managing the entire customer from the pass. lifecycle within Passbook and each company Figure 1: Based on data from Urban Airship will have various uses for Passbook as all Mobile conversion. The consumer receives companies, regardless of vertical, are a message about a helpful feature from the interested in increasing brand awareness, app or redeems their pass. increasing customer engagement and Mobile loyalty. The consumer finds value Mobile lifetime value. The app stays on the driving sales. in the app and uses it regularly. This is consumer’s phone and is used regularly; a encouraged through periodic and valuable competitive lock-in. push messages and additions of passes in the form of coupons, tickets, use of loyalty So, what is your Passbook strategy? cards, mobile payments and more.
254 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 255
Global smartphone vs mobile phone users To stay focused on your core business, it’s 2012E imperative to partner with a company who gets mobile relationship management. Despite tremendous ramp so far smartphone user adoption has huge upside
6,000 You know your business better than There are no more excuses for not having 5B mobile anyone else. To stay focused on your core a mobile strategy today. And not having phone users business, it’s imperative to partner with an app is no longer an excuse for not 5000 a company who gets mobile relationship establishing a relationship with your management. You need to speak to your customers on their personal devices. customers today and you don’t have time to 4,000 wait for engineers to build passes and send As the General Manager, Digital Wallet, messages for you. It’s time to take matters Joe Beninato is responsible for the strategy 3,000 into your own hands. Marketers can now and execution of Urban Airship’s passbook Global users (MM) users Global build passes in a matter of minutes to reach initiatives. Since graduating from MIT with your most profitable and loyal customers. a degree in aerospace engineering, he has 2,000 worked with more than fifteen startups, You’ve segmented your customers by serving as founder, employee, investor 1B smartphone users gender, interests, purchasing habits, or advisor. Actively involved in the Silicon 1,000 location, location history and so much more. Valley startup community, Beninato has Make that information work for you in the served on the board of directors for 0 most lucrative and growing space today - Presto, When.com, eDaycare (acquired Smartphone Mobile phone mobile. In a matter of minutes you can build by Arrowsight), and the non-profit a pass to be delivered right to someone’s Churchill Club. Figure 2: Based on data from Morgan Stanely research estimates. KPCB Kleiner Perkins smartphone or tablet with an offer that will Note: one user may have multiple devices. Therefore the number of actual smartphone and mobile phones devices in use stay with them until they use it. You can see is likely higher than the user data shown here. if that person has downloaded the pass, deleted it an hour later or made a purchase. This is all very powerful information coming directly from the device which is ALWAYS with your consumer.
256 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 257 PART 8: CLOSING THOUGHTS: THE ROAD AHEAD
PART 8: CLOSING THOUGHTS: THE ROAD AHEAD
The growth of mobile over the past two decades has been unprecedented. Device penetration, and how we have integrated mobile phones into our daily routine, has reshaped entire industries, transformed commerce and impacted our society at all levels. What’s next? With the rise of digitization, enterprises in industries ranging from telecoms and media, to healthcare and financial services have amassed terabytes of information about their legions of customers. This digital treasure trove, already highly valued as a way to help meet the evolving needs of customers and spot important market trends, can help companies across all verticals create new products and services, and even spawn entirely new businesses. There are significant— and competitive — advantages to leveraging Big Data. In this section, we explore this future and the emergence of new business models that will be based on little bits of information collected over vast networks to delight customers and increase operational efficiencies will rule the day.
258 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 259 PART 8: CLOSING THOUGHTS: THE ROAD AHEAD
Big(ger) Data Pushes The Boundaries By Mickey McManus, President and CEO, Maya
important developments, largely inevitable, pleasurable end in itself, should be charged The growth of mobile over the over the current landscape. And the terrain? that will impact every single one of us. with writing the codebase of humanity’s past two decades has been The uncharted territory at the intersection future. Programmers may be the gods of the of pervasive computing and people. For a start, the world of Trillions will microworlds they create, but alone they are unprecedented. Device encompass much more than the Internet not suited to lead the next phase of the penetration, and how we have It’s a fantastic and unprecedented journey of Things, the vast network that will take Information Revolution. integrated mobile phones into our that lies ahead, taking us from a state where shape when embedded sensors gain the daily routine, has reshaped entire information was contained in PCs and ability to communicate, or the vision of Moreover, preparing to unleash and exploit devices to a space where, thanks in part machine-to-machine (M2M) communications trillions of opportunities will require us to industries, transformed commerce to the advance of mobile, information isn’t that companies have worked towards for build an entirely new information architecture, and impacted our society at all ‘in’ anything. Instead, we will live in the more than a decade. one very different from the Internet we know levels. What’s next? MAYA Design, information, in a new collective default state today. It must be designed from the bottom a leading pervasive computing of ‘connectedness.’ In a trillion-node-network computing is up to liberate information, allowing it to flow turned inside out. Systems morph into eco- and flourish. And we must work to ensure design firm, and the inspiration The number of computing devices now systems where simplicity is supreme and that control over much of the data isn’t once behind the new book Trillions: surpasses the number of humans on interoperability becomes a sacrament. again concentrated in the hands of a few Thriving In The Emerging the planet — and the momentum shows More importantly, our connectedness can powerful companies. Information, guides us through no signs of stopping as companies build breed catastrophe if we fail to be disciplined microprocessors into everything from cars (yet adventurous), rigorous (yet fluid) and the wonders and challenges of and clothes, to pills and packaging. Already open (yet controlled). Context adds value “the next information revolution.” industry manufactures more transistors than grains of rice and, in a few more We will also have to abandon the idea that Today, we are arguably on the cusp of a Since the rise of mass-market computing— years, the number of microprocessors will people should become computer literate. fourth revolution: the Age of Trillions. No one some 25 years ago—we have been climbing climb into the trillions, creating a world That’s precisely backward. The hard truth is disputes the evolving phenomenon itself, a mountain of technological change. Let’s literally permeated with computation. that computing should (and must!) become though some argue that it is merely a call it PC Peak. As we approach the timber- human literate. This means saying good-bye continuation of the PC revolution. We think line, just when we think the summit can’t To discuss the outcome — in all its majesty to the notion that geek culture, which thrives that pervasive computing represents a be too much farther ahead, a much bigger and complexity — is beyond the scope on obscurity and sees technology as a profoundly different relationship of people mountain comes into view. Let’s call that of this article. But there are some hugely one Trillions Mountain. It’s steeper, towering
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The explosion of sensors points the way to a hyper-relevant future where companies can tap into Big Data product to make the meal complete. In this after he didn’t pay his suppliers or staff. to information, and that eventually it will be scenario tortilla chips could suggest a spicy Over time, and as the credit rating fell, to understand the understood as a distinct epoch of human dip as an accompaniment, and the social he simply closed down the business, in-the-moment context history. As an intrinsically networked network of products, enabled by sensors fired all the employees and disappeared. of the consumer to phenomenon, it will also continue the everywhere that infer what we want and In reality he changed his address to the historical trend of acceleration. A decade need, could ‘manage’ that purchase process address next door, hired everyone back deliver real-time, in the era of pervasive computing all the way down to the real-time delivery of a and got back to business-as-usual. context-aware offers. will bring unimaginable changes. relevant discount coupon to the customer’s mobile device and chalking up new loyalty Framing the information in a Trillions The impact on all industries will be points to the supermarket club card. mindset, introduces new and radical profound. But the real excitement starts transparency. Banks, businesses, even when these microprocessors join the brands, are naked when seen through the conversation, communicating with Transparency and transformation Trillions lens, an outcome that has the themselves and with us. potential to change the rules — dramatically. Banking and finance will also be In the case of retail, for example, the transformed by pervasive computing. For example, in the heyday of advertising explosion of sensors points the way to a We have worked with a commercial credit big business was made by convincing hyper-relevant future where companies ratings agency to enrich its stockpile of consumers that a story about a particular can tap into Big Data to understand the business and credit data with unique brand was true. After all, the company in-the-moment context of the consumer identifiers for the companies, executives behind the brand (and its activities) was to deliver real-time, context-aware offers. and even locations associated with essentially hidden within a black box. While each organization. This has allowed us storytelling will continue to be a powerful In fact, at MAYA we are working on this to piece together formerly unrelated means of inspiring and setting the context right now, developing prototype packaging records about businesses that uncover for a brand, false or misleading storytelling that can ‘sense’ when consumers — people indicators of fraud and deceit that would will be the emperor who has no clothes. who likely appreciate the product or intend have otherwise been completely hidden. The accelerated feedback loop and radical to purchase the product — are nearby. transparency of Trillions will drive a blending One example that stands out is a of marketing and product development so Triggered by the person’s presence the businessman who made a habit out of that customers’ true stories and passions package could light up to get their attention opening companies that started with a about a brand will take center stage. or even suggest the consumer buy another good credit rating and then plummeted
262 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 263 New revenue streams in the form of high-volume micro-transactions will become viable. New business models based on little bits of information collected over vast networks will rule the day.
Big Data, Big Deal Add trillions of sensors to the mix and Data exhaust The value of the information you collect, Big Data gets even bigger, allowing a new the needs you discover, the patterns that On the face of it, you could argue that breed of companies to get in on the action. Today, there is a lot of what I like to call emerge, and the behaviors that you can embedding trillions of sensors into devices Trillions is a very, very big number. ‘exhaust data’ that companies do not yet foster is inestimable. After all, anything (from watches to washing machines) and New revenue streams in the form of high- capture or monetize, virtually throwing it multiplied by a trillion is an interesting consumer touch points (from in-store volume micro-transactions will become away. In the Trillions world there will be no number. But the biggest benefit may be displays to outdoor signage) lays the viable. New business models based waste. Instead, we’ll have a kind of informa- to your customers, people that will have groundwork for Big Data and even bigger on little bits of information collected tion carbon cycle that will close the loop on come to expect, even demand, relevance opportunities for companies that collect, over vast networks will rule the day. data the way that the carbon cycle in nature in marketing, communications, applications, collate, distribute and monetize what recycles the building blocks of life. Nothing services — everything — because technology futurist, author and consultant Alan Moore Consider what could happen if you goes to waste, and if you don’t move fast and data have come together to make it calls the “black gold of the 21st century.” harvested and shared all the information enough you become food for something else. all possible. your current products could capture or Little wonder that Fortune magazine ‘know’ about their surroundings and use It’s all about understanding the value of your Mickey McManus is president, CEO, has dubbed Big Data ‘the next big thing’. over time. For example, the vibration information and planning for an economy and principal of MAYA Design, a leading With the rise of digitization, enterprises sensor in my garage door opener can share built on t-commerce (trillions commerce). technology design and innovation lab. In in industries ranging from telecoms and what it learns in real-time with the tens This approach to Big Data can fuel big(ger) 2005, McManus spearheaded the launch media, to healthcare and financial services of millions of other door openers across growth for your business. The importance of MAYA’s Pervasive Computing practice to have amassed terabytes of information the country to detect earthquakes (not of this change cannot be overstated, which help companies kick-start innovation around about their legions of customers. This just moving garage doors). Additionally, is why we strongly advise companies to business challenges in a vastly connected digital treasure trove, already highly optical sensors on those same garage door explore ways to foster relationships (even world. To explore the emerging value at valued as a way to help meet the evolving openers can capture information about the with strange bedfellows) and make sure that the intersection of design, technology, and needs of customers and spot important degradation of paint on car surfaces that their products are part of the information business, McManus co-authored Trillions: market trends, can help companies create may be invaluable to paint manufacturers. flow. In the Age of Trillions every product Thriving in the Emerging Information new products and services, and even becomes an accessory to every other Ecology (Wiley 2012). His work has been spawn entirely new businesses. There product or service. published in Bloomberg Businessweek, are already significant— and competitive Fortune, Fast Company, the Wall Street — advantages to leveraging Big Data. Journal, and Harvard Business Review.
264 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 265 APPENDIX
Company Descriptions
AbacusConsulting on serving the mass market segment, 97.9 percent stake in CIMB Niaga. Tennessee and 19 FTN Financial Group Through a combination of latest business which consists of pensioners, micro/small www.cimbniaga.com offices in the U.S. and abroad. First methodologies, state of the art tech- business owners and productive poor Tennessee has the leading combined market Cisco nological tools, and world class services through more than 1,800 outlets across deposit share in the counties where it does AbacusConsulting promises a deep scale, Indonesia. www.btpn.com Cisco (NASDAQ: CSCO) is the worldwide business and one of the highest customer industry focused, and technology driven leader in IT that helps companies seize retention rates of any bank in the country. Celcom Axiata intent. The target is to help the clients the opportunities of tomorrow by proving www.fhnc.com realize their dream of being the market Celcom is Malaysia’s first and foremost that amazing things can happen when you GSMA LATAM leader. AbacusConsulting also has a mobile telecommunications provider with connect the previously unconnected. strategic focus on developing and over 12.7 million customers. Currently the www.cisco.com/go/cmx The GSMA represents the interests of delivering mobile commerce solutions largest mobile broadband and corporate mobile operators worldwide. Spanning more DBBL to financial institutions and telecom services provider, Celcom is now mov- than 220 countries, the GSMA unites nearly sectors. www.abacus-global.com ing towards integrated multi-access and Dutch-Bangla Bank Limited (DBBL) started 800 of the world’s mobile operators with multimedia services, in line with evolving operation is Bangladesh's first joint venture more than 230 companies in the broader Accenture technologies and consumer behavior in bank. From the onset, the focus of the bank mobile ecosystem, including handset Accenture is a global management Malaysia. Celcom is part of the Axiata has been financing high-growth manufactur- makers, software companies, equipment consulting, technology services and Group of Companies, one of the world’s ing industries in Bangladesh. DBBL's other providers and Internet companies, as well outsourcing company, with approximately largest telecommunications companies, focus is Corporate Social Responsibility as organizations in industry sectors such 259,000 people serving clients in more than with more than 180 million customers across (CSR). Due to its investment in this sector, as financial services, healthcare, media, 120 countries. Accenture Mobility helps 10 Asian markets. www.celcom.com.my DBBL has become one of the largest donors transport and utilities. The GSMA also organizations embrace business to and the largest bank donor in Bangladesh. produces industry-leading events such CIMB employee (B2E), business to consumer The bank has won numerous international as the Mobile World Congress and Mobile (B2C), business to business (B2B) and CIMB Niaga was established as Bank Niaga awards because of its unique approach as Asia Expo. www.gsma.com machine to machine (M2M) business in 1955. It offers a comprehensive suite of a socially conscious bank. HBL opportunities. www.accenture.com banking products and services, through www.dutchbanglabank.com an expanding delivery channel network of HBL was the first commercial bank to be BTPN First Tennessee Bank 974 offices across Indonesia that includes established in Pakistan in 1947. Over the Founded in 1958, PT Bank Tabungan 590 branches, 330 Mikro Laju units, and The 4,500 employees of First Horizon years, HBL has grown its branch network Pensiunan Nasional Tbk. (‘BTPN’) is 54 cash/payment points. CIMB Group, National Corp. (NYSE:FHN) provide financial and become the largest private sector bank a leading mid-size and publicly listed Malaysia’s second largest financial services through more than 170 First with over 1,500 branches and 830 ATMs commercial Bank in Indonesia focusing services provider and one of ASEAN’s Tennessee Bank locations in and around leading universal banking groups, holds a
266 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets 267
across the country and a customer base trends such as social, cloud and big data computing practice to help companies design MyClear exceeding five million relationships. With technologies. Lopez Research combines smart connected products, environments, a presence in 25 countries, subsidiaries survey-based research and predictive and services. The name is based on an Malaysian Electronic Clearing Corporation in Hong Kong and the U.K., affiliates in analysis to gain insight into coming trends. acronym coined by the industrial designer Sdn. Bhd. (MyClear) is a wholly-owned Nepal, Nigeria, Kenya and Kyrgyztan and Its clients include start-ups, software Raymond Loewy, and stands for Most subsidiary of Bank Negara Malaysia. representative offices in Iran and China, vendors, networking vendors, enterprise Advanced Yet Acceptable. The company's tag Incorporated in October 2008, its main HBL is also the largest domestic IT leaders as well as telecom providers. line is "taming complexity." www.maya.com objective is to provide an efficient and multinational. www.habibbank.com www.lopezresearch.com reliable infrastructure for e-payments, MMA interbank funds transfer, settlement and IDC Financial Insights MasterCard The Mobile Marketing Association (MMA) securities depository. For payment services, IDC Financial Insights assists financial MasterCard (NYSE: MA) is a technology is the premier global non-profit trade MyClear provides real-time high value service businesses and IT leaders, as well company in the global payments industry. association established to lead the growth interbank funds transfers and operates the as the suppliers who serve them, in making It operates the world’s fastest payments of mobile marketing and its associated national check clearing system. For retail more effective technology decisions by processing network, connecting consumers, technologies. The MMA is an action oriented services, MyClear provides the e-Debit, providing accurate, timely, and insightful financial institutions, merchants, govern- organization designed to clear obstacles to Interbank GIRO, Financial Process Exchange fact-based research and consulting services. ments and businesses in more than 210 market development, establish mobile (FPX), Direct Debit and MyMobile services. Staffed by senior analysts with decades of countries and territories. MasterCard’s media guidelines and best practices for www.myclear.org.my industry experience, our global research products and solutions make everyday sustainable growth, and evangelize the use Ooredoo (formerly QTel) analyzes and advises on business and commerce activities – such as shopping, of the mobile channel. The more than 700 technology issues facing the banking, i traveling, running a business and managing member companies, representing nearly Ooredoo (Qatar Telecom) provides a full nsurance, and securities and investments finances – easier, more secure and more fifty countries around the globe, include all range of telecommunications services industries. www.idc-fi.com efficient for everyone. www.mastercard.com members of the mobile media ecosystem. in Qatar and across its presence in 17 www.mmaglobal.com countries. Ooredoo is part of the Qtel Group, Lopez Research Maya a leading international communications Mobey Forum Lopez Research LLC, founded in 2008, is MAYA Design Inc. is a technology design company, with a significant presence in a market research and strategy consulting firm and innovation lab founded in Pittsburgh, Mobey Forum is a global, bank-driven the MENA region and Southeast Asia, and firm that specializes in IT and communica- Pennsylvania, to help companies design business association working to accelerate a consolidated customer base of 83.7 million tions technologies. The company’s mission more usable and useful technology products, the evolution and adoption of MFS. as of June 2012. Its companies include is to understand how mobile transforms as well as information-rich services and It develops white papers which offer Indosat, Asiacell, Wataniya, Nawras, business by integrating with other market environments. It has established a pervasive advice and guidance to banks and other Nedjma and Tunisiana. www.ooredoo.qa stakeholders within the MFS ecosystem. www.mobeyforum.org
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PayPal Shift Thought its affiliation with RBS allows it to extend its Urban Airship With more than 123 million active accounts reach to more than 38 countries, providing Shift Thought specializes in knowledge Urban Airship enables brands to build in 190 markets and 25 currencies around local expertise and in-market operations on relating to Digital Money, monitoring relationships with their customers through the world, PayPal enables global commerce. a global basis. www.citizensbank.com market developments in this rapidly services that streamline delivering highly PayPal provides a fast, safe way to pay and growing industry across 32 key services targeted, cross-platform mobile push RSR Research get paid online, via mobile devices and in and 200+ country markets. Shift Thought messages and Apple Passbook passes. store. PayPal is an eBay (NASDAQ:EBAY) Retail Systems Research (RSR) is the has developed the Digital Money SAGE Billions of push messages and tens company headquartered in San Jose, Calif. only research company run by retailers technology to analyze and share knowledge of thousands of passes are delivered with international headquarters in Singapore. for the retail industry. RSR provides insight across multiple perspectives including monthly, sparking exceptional consumer www.paypal.com into business and technology challenges digital money market opportunities, experiences, driving app engagement and facing the retail industry ecosystem, initiatives, technologies, players and increasing customer loyalty and lifetime Portio Research and thought leadership and advice on regulatory environments. The firm value for leading brands such as CBS Portio Research Ltd is an independent navigating these challenges for specific provides regional reports, country Interactive, ESPN, Groupon, Shopkick, research company that provides high- companies and the industry at large. entry strategy and advice on business Walgreens, Warner Bros. and Waze. quality reports on the mobile and wireless www.retailsystemsresearch.com development, strategic partnerships, www.urbanairship.com industry, and offers a wide range of custom- market development and product SAP Yankee ised research services. Its studies specialize development. www.shiftthought.co.uk in the products and services connecting As market leader in enterprise application Yankee Group, a division of The 451 Group, STM mobile customers, subscribers and network software, SAP helps companies of all sizes is the preeminent research and advisory operators, giving a clear picture of the and industries run better. From back office STM is La Société de transport de firm equipping enterprises to grow revenues market, competitors and customers, to boardroom, warehouse to storefront, Montréal, offering public transit to more and profit in the mobile world. Yankee Group industry trends and futures to facilitate desktop to mobile device – SAP empowers than 1.3 million customers everyday on forecasts that the mobile revolution is a decision-making and strategy. people and organizations to work together the island of Montreal. It provides subway $3 trillion market opportunity and dramatic www.portioresearch.com more efficiently and use business insight services at 68 stations and with 228 bus changes brought on by this revolution will more effectively to stay ahead of the lines, and has won best public transit play a larger role in the lives of consumers, RBS Citizens competition. SAP applications and services company in North America in 2010. workers and enterprise decision-makers. As part of the Royal Bank of Scotland Group enable more than 197,000 customers to www.stm.info In response, Yankee has made the mobile (RBS), RBS Citizens Financial Group is one operate profitably, adapt continuously, revolution its complete focus as a research of the world's leading commercial banking and grow sustainably. www.sap.com and advisory services provider. institutions. RBS Citizens has non-branch www.yankeegroup.com offices in more than 30 states in the U.S. and
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Acknowledgements
Mobile Commerce Guide
Editorial Direction Diarmuid Mallon Carmel Coscia
Project Managers Verena Wiszinski Ashley Lorenz Shahzia Banth
Design Boing Design Paris [email protected]
Developed and produced Peggy Anne Salz, Publisher and Chief Analyst www.mobilegroove.com Amanda Roulstone Assistant to Peggy Anne Salz www.dragonvirtualassistants.co.uk
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