Monitise executives will be presenting on the topic of mobile payments at two separate conferences this week.

Richard Johnson, Monitise’s Group Strategy Director, will be co-presenting with IBM on “Riding the Mobile Payments Tsunami” at the IBM SmarterCommerce Global Summit in Nashville, Tennessee on Tuesday, May 21. During this presentation, Richard and IBM will present the trends in mobile money – the collection of mobile payments, mobile commerce and mobile banking – and discuss how these trends are changing the way payments are processed and resulting in new and evolving business models.

Additionally, Monitise’s Vice President of Operations, Mary Nelson, will be speaking at the Women in Technology International (WITI) panel discussion on “Mobile Payments and Data – What Does It Mean For You?” on Thursday, May 23 in Redwood City, California.

MobileFI readers can save $15 on registration for WITI by using Discount Code: sv523dis when registering online.

In the second of a three-part series, Alastair Lukies, CEO and founder of Monitise, was quoted in a Wall Street Journal article about winning the mWallet/mPayment war:

The future of personal commerce is literally in the palm of your hand. Already, a growing number of people use their mobile phones to deposit checks in their bank accounts, determine whether they can get a better price online for a product advertised at a bricks-and-mortar store or find a coupon on their way to the checkout counter.

As consumers seek out better ways to interact with brands and pay for goods and services, a host of companies are poised to take leadership of the $1 trillion mobile commerce market. Technology companies, credit card companies, ecommerce brands, network operators, financial institutions and individual merchants are among the players battling to capture consumer mindshare and gain control of this transformational market.

“The mobile phone has sparked the biggest technology revolution ever,” says Alastair Lukies, CEO and founder of Monitise, a global leader in mobile banking, payments and commerce. “For many people, the mobile phone is the alarm clock that wakes them up in the morning, and it is the device they interact with continuously throughout the day. It is the only device that bridges the online and offline shopping worlds. That’s why thousands of companies around the world—including some of the biggest technology companies—are investing substantial time and resources in the development of mobile money, mobile payments and mobile wallets.”

Over the next five years, U.S. consumers will adopt mobile payments at an accelerating rate, reaching $90 billion by the end of 2017, wrote Denée Carrington in the Forrester Research January 2013 report U.S. Mobile Payments Forecast, 2013 to 2017.

Globally, the prospects for mobile money are just as significant. A prime catalyst for the speed of adoption is the development of the mobile wallet, which is a digital service tied to a mobile device. It authorizes payment transactions from one or more payment sources and facilitates commerce-related features, such as coupons, loyalty rewards and product information.

“Digital wallet operators will wield newfound control and influence,” Carrington wrote in the Forrester August 2012 report, Why the Digital Wallet Wars Matter. “Wallet operators will house the inventory of cards that consumers link to their digital wallets and will provide the ability for consumers to define how those cards are used under different circumstances. Wallet operators will also control which offers, incentives and value-added services are present in the wallet.”

A Time of Innovation

Last year brought “a dizzying array” of announcements of different mobile wallet initiatives, Carrington noted in the report. Some wallet companies are using mobile contactless payment technology, which allows customers to wave their cellphone over a cash register to pay for a purchase without pulling out their wallets. Others are developing solutions that include using barcodes and cloud-based payments.

“Much of the focus is on what the consumer wants, but people forget the merchant has to accept these new technologies, too,” says Karen Webster, president of PYMNTS.com, an information service about the payments industry. “In the near term, we will see a huge number of players trying a lot of different things.”

Arkady Fridman, an analyst with the Aite Group, a research and advisory firm, says it is important that the players battling to control this market be ready for how the mobile commerce landscape could develop. “We know things will evolve, and evolve quickly, but we don’t know exactly how they will evolve,” he says. “The successful companies will learn from consumers and evolve with them by focusing on data, analytics and continuous improvement.”

He believes the transformational quality of mobile commerce will require companies to rethink many age-old operating concepts. “Today, banks and financial institutions have strict ROI guidelines—they will spend this much and get that return,” he says. “They need to rewrite the guidelines and make an ongoing investment in mobile so they can respond to consumer needs. You shouldn’t get too stuck on any particular piece of functionality or app.”

Leaders of the Pack

Many believe that financial services and payment companies are particularly well placed to take a leadership role in mobile money.

“Mobile bankers and younger consumers lead the way in mobile digital wallet adoption,” wrote Carrington in her August Forrester Research report. “Thirty percent of U.S. mobile phone owners are open to in-store mobile payments, and that number jumps to 50 percent among smartphone owners. Mobile banking is the strongest leading indicator in the early-adopter profile.”

In addition, nearly eight in 10 of the people most interested in mobile wallets are under the age of 45, and they are big users of online banking as well. “This is great news for banks planning to pursue a mobile digital wallet strategy, as they have direct access to their target consumers through existing mobile and online banking services,” Carrington wrote.

In the long run, Lukies says the leaders will be the ones who enroll large volumes of customers and keep them engaged, because they understand what customers want from a mobile money experience throughout the transaction chain—from the discovery and consideration of goods and services, to purchase, straight to after-purchase interactions with merchants and brands.

“Mobile banking can’t simply be a one-dimensional experience where you do simple transactions with your accounts,” he says. “If banks listen to the consumer, the results will be amazing. If they facilitate special offers from both national and local merchants and enable this new type of commerce, they will rebuild their brands and the trust people have in those brands.”

News and insights from this week in the Mobile Money industry, by Monitise Director of Market Intelligence, Andrew Griffin.

Andrew Griffin, Monitise Director of Market Intelligence

STOCK MARKET

We’re at the tail-end of quarterly reporting. Groupon beat expectations, though profitability almost halved. The company reported that 45% of transactions were via mobile. On the mobile operator side, Telefonica, which at 247 million mobile subscribers has over twice the number of AT&T or Verizon, sees Europe under pressure with revenues down 7% (pretty normal for a European MNO operation) but up 11% in Latin America, their other main market. In fact, Brazil just became Telefonica’s biggest market. Their model of ceasing to subsidize phones in Spain has been successful, with a -16% revenue decline but flat cash-flow year-over-year.

TECH/MOBILE COMMERCE

The big story late last week was the departure of Google’s mobile wallet chief ahead of the big annual Google IO conference. Back in 2011, PayPal complained bitterly to Google for stealing Osama Bedier to head their wallet project.  He’s now left for unspecified reasons and in the words of Yankee Group: “Two years after launch, Google’s initiative remains stagnant”. At the last minute, Google reportedly scrapped plans to launch a physical credit card at Google IO. They did, however, announce two new Google Wallet product features:

1. P2P via Gmail: Integrating Google Wallet with Gmail, this gives users the ability to send and receive money from within Gmail using an “attach payment” button. There is a 2.9% fee charged to the sender for card-funded payments and free via ACH for bank accounts linked to Google Wallet; there is no cost to receive funds.
2. Instant Buy API: An extension of the “Buy With Google” function (that allows users to pay more quickly on eCommerce sites by automatically filling in all fulfillment details/payment credentials) to Android native apps. When integrated into the mobile app, the API provides payment info in just a couple of clicks, simplifying purchases made through a mobile app. MobilePaymentsToday described it as similar to Braintree’s Venmo functionality.

Though the new features are aimed primarily at PayPal (which also allows users to send and receive money via email), this is yet another example of non-banks muscling into the financial services space.

Monitise has products covering both of these segments for its FI customers and other companies. We prefer mobile phone numbers over email addressed-based P2P (phone contact lists typically have more numbers than email addresses); undoubtedly, Google will eventually move that way too, as otherwise the mobile user presumably would have to use the Gmail app to make payments (not a problem on Android, but perhaps less common on iOS). Monitise’s instant mobile checkout functionality (brought in-house when we fully acquired Mobile Money Network in 2012) aims to bring instant-purchase into the mobile banking app and thus to millions of our end users, all within the mobile banking app, which is rapidly morphing into a mobile wallet.

On the subject of mobile wallets, BCC Research foresees $665 billion in mobile wallet volume by 2017. That compares to Juniper, Heavy Reading, and IDC, all at $1 trillion for mobile payments (though this includes mobile commerce while BCC is strictly looking at mobile wallet app payments).

Mobiles will outnumber people by the end of the year. Well, not quite, but if the current rate of growth continues, there will be more mobile phone subscriptions than people in the world by the end of 2013, according to a United Nations report. Subscriptions don’t actually equal people – in emerging markets, people buy multiple SIM cards every year though many are not actually in a phone). Right now it’s 7.1 billion people and 6.8 billion subscriptions worldwide.

In the UK, BarclayCard launched “Bespoke offers”, signing up Tesco, Starbucks, British Airways and Virgin and offering deals targeted by age, income and spending habits.

MOBILE BANKING/PAYMENTS

Mobile banking support data continues to flow.  A Yodlee survey ranked mobile as the top channel reason to stay with a bank, and the fourth overall highest-rated reason (after convenience, service and fees). Separately, American Banker reported that 75% of people polled are equally comfortable with mobile vs. online banking. 72% of respondents use digital banking services (mobile and/or online) weekly, and 56% use a credit card app/site weekly.

Multi to Omni-Channel – Javelin Strategy & Research continues to push the trend: ”It’s not just a nuance to provide an excuse to print up new business cards, tweak our website, and update my LinkedIn profile. It’s a change that highlights why strategic channel thinking must evolve as the financial services industry knits together separate service channels in an era of ‘always-on’ interactive finance.”

And finally, a report and infographic from Accenture highlights consumers’ willingness to engage more with mobile payments. For instance, 60% would use mobile payments more in exchange for instant coupons.

Carl Tsukahara, Monitise’s Chief Marketing Officer, contributed the following article to Bank Systems & Technology this week:

Banks have lost a great deal of public trust since the financial crisis, but they can recover some of that trust by fulfilling consumers’ desire for innovative and convenient mobile solutions.

A recent Gallup Poll clearly suggests that the brand perception of US banks is nearing generational lows. From a global financial crisis to new fees that are often seen as predatory, the once-undisputed trust banks had with their consumers continues to erode across demographic categories. With demographics shifting toward a new, mobile-first consumer, banking institutions have an opportunity to completely rethink interaction and engagement to re-establish a stronger bond of trust with their customers.

Today’s “mobile-first” generation has seriously upset the traditional way of thinking. The digital age is upon us, and interaction has almost completely shifted from physical to digital. As banks and financial institutions struggle to understand how to compete under increasing regulatory pressures, tech intermediaries are coming into the fold to create new, direct-to-consumer relationships that seek to disrupt the financial services and payment industries forever. With trust low and consumers inundated with new offers for mobile services from all sides, banks cannot afford to simply follow technology innovation; they must begin to lead it.

Mobile is a Key Vehicle in Regaining Consumer Trust

While today’s consumer may visit a bank’s physical location once per month, they log into online banking services six times and their mobile applications much more, on average, during the same period. Mobile offerings are the best channel for banks to drive a more personalized, frequent interaction leading to a deeper customer engagement. Through mobile, forward-thinking banks can create the types of differentiated solutions – from real-time access, alerts and personalized user experiences based on certain factors, to unique loyalty rewards, deals and payment vehicles that match a consumer’s desires and profile – all designed to attract and engage their customer bases and to drive future monetization opportunities.

Mobile payments and commerce, both in store and remote, are a service expectation of the mobile-first generation today and of every consumer in the near future, and with so many different options out there, consumers haven’t identified a trusted provider. That leaves a gaping hole (and multi-billion-dollar opportunity) for banking institutions, payment companies, and other suppliers to fill as the trusted entity for delivering payments and commerce content. Mobile is no longer ‘nice to have’. It’s a ‘must do’ at every level, be it national, regional or community.

Catch Up to the Present

Though online adoption is still strong, banks generally realize that online customers will still end up using mobile as their primary, real-time experience. This is already evident in other industries. Take Windows 8, for example. The user experience of the new operating system is built specifically with the mobile user in mind, because while desktop and laptop computers are still in use, based on unit sales volume, computing will soon be done primarily on the tablet and the smartphone.

In order to ensure they stay ahead of the mobile curve, successful mobile experiences from banks of all sizes need to ensure that they have high engagement experiences as a baseline – 20+ touch points per month at minimum – by not settling for “less than excellent” solutions. Un-optimized solutions don’t drive adoption or engagement, and by extension trust, because they don’t contain the services that users want and they don’t have the user experience required by your different customer segments.

Leverage the Past to Build on the Future

Banks today have a golden opportunity to use this frequent mobile engagement to regain the trust of their consumers. As the plethora of new companies come onto the scene touting mobile payment offerings or mobile commerce content, its important for banking institutions to leverage their foundations and offer consumers the peace of mind of trust via regulated, safe, guaranteed, consumer-centric experiences in delivering payment and commerce services. In addition, their business models are built to provide direct-to-consumer customer support and for being the voice of reason and regulation in managing the housing of funds, funds transfers and settlements. All of this serves as an excellent foundation for further delivery of trusted content as well as managing the inevitable flow of exceptions.

In the world of payments, everything is fine until something goes wrong, and banks are at the center of helping customers deal with the nuances of settling within the complexities of the payment systems. By making sure these services are trusted and tested as reliable, consumers will naturally reassess who holds their trust in mobile payment and commerce offerings. Because who are you going to call at your friendly search technology giant when something goes wrong?

Use Your Data to deliver Real Convenience, Service and Value That Consumers Want

Finally, banks are privy to a lot of information that other providers simply don’t have in a manner that is controlled and safe via personal preferences and regulatory considerations. From available account balances to debt, banks can easily use this information in collaboration with consumer privacy considerations, to create a more compelling set of mobile services for its customers. Simple things such as bill pay and balances can really help a consumer make decisions about shopping or offers and the buying of both soft and hard goods. By stepping up and offering more pointed content to the consumer using their knowledge of the consumer’s preferences, demographics, location and transactions, banks can recapture the their trusted relationship that has been damaged in the past few years.

Many different companies have stepped into the void left by the banking industry’s hiccups. But as they seek to disrupt the long-standing relationship between the consumer and their bank with new technology, the banking industry has a secret weapon: trust. With a full-featured mobile offering, banks can re-establish trust and quickly find themselves in a deeper and more compelling relationship with the consumer that simply can’t be broken.

Alastair Lukies, CEO and founder of Monitise, was recently quoted in a Wall Street Journal article about winning the mWallet/mPayment war. Below is a transcript of the article, written by Joe Mullich and published in the Wall Street Journal on May 13, 2013:

Mobile money—sometimes referred to as the intersection of mBanking, mWallets or mPayments—is reshaping how people buy goods and services and interact with merchants and brands. Much of the focus on mobile money has been around delivering a seamless transactional process that helps people conduct commerce on their mobile phones or tablets. As the use of mobile money expands, consumers will be even more concerned with who they can trust with their secure data and financial transactions.

“Mobile money is in a similar phase as the ATM was in the early days of the 1970s,” says Alastair Lukies, CEO and founder of Monitise, a global leader in mobile banking, payments and commerce. “As excited as people were about the prospect of using them, ATMs didn’t become mainstream among consumers until they trusted them.”

In the process of transactions, mobile wallets can gather personal identities, spending data and other sensitive information—the types of information that consumers want to know is secure and protected.

“Consumers need to trust the infrastructure that underlies the mobile-commerce transaction long before they use a service,” Lukies says. “When voice over IP came along, people immediately gravitated to the Internet to make phone calls. That won’t happen with mobile payments in the same way, because people require a higher level of trust in the infrastructure that manages their money and financial information.”

The early adopters of mobile money “are inherently more willing to take on risk than are their more-conservative peers,” wrote Denée Carrington in the Forrester Research report Why the Digital Wallet Wars Matter in August 2012. But the next wave of users will “differentiate among digital wallets based on their perception of the wallet operator’s ability to protect data, ensure the integrity of transactions, and inspire confidence in their ability to do so.”

Banking on Reputation

Up until now, mobile banking has largely been devoted to tasks that did not make consumers unduly concerned about security, such as checking their account balances or moving funds between their own accounts. “When you are using mobile money to make purchases and send money to someone overseas, the level of trust you require rises exponentially,” says Lukies.

Karen Webster, president of PYMNTS.com, an information service about the payments industry, points out that “trust” is fluid. “If you’re spending six dollars at a coffee shop using a mobile device, you might have one level of trust,” she says. “If you’re spending $2,000 to buy something, the relationship and level of trust you need moves up the stack and you have to be more familiar with the brand. Consumers want to put their money in the hands of an established brand that has created a trusted relationship over a long period of time.”

For a number of reasons, Lukies says banks, established payment companies and financial institutions are the frontrunners in the race for consumer trust. They are regulated. They are experienced in money movement, data collection, exception management and transparency. And they are in the business of managing money movement in a protected fashion.

Banks, in particular, have the dependable infrastructure to provide the security, 24-hour access and customer support that people will demand before making the switch to mobile money. In addition, banks are uniquely positioned to directly help consumers navigate the bombardment of offers that will come their way as mobile payments expand.

“In marketplaces like North America and Europe, where consumers know and trust bank brands, they are in the best position to win the trust of the mobile consumer,” Lukies says. “In other places where the banks aren’t as well known, it’s up for grabs.”

Will Tech Companies Take Over?

While consumers have expressed some reticence about trusting technology companies with their financial information, Lukies says that is quickly changing. A recent poll found that 80 percent of consumers would consider alternatives to working with banks altogether and move their mobile-money accounts to services operated by some technology vendors.

Lukies says this may be an indication that consumers don’t fully realize that technology companies lack the same regulatory oversight and other safeguards that are commonplace in the banking industry. “That has concerned me for two to three years, but it’s been too early to have that conversation because mobile money wasn’t developed enough to make consumers interested in the issue until recently,” he says. “It’s crucial for banks to understand how important the trust element is and begin communicating their advantages to consumers.”

In Lukies’ view, this messaging must be combined with banks offering the total functionality and experience that consumers want when they use their mobile devices to evaluate and purchase goods and services. “If technology companies had led the charge with ATMs in 1970, the technology would never have taken off, because people wouldn’t have trusted technology companies with their money,” he says. “Banks are the ones who are ideally positioned to bring these innovations to the market because of the level of trust they instill.”

Click here to view the original article.

Billionaire investor Leon Cooperman, chairman and CEO of Omega Advisors (a New York-based investment advisory firm managing over $6 billion in assets) spoke last week about Monitise on CNBC.

Click here to watch the video.

News and insights from this week in the Mobile Money industry, by Monitise Director of Market Intelligence, Andrew Griffin.

Andrew Griffin, Monitise Director of Market Intelligence

STOCK MARKET

The big card networks reported Q1 earnings over the last week. Both emphasized their mobile credentials, though with differing flavors. Visa reported 15% revenue and 20% earnings growth. Commenting on the conference call on mobile, Visa said, “It’s a critical access point to a network and continued investment in that is absolutely critical for us”. The call went on to discuss v.me: 31 merchant sites live at the start of the year with another 132 signed up, 63 issuers representing 55 million Visa cards, including 12 of the top 25 banks, and 51 US regional banks.

Mastercard reported revenues up 8-9% and earnings up 16-17% on constant currency basis. Mastercard emphasized its mobile network operator relationships: “We continue with our efforts to develop partnerships in mobile network operators around the world. We now have relationships with over 30, with a combined reach of 1.3 billion people in 28 countries.” In the US, 100 merchants now accept MasterPass, and they have now launched in Australia and Canada; the UK is coming at the end of the summer, with 13 countries by the end of the year.

Facebook always has something to say on mobile, and this quarter was no exception. Facebook posted Q1 revenue of £1.46 billion, up 38% year-over-year.  Ad revenue is growing more strongly at 43% (an acceleration from 2012), while payment revenue grew 15%.  Mobile ads grew from 23% to 30% of total (remember this business was zero in Q1 2012) and Asia was cited as particularly strong (likely mobile is a much bigger proportion of users there, too). Despite Nielsen’s claim that Facebook is losing users in the US, North American monthly average users (MAU) rose by 2 million and daily average users (DAU) grew by 4 million. Globally, Facebook has 1,110 million MAU, 665 million DAU, 751 million mobile MAU (so, 68% of total) and 189 million mobile-only, up 128% year-over-year.

TECH/MOBILE COMMERCE

Device Stats: ComScore reported iPhone’s US share grew from 36% to 39% of phone users from December to March, followed by Samsung at 21% to 22%. 58% of US subscribers now have a smartphone, and Apple and Samsung account for 91% of those smartphones. Who ranks third? HTC – at 9% of total. Overall, Android beat iOS, with 52% penetration of all phones.

Daily Internet Messaging Traffic Overtook SMS Traffic Last Year: According to Informa, with OTT messaging totaling an average of 19.1 billion messages per day in 2012, compared to an average of 17.6 billion SMS messages per day. This is driven by chat apps such as WhatsApp and Apple’s iMessage.

MOBILE BANKING/PAYMENTS

We saw a slew of mobile banking proof points in the week. Monitise’s UK customer, RBS, announced that it is cutting 10% of physical branches, citing mobile banking as a key reason. And Monitise announced that our Hawaii-based customer, American Savings Bank, was the first Hawaiian bank to launch RDC, achieved its first-year adoption goal within one month after launch and met its second-year goal within 2½ months; American Savings Bank integrated Monitise’s mobile platform into its Fiserv core.

Quartz posted an article citing the head of security from MetroStar Systems, saying he would only bank online via mobile. He said that the human element is the weakest point in online banking, not the network or software. Apps downloaded on a mobile device are far more secure than an online website. And Fiserv released data showing mobile bill pay jumped from 4% to 15% of total in 2 years.

Finally, from Cisco comes a handy stats deck surveying opinions on retail banking, including the following findings:

• 63% want access whenever they need it
• 68% want streamlined, efficient communications with their bank
• 45% believe their banks know enough to offer personalized services
• 56% would provide more personal information to simplify management of finances
• 59% would value real-time notifications that assisted financial or purchase decisions
• 60% would not want personal information shared by their bank (implying a surprising 40% don’t mind).
• 46% are willing to video chat with their bank – while 73% of bankers think customers would be willing to video chat with them.

Carl Tsukahara, Monitise’s Chief Marketing Officer, recently shared his thoughts on how the mobile payments and commerce landscape will take shape over the next three-to-five years in PYMNTS.com. Below is an excerpt:

The mCommerce space is now a trillion-dollar space, with players from various different verticals and industries all fighting for a share of the rapidly growing mobile market. The advantages that mCommerce and mPayments offer are obvious. What’s less obvious is who’s best poised to take advantage of the trend, and what these entities need to do to ensure mobile supremacy.

PYMNTS.com spoke with Tsukahara to discuss these topics, and to learn what we can expect to see from mobile in the coming years.

“There are so many folks still engaged in commerce, there won’t be one winning industry. But we do believe with great conviction that the financial services entities, the banks and payments companies, will have a very, very strong, dominant role in this,” Tsukahara said.

But despite that bet, Tsukahara predicted that other entities, such as retailers, mobile network operators and entertainment companies, will all make pushes in the mobile industry too. And interestingly, Tsukahara says he thinks we’ll see some “standalone” companies take a closed loop approach to mobile payments as well.

Those entities will likely subside over time, though, as Tsukahara sees more “collaborative capabilities” coming to the mPayments forefront.

“Whoever ends up owning the consumer phone top and the mindshare of engagement, other folks who want to use this as a commerce channel will need to migrate to those points. And it’s really based on the premise that you have to go to where the eyeballs are,” he said. “It’s not the other way around where you have content that sucks in the eyeballs and creates a large entity.”

So which companies will be the ones who own that “mindshare of engagement?” According to Tsukahara, it’s those entities that understand that the real consumer value in mPayments comes from the features that surround transactions, and not the physical payment itself.

“There’s a big misnomer that some people think about the mobile wallet, and they associate it by monetizing the payment, and that’s not correct. You really want to monetize everything around the experience,” Tsukahara said. “Those could be things such as creating loyalty. If you’re a retailer or a financial institution, you want to have loyalty. You want your consumers to look at this as really the extension of your brick-and-mortar in building a relationship. You want to make sure that you’re driving the monetization not necessarily around, ‘I can wave the phone at a terminal in store.’ It’s more what you can do when you have those vehicles and have the consumers.”

To hear more from Tsukahara on the mobile payments landscape and the players that will shape it in the coming years, listen to the full podcast by following this link.

Americans are increasingly using their mobile phones to access bank accounts, credit cards, and other financial accounts, according to the Federal Reserve Board’s latest report on mobile financial services.

As of November 2012, 28 percent of all mobile phone users and 48 percent of smartphone users had used mobile banking in the past 12 months. This represents a significant increase from 21 percent in December 2011 for mobile phone users and 42 percent for smartphone users. While relatively less common, the use of mobile phones to make payments at the point of sale increased threefold over the same period, as 6 percent of smartphone owners reported using their phone to make a purchase.

Mobile devices have increasingly become tools that consumers use for banking, payments, budgeting, and shopping. The Board’s report examines how consumers access their bank’s services using mobile phones (mobile banking), how they pay for goods and services with mobile phones (mobile payments), and how they use mobile phones to inform shopping decisions.

Mobile remote deposit capture doubles

The most common mobile banking activities continue to be reviewing account balances, monitoring recent transactions, or transferring money between accounts. Notably, the use of mobile phones to deposit checks has doubled between surveys, with 21 percent of mobile banking users having deposited a check with their phone in the 12 months prior to November 2012.

Mobile facilitates shopping decisions

Mobile phones are also increasingly used to help make decisions while shopping. Among smartphone owners, 42 percent had used their phone to compare prices while shopping and 44 percent had used their phones to browse product reviews in store. Almost two-thirds of those who had used their phone to do price comparisons changed where they made their purchase based on that information.

Mobile banking prevalent among underbanked

The use of mobile financial services is particularly prevalent among the 10 percent of the population that is underbanked (people with bank accounts but who also use check cashers, payday lenders, or payroll cards). Among the 90 percent of underbanked consumers with mobile phones, 49 percent had used mobile banking in the 12 months before November 2012, up from 29 percent in December 2011. Mobile phones may also allow for the extension of financial services to an additional 10 percent of the population that is unbanked (has no bank account), as 59 percent of this group has a mobile phone, half of which are smartphones.

News and insights from this week in the Mobile Money industry, by Monitise Director of Market Intelligence, Andrew Griffin.

Andrew Griffin, Monitise Director of Market Intelligence

STOCK MARKET

It’s results season and I’m calling out two items this week:  AT&T Q1 saw interesting data points on their smartphone penetration: smartphones represent 88% of cell phone sales and 70% of their installed base; this is higher than the national average, which only recently rose above 50%.

Starbucks FQ2: According to Starbucks, their mobile app is responsible for 10% of US payments – impressive – and processing a $3 billion transaction run-rate, “a scale that rivals many premier U.S. banks”. Let’s examine this a little further. On their conference call, Starbucks’ management cites over 10 million global active mobile-app users and nearly 4 million US transactions per week. This data equates to 1 transaction every 2¼ weeks per active user, assuming most of them are in the US. More likely, it’s about 5 transactions per week for 800,000 or so of the users, and almost none for the rest who simply have balances left on their cards.  Those 800,000 must be buying an awful lot of coffee to make up 10% of total US payments. Put another way, despite half of their customers owning smartphones, only a low single digit percentage of customers actually use the mobile app.  Starbucks is rightly praised for its app, but as a single-use app it seems that most consumers aren’t seeing the benefit over a card (30% of payment is via prepaid). We think this has bright implications for mobile wallets, which we believe will enjoy strong adoption and usage.

TECH/MOBILE COMMERCE

How banks can compete in mobile shopping is explained in an interesting Bank Systems and Technology article  on how banks are well-positioned in mobile commerce. The article draws on Alix Partners opinion on the ability of banks to use their data to offer mobile commerce in a way that improves customer loyalty. It all starts with a high engagement mobile banking app, and is supported by survey data that consistently shows “my bank” is the most trusted mobile wallet channel.

Switching to the UK, a Deloitte UK media consumer survey is a rich mine of UK demographic stats and penetration rates. “TV is no longer a top 3 favored device, but TV programs remain the favored media for content.”

MOBILE BANKING/PAYMENTS

The World Retail Banking Report highlights mobile and is available from Capgemini and EFMA at this link. The Finextra review of the report was titled “Mobile emerges as key tool in fight for bank customers”. Half of people are prepared to shop around for a new banking provider. Canadians and US citizens are happiest with their banks, Hong Kong residents and Japanese the least. “Banks need to go where the opportunity is, and that is mobile”, says the report. Banks come second after the high-tech industry in terms of digital maturity, above telcos, insurers and manufacturers. The report makes a key point that mobile efforts must not be silo’d across different products/divisions.

According to Ernst & Young and Wharton, “The most ambitious [banks] … will look to develop mobile wallets with integrated loyalty, promotions, vouchers and other services to enhance the shopping experience for customers and merchants in ways we can’t even imagine yet”. There is a nice collection of articles and videos in their mobile banking ebook and we are working on exactly these kinds of mobile commerce networks for our customers.

And finally – a New York Times article from 1992 very accurately predicted what “pocket-sized digital communicating devices” might be doing in the future. The reaction from industry at the time? “At one end of the spectrum is John Sculley, the chief executive of Apple Computer Inc., who says these personal communicators could be ‘the mother of all markets’  At the other end is Andrew Grove, the chairman of the Intel Corporation, the huge chip maker based in Santa Clara, Calif. He says the idea of a wireless personal communicator in every pocket is ‘a pipe dream driven by greed.’” Well, I guess despite Apple being right, it did have a near-death experience that cost Sculley his job on the way to dominating the “mother-of-all-markets”; the article also shows that mobile simply was not in Intel’s DNA.