SAP mCommerce Guide 2013

Mobile Commerce GuideEngage Customers and Build Loyalty in Developed and Emerging Markets

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Mobile Commerce GuideEngage 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

Mobile Commerce Guide Engage Customers And Build Loyalty in Developed and Emerging Markets

Published by: SAP AG Dietmar-Hopp-Allee 16 69190 Walldorf Germany

Copyright © 2013 SAP AG or an SAP affiliate company. All rights reserved

Library of Congress Cataloging-in-Publication Data SAP Mobile Commerce Guide Engage Customers & Build Loyalty in Developed and Emerging Markets Edited by Peggy Anne Salz p. cm.

ISBN Number: ISBN 9780988588677

1.Mobile technology. 2. Mobile commerce Library of Congress Control Number: 2013906059

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 in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

11 FOREWORDBy Sanjay Poonen, President, Corporate Officer, Technology Solutions and Head of Mobile Division, SAP

14 PART 1: MOBILE COMMERCE: MAPPING THE COMPETITIVE LANDSCAPE16 Mobile: A License To Thrill

A look at how mobile is impacting business, people and society at every level, everywhere on the planet. By Tomi T. Ahonen, best-selling mobile author

22 Who Will Lead The Mobile Commerce Charge?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 RewardsCompelling 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 EcosystemBanks 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

TABLe Of COnTenTS

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43 Digital Money Sweeps Mexico And Brazil As the mobile money phenomenon sweeps across Brazil and Mexico banks aren't the only ones lining up to transform financial services. By Charmaine Oak, Practice Lead, Digital Money, Shift Thought

50 PART 2: BANKING IN DEVELOPED MARKETS: TAKING CHARGE OF CHANGE

52 Banks: Evolve, Innovate And Embrace ‘True Multichannel’, Or Be Left Behind Banks must generate customer-centric insights through advanced analytics that will allow them to enhance products, personalize service bundles — or make way for companies that will. By Simon Paris, Global Head of Financial Services Industries, SAP, and Matthew Talbot, Senior Vice President, Mobile Commerce, SAP

59 Removing Friction To Build RelationshipsAt RBS Citizens the goal is to get customers in and out fast — and success is all about delivering financial services that respect customers' time. By Scott Manley, SVP, Head of Product – Delivery Channel, Treasury Solutions, RBS Citizens

64 The Convergence Of Mobile And Online BankingThis is the future of electronic banking that requires a common middle layer with business logic and messaging infrastructure. By Jacob Jegher, Research Director, Celent

69 Breaking The Mobile Banking Mold Organizations must be agile. To keep pace first Tennessee Bank delivers financial services that empower executives to act fast and conduct transactions on the move. By Taylor J. Vaughan, Director of Treasury Management Services, first Tennessee Bank

75 6 Ways To Wring More Value Out Of Multi-Channel BankingThe pressure is now on banks to help their customers make smarter decisions based on increased visibility into all their accounts as they save, spend and shop. By Davor Ebling, Director, Mobile Commerce Solutions, SAP

82 PART 3: BANKING IN DEVELOPING MARKETS: PLOTTING THE COURSE FOR FINANCIAL INCLUSION AND FINANCIAL SUCCESS

84 Advancing New Frontiers For Financial InclusionPakistan is one of the fastest growing branchless banking markets in the world. AbacusConsulting recounts recent developments in mobile banking and the impact on the local landscape. By Abbas Khan, Partner, AbacusConsulting

92 Accelerating Mobile Banking Through CollaborationMalaysian Central Bank is on a mission to transition Malaysia to a high value-added, high-income economy by 2020. A big part of the plan involves the widespread and rapid migration to electronic payments spearheaded by MyClear. By Siek Kar Teck, Director, Retail Payments Division, MyClear

96 Mapping The Market For Financial Inclusion HBL is harnessing mobile technologies to do more than enable the delivery of innovative banking services; it is providing all people, including the poor and rural populations, access to convenient mobile banking services that put them in control of their financial future. By faiq Sadiq, Head of Payment Services, Habib Bank Limited

101 Creating New Pathways For The Poorest DBBL launched mobile banking services targeting the unbanked, signing up an average of 100,000 customers each month since the commercial launch in 2012. Now the bank is planning additional services using new authentication technologies to grow that number exponentially. By Abul Kashem Md Shirin, Deputy Managing Director, Dutch-Bangla Bank Limited

108 Targeting Tomorrow’s Mass Affluent CIMB niaga, the number five bank in Indonesia, through innovative services and social media outreach is preparing for a day when today's unbanked will be part of the burgeoning middle class. By Wan Razly Abdullah, Strategy and finance Director, PT Bank CIMB niaga Tbk














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114 Branchless Banking Driven By ‘Disruptive Innovation’ Bank BTPn reveals its plans to disrupt the market with a new and cost-effective model aimed at empowering people at the bottom of the pyramid to manage an interest-bearing bank account. By Donny Prasetya, Head of Business Development, btpnWOW!

122 PART 4: MOBILE OPERATORS: PAVING THE WAY FOR MOBILE PAYMENTS AND MORE

124 SIM-Based NFC: Enabling A New Level Of Interaction For Latin American Big EventsA string of NFC trials are taking place in Brazil just in time for the FIFA 2014 Soccer World Cup and the 2016 Olympic Games, enabling consumers to make payments and access information, and highlighting new business opportunities. By Valter Wolf, Market Development Director, GSMA

127 Open Solutions Could Help Fulfill The Promise Of Mobile Money With over 100 mobile money deployments globally, only a handful have reached meaningful scale. Here are some key examples and learnings revealing what makes services tremendously successful. By Sal Karakaplan, Vice President, Mobile Money, MasterCard

131 Preparing To Deliver ‘Advanced’ Services from enabling merchant payments to driving financial inclusion, Ooredoo is positioning itself to be a leading provider of mobile money services and one of the world's top 20 mobile operators by 2020. By Rambert Namy, Head of Mobile Financial Services, Ooredoo

136 Expanding Mobile Wallet Capabilities To Encourage Customer Loyalty Celcom has made its mark with AirCash, one of the first mobile wallet services to launch in Malaysia. now efforts focus on integrating AirCash into its larger customer loyalty program. By Afizulazha Abdullah, Chief Digital Services Officer, Celcom Axiata Berhad

140 PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION

142 Mobile Shopping And Coupons Transform Retail Yankee connects the dots through recent data and surveys to show why — and how — mobile coupons are becoming the way to lure shoppers. By Yankee Group

148 Opportunity At The Intersection Of Retail And MobilitySmart marketers in transportation, utilities and consumer products companies are exploring how they can deliver relevant, timely information, promotions, and special offers right to the consumers’ smartphone. By Colin Haig, Program Principal, SAP Retail

153 Fast Shopper, Slow Store: A Mobile PlaybookActionable insights and valuable advice to connect with the 'new' mobile consumer. By Gary Schwartz, CeO, Impact Mobile.

161 Survival Guide: Evaluating The App Vs. Web DebateMobile apps vs. mobile Web is a topic of heated debate in the industry today. A successful approach is one that uses mobile apps and the mobile Web in the right combination to make shopping across all channels seamless and personal. By Panagiotis Papadopoulos, Retail Mobile Lead, SAP

166 Mobile Retailing 2.0: Connect With The Customer At The Point of Decision How retailers can realize the full potential of the greatest marketing tool ever invented to win the battle for the customer and get the edge on online rivals. By Mickey Haynes, Global Principal, Mobility Solutions in Retail, SAP

171 Showrooming, DeconstructedA guide to help retailers build the key capabilities that will allow them to clinch the deal and stem showrooming. By Nikki Baird, Managing Partner, RSR Research











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175 Consumer Focus Key To Closing The Mobile Commerce LoopInnovative retailers are using mobile to equip their stores and empower their staff to deliver an omni-channel experience personalized to each customer, and to accelerate revenues and deliver customer value. By Rakesh Gandhi, Senior Director, Mobile Application Solution Management – Consumer Mobile, SAP

182 PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS

184 Gateway To The Future Of Customer Relationship ManagementExamining the customer journey, the purchase funnel and the many moving parts marketers need to understand to encourage commerce, trigger conversions and boost customer engagement. By Michael J. Becker, Managing Director north America, Mobile Marketing Association

192 Reaching The Mobile ConsumerOrganizations must be careful not to miss the opportunity to build mobile into a wider strategy, that is cohesive across all channels, to enable meaningful — and ongoing — customer engagement. By Jason A. Oglesby, Director Mobile Solutions Management, SAP

200 The Engaged Retailer: How Mobile And Big Data Improve Revenue, Retention And ProfitsRetailers must take proactive action to turn mobile into an asset that delivers revenue and customer engagement. They can start by building an information technology and customer-facing strategy that capitalizes on mobile attributes such as location, activity, and sensor data to delight customers. By Maribel Lopez, Founder and Principal Analyst, Lopez Research

204 Detect, Connect And EngageTechnology and analytics are coming together to allow retailers to radically redefine the relationship they have with their customers in real-time. By Mark Dahm, Senior Manager, Business Development, Wireless Networking Group, Cisco Systems and Jason A. Oglesby, Director Mobile Solutions Management, SAP

210 Public Transport Drives Personal LoyaltyCanadian transport authority STM has launched an innovative mobile customer rewards pilot program, delivered by a smartphone app, to thank existing customers and attract new ones. By Pierre Bourbonniere, Head of Marketing, Société de transport de Montréal

214 Utilities Customer Engagement Customers are moving to mobile and other channels to solve issues, report outages or simply check their bill — and utilities companies need to prepare. By Haridas nair, Vice President, mCommerce Products and Solutions, SAP

220 PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL

222 Starbucks: A Mobile Payments Case Study Exclusive insights to track and analyze the stellar success of Starbucks' mobile based payment system called ‘mobile pay’. By Sam Gellar, Analyst, Portio Research

232 Weighing The Alternatives To NFCAn evaluation of alternative mobile payment technologies shows the benefits and drawbacks to conclude that the ideal solution may be a combination of 'all of the above'. By Mickey Haynes, Global Principal, Mobility Solutions for Retail, SAP












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240 A Serious mPOSitionMobey 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 ScreenIn 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 WaveLearn how to leverage this new mobile marketing imperative to drive sales, boost loyalty, and increase customer engagement. By Joe Beninato, General Manager, Digital Wallet, Urban Airship

258 PART 8: CLOSING THOUGHTS: THE ROAD AHEAD260 Big(ger) Data Pushes The Boundaries

Today, we are arguably on the cusp of a fourth revolution: the age of Trillions. The impact on all industries will be profound. But the real excitement starts when these microprocessors join the conversation, communicating with themselves and with us. By Mickey McManus, President and CEO, Maya

266 APPENDIXCompany Descriptions

FOREWORDSanjay Poonen, President, Corporate Officer Technology Solutions and Head of Mobile Division, SAP

With nearly 3.2 billion mobile phone users and counting, worldwide mobile penetration has already been remarkable. But mobility is not only enabling rich and always-on interactions. It is also transforming banking and commerce, creating a new global mobile marketplace that is always accessible and always ready for business. Indeed, mobile commerce is becoming a fact of life, driven by the advance of mobile technologies, a surge of innovation in devel-oped and developing markets and a growing

consumer requirement for an enhanced, relevant and — hence — more contextual retail experience. If we think that the birth of electronic commerce and the advance of eBay and amazon.com in 1995 was a big phenomenon, then the impact of mobile is going to be transformational.

Mobile has the power to trigger a seismic shift in commerce because consumers already live their lives on mobile. Reams of research documents people — everywhere — reach to their mobile devices every step of their daily journey. Already the number of people using their mobile phone to access the Internet far exceeds the number using a desktop PC.

FOREWORD







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Another driver is the passion Millennials have for personal mobility. In many regions of the world, people under the age of 40, a segment keen to adopt mobility innovations and integrate mobile into every aspect of their lives, will be the majority of the population. This will create new opportunities, and new pressures, for companies across the emerging ecosystem — banks, card issuers, mobile operators, app developers, merchants — to enable commerce experiences that know neither boundaries nor friction.

Mobile is also driving financial inclusion, allowing banks such as Dutch-Bangla Bank Limited in Bangladesh to extend their services to the unbanked. The impact is profound as financial institutions — and mobile operators where regulation allows — empower people at the bottom of the pyramid to participate in society and improve their quality of life.

Mobile operators are experiencing similar success. Ooredoo, a multi-country mobile operator group has identified mobile money as a key capability and a pillar of its initiative to be one of the top 20 mobile operators worldwide by 2020.

Moreover, mobile is evolving, driven by companies that have succeeded in enabling person-to-person payments and have set a course to transform the entire retail environment.

It’s new territory that offers new challenges — and huge benefit to the companies that can master them.

To help you navigate this new market and grasp the growth opportunities ahead the second edition of the Mobile Commerce Guide has brought together a wide variety of case studies and success stories, contributed by the executives who helped make them reality, to show how mobile impacts the Retail, Consumer Product, and the Utilities industries.

As this Guide shows, precisely how compa-nies can deliver value — and communicate this to their customers — will depend on a variety of factors. Banks may encourage and educate unbanked to see their mobile wallets as instruments that allow them to save money and plan their financial futures; mobile operators may share infrastructure and best practices to reach and educate

customers faster; retailers and consumer product companies may refine their models to enable contextual commerce their customers genuinely welcome and appreciate because it is personally relevant and valuable; and utility companies may harness mobile to provide customers new visibility into the services they use and the payments they make.

To wield the transformational power of mobile for your business, you must first fully understand its impact. The examples gathered in this Guide for this purpose are global and diverse. But — more importantly — the insights presented here, drawn from the expertise and experiences of more than 40 leading analysts, professional industry organizations and futurists, are actionable.

These are exciting and challenging times. Whether you are eager to start planning your mobile commerce strategy, or seek guidance as you expand your existing offer, think of this Guide as a knowledge resource and companion on the journey ahead.

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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.

PART 1: MOBILE COMMERCE: MAPPING THE COMPETITIVE LANDSCAPE

PART 1: MOBILE COMMERCE: MAPPING THe COMPeTITIVe LAnDSCAPe

1716 Mobile Commerce Guide Engage Customers and Build Loyalty in Developed and Emerging Markets

Mobile: A License To ThrillBy Tomi T. Ahonen, best-selling mobile author

You may have noticed that the world’s biggest Internet company, Google, says the future of the Internet is mobile. You probably noticed too that a once hovering- near-bankruptcy PC maker called Apple Computer dropped ‘computer’ from its name, launched mobile phones, and today calls itself a mobile company.

Oh, and you might recall that Apple was — for a while last year — the most valuable company on the planet, making the biggest profits. But did you also know that the computer-era billionaire Bill Gates is no longer the worlds’ richest man? That title was taken by Mexican Carlos Slim.

What could possibly replace computers as the engine to generate such wealth? In a word: mobile. By the way, Carlos Slim Helú runs Mexico-based América Móvil, one of the world’s largest mobile telecoms empires stretching across all of Latin America.

Yes, mobile seems to be an engine to deliver growth, revenues, profits, and wealth for those technology, telecoms, and IT companies.

Now let me ask you this: Did you hear what Electronic Arts, the world’s largest game developer says about the future of gaming? They declare it is mobile. What about the BBC, the world’s largest radio and TV broad-caster? It says that all broadcast content will become available on mobile phones. What about Warner Music? It said wireless is the future of music. What of Sony, the world’s largest home electronics company? The CEO there just said that mobile was front and center of Sony’s future. And Samsung? The world’s largest tech company said last year that their mobile unit is the driving force of their profits. Or Facebook, the biggest social media company? It revealed last year that more than half of users now come from mobile - and that the future of social media is... (you guessed it!) mobile. Not to be outdone the Associated Press, the news agency headquartered, in the U.S., announced that it was the mobile phone, not the traditional Internet, which was the future of the news media.

I could go on and on. But let’s forget about the tech and media industries. Take Visa, the world’s largest financial company by number of users and obviously the world’s largest credit card company. They now say that the future of payments... is mobile. The world’s largest lock maker, Assa-Abloy is building locks that are operated by your mobile phone. The world’s largest airline by passenger miles, Delta, is now deploying mobile phone based check-in and boarding passes.

In France Carrefour, the country’s largest retailer has deployed mobile solutions so advanced that they will help mobile shoppers find the shortest route in the stores. To assist shoppers the shopping list stored on their mobile phones is even re-arranged by aisle, depending on which store you go to. In Japan McDonald’s the world’s largest restaurant chain, has already convinced one out of every six Japanese consumers to sign up to receive mobile coupons and offers. And speaking of ads, Coca-Cola, the world’s largest soft drinks maker, recently ran an international multi-platform ad campaign with mobile at the heart of it that achieved a whopping 45 percent response rate!

MOBILE IS MASSIVE

When I wrote my first book about mobile services and apps over a decade ago, this whole mobile industry was only an experi-ment that spanned some random countries where they spoke languages nobody else ever bothered to learn, like Finland, Japan, South Korea and Sweden. It was eccentric to believe in mobile back then, and an act of faith to think mobile would ever be big.

When I showed off the ‘cool’ ways these mobile phones could play elementary music snippets — known as ‘ringtones’ at the time - most said it was a fad that would never catch on. Today mobile data services are a massive global hit! In fact, they were worth US$436 billion last year. Yes, bigger than the Internet, bigger than global radio, bigger than Hollywood movies, bigger than video gaming. The mobile data industry is the fastest-growing industry of all time. No wonder it turns around companies like Apple, or creates billionaires like Carlos Slim.


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WE ARE MOBILE, TOO

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 see that mobile is already a huge part of daily life in countries across the globe.

Let’s start with children. Did you know there are now mobile tools and services that help kids study better for their school work? In South Africa, for example, a local mathematics books publisher released a mobile math practice solution that helped South African students using it score 14 percent better in national math exams!

Or what about a farmer in India? The time to go turn on and turn off the irrigation at the farm can take hours riding a bicycle from one irrigation valve to another. Now there is a mobile solution for that. The solution, which uses SMS, allows the farmer to control his irrigation from home at a few clicks of his phone. It’s not just saving him time, and water, and the costs of electricity and money - it also saves with soil erosion! If you irrigate too little, the ground is dry and is blown away. If you irrigate too much, the ground is washed

away - to the farmer downstream who is only too happy to get your topsoil.

MOBILE MONEY PROSPERS

And let’s not forget mobile money. In many parts of the developing world people have only managed to save small amounts of money — if any. They cannot qualify for a bank account to put their money away safely because they lack the proper identification and a permanent address. Literacy is also an issue.

So what do they do? They try to hide what little cash they have. It’s a risky business. It’s not safe — and burglars, thieves, animals and natural disasters can take the money way. Your life savings are gone.

But once the miracle of mobile payments arrives, suddenly anyone can have the basic safety benefits of depositing their money onto something — a card, a phone, a branch-less bank account — that is permanent, trusted, and safe. Run by the mobile operator or the local bank, these services empower the poor to save and plan a better future.

M-Pesa in Kenya launched six years ago; last year the Central Bank of Kenya told us the amount of money that transited mobile phones was equal to 48 percent of the total Kenya GDP. Yes, of the total Kenya economy, nearly half already transits mobile phones, and this in only six years. The World Bank counts nine countries in Africa where already at least 10 percent of the adult population uses mobile money or mobile payments.

MOBILE, MOBILE EVERYWHERE

Vertical industries are also getting in on the action. An example is Willer Travel, a long distance bus company in Japan. They had a popular Website where they sold tickets. When they mobilized their Website, they achieved a three-fold increase in their ticket sales on their mobile sites.

Similar stats come all around the world. Tiffany’s the U.S. jewelry store decided to mobile-optimize their Website which

caused their jewelry sales via the mobile channel to more than double. The Hockey News, a weekly ice hockey magazine, launched a pure mobile version of the magazine and not only found 100,000 new paying mobile readers as an audience, they observed a positive knock-on effect on print sales, which increased by 5 percent! What print title reports increases in circulation these days?

The moment the decision was official, Pope Francis sent his first greetings via SMS. Was that an innovation for a religious leader to use text messaging to reach masses of followers? No, the previous Pope, Pope Benedict XVI, did it too. Was he the first mobilista-Pope? No. The Vatican has been sending mobile messages to the faithful since January 2003.

Politicians are also harnessing mobile to drive amazing results. President Barak Obama’s re-election campaign masterfully utilized new media in many forms. One of

No matter who you are or what you do mobile is your tool to get ahead.

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the highlights was on Election Day, when Team Obama sent out a text message to his followers and volunteers, asking them to make one phone call on behalf of the President. In total 9.5 million such SMS text messages were sent to all those who had given Team Obama their mobile phone number. This one SMS text message was estimated to have achieved 1.9 million bonus volunteer phone calls on Election Day because of the acts of volunteers who agreed to donate one phone call to Obama, after receiving that message that morning of Election Day.

The impact was profound. All the polls in the last days before the election measured the vote to be very close, about 1 percent advantage to Obama. But Obama actually won by 4 percent. That difference was about 3 million votes. This never-before-used tactic of sending a text message to call voters to

action (make a phone call to someone to convince them to vote for Obama) probably accounted for the lion’s share of that surprisingly large winning margin. That, my friends, is the power of mobile.

MOBILE TO THE END

It doesn’t matter if you are a giant company or a tiny family-run business. It doesn’t matter if you’re living in the most advanced digital nirvana or a person carving out an existence in the developing world. It doesn’t matter if you are a highly educated MBA or an illiterate fisherman. No matter who you are or what you do mobile is your tool to get ahead. If you are a business you can harness mobile to get more customers and make more money — more quickly, more profit-ably and more reliably. It also helps you reach better and bigger audiences that will

become more loyal to you, if you get the value exchange right.

If you’re not a business, mobile can help you heal the sick, educate the students, get the votes to be elected and improve your life.

In 2013 there is no industry that is not being impacted and revolutionized by mobile tech-nology. From car manufacturers to funeral homes, mobile is becoming part of their corporate DNA. Yes, I said funeral homes. These institutions are now deploying QR codes to gravestones, so our memories of our dear departed can be cherished and shared by friends, relatives and ‘significant others’ who scan the codes and access the things the deceased did and held dear.

Yes. Mobile is with us every day everywhere. It’s the first thing we see when we wake up and the last thing we look at before we fall asleep. And now, this industry is even letting mobile be the way we connect with the memory of our loved ones long after they are gone.

Yes, mobile is a wonderful technology that is completely changing every aspect of our world.

Tomi T. Ahonen is an ex-Nokia executive, and one of the most published authors in the mobile industry. He counts over a dozen books, as well as a regular blog that has gained him the number one spot in the Forbes Top 10 Power Influencers in Mobile1.

Coca-Cola, the world’s largest soft drinks maker, recently ran an international multi-platform ad campaign with mobile at the heart of it that achieved a whopping 45 percent response rate!

FOOTNOTE

1. www.forbes.com/sites/haydnshaughnessy/2012/01/03/who-are-the-top-10-power-influencers-in-mobile/

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The advance of mobile technologies, a surge of innovation in emerging markets and increased consumer requirements for enhanced retail experiences present opportunities for banks to expand into new service areas and extend their existing services to the unbanked. But banks are not the only ones taking note. Mobile operators, card issuers, app developers, and retail chains are also jockeying to establish competitive offers and grow their footprints. Accenture describes the current ecosystem and defines the capabilities mix that will be needed to serve the market of ‘less cash’ consumers of the future.

With nearly 6 billion connections and counting, worldwide mobile penetration has already been remarkable. But mobility is not only enabling rich and always-on interactions. It is also transforming banking and commerce, creating a new mobile marketplace that is always accessible and always ready for business.

The movement toward this new phase of mobility — which Accenture calls Mobile Life — is pushing mobile money offers in three distinct directions: traditional mobile banking services (mBanking Services), mobile payment services (mPayment Services), and mobile enabled consumer services (mEnabled Consumer Services).

Often the initial point of entry for banks into the mobility arena, mBanking links customers’ bank accounts to their mobile devices and provides customers with a new way to manage their finances. Services can range from basic product information and

Who Will Lead The Mobile Commerce Charge?By Pradipto Pal, Executive, Accenture Mobility


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.

transaction histories, to more advanced operations such as loan applications and inter-bank fund transfers.

Mobile money transfers and purchases, or mPayments, open the door to previously unbanked markets. These types of services can vary significantly in their sophistication, from SMS-based money transfers, to Near Field Communication (NFC) payments, to a full “digital wallet” capable of storing multiple credit cards, prepaid cards, and discount cards for mobile transactions and commerce.

Least understood and not yet widely adopted, mEnabled Consumer Services encompass a broad range of mobility offerings catering to specific consumer lifestyle needs within and outside the traditional banking realm. Services can range from simple SMS-based promotion alerts to location-based targeted market-ing. With mEnabled Consumer Services, banks have the opportunity to venture into new businesses and further embed their brand in consumers’ daily lives.

Banks may choose to extend existing offerings to new customers, branch out into new value segments or increase the sophistication of their services in a particular area.

However, banks should be aware that they are not the only ones with this ambition. While the banking industry has dominated banking and payment services for many years, the recent advance of mobile technologies and emergence of new consumer behaviors has leveled the playing field. As a result, new entrants, new partnerships and new operating models are flooding the space and transforming the competitive landscape.

ASIA’S AFFLUENT

Thus, many banks find themselves in an unfamiliar position, struggling to keep up — or join up — with mobile operators, card issuers, app developers, and retail chains that are also jockeying for position in a value chain that spans activities from banking to commerce to CRM.

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Figure 1: Based on data from www.accenture.com/Microsites/accenture-innovation-center-asia-pacific/Pages/index.aspx

Competition is stiff, particularly in Asia Pacific where a digital wave is creating a market hungry for mobile money services. Driven by the advance of a tech-savvy consumer base and a ‘change of the guard’ that sees Generation X making way for Generation Y to take the helm, this shift is happening much faster in Asia Pacific than in Europe or North America.

Indeed, the youth segment in Asia Pacific is not only far greater in sheer numbers; it also has a much greater desire to lead a Mobile Life. This segment, which I describe as digital natives’, has a huge appetite for mobile/digital services. In fact, demand in the region far outstrips supply of both services and bandwidth.

Notably, the rapid growth of the middle class across Asia Pacific presents players with additional opportunities. Another 70 million households are expected to join this burgeoning class by 2015, and this impressive income growth extends all the way up the social ladder. Between 2010 and 2015, the number of millionaires in the Asia Pacific region is forecast to increase by 25 percent (compared to 17 percent world-wide), while the ’ultra wealthy’ segment

will swell by 37 percent (nearly double the global rate).

The region is not only growing richer; it is also becoming more passionate about mobile technologies and services.

The outcome will be an increase in smart-phone penetration, a trend we already observe, that will drive more mobile app downloads and usage of the mobile Internet. Significantly, NFC will likely gain serious traction, with an estimated 450 million NFC-capable devices expected to hit the market over the next three years.

As more people embrace a Mobile Life, the demand for services — including banking, payments and commerce — will skyrocket. In fact, Accenture research found that 60 percent of mass affluent customers, which includes the region’s upper middle class and high-net-worth individuals, are interested in using digital channels in conjunction with bank branch visits. In addition, 21 percent of respondents would prefer to switch completely to direct banking.

Four mobility value segments for banks

Mobile as a platform to improve bank’s operational efficiency Enterprise focus

Customer focus

Mobility transformed banking processes m-salesforce

m-Salary m-Allowances m-Claims

mEnabled enterprise

mPayment servicesmBanking servicesMobile as a new interactive channel to increase customer loyalty and cross-sell opportunites

mEnabled consumer services

Mobile as a conduit to build brand presence and integration into consumer’s daily lives

Mobile as a payment tool to target unbanked sections of society and expand mCommerce opportunities

Mobile wallet (Stored value account) mCommerce

Augmented reality, for e.g. real-time property guide

Mobile Life

White space represents the untapped opportunities as a result of new business and/or operating models

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MOBILE COMMERCE TOUCH POINTS

Now that I have described the key market demographics and data points across the Asia Pacific region, let’s examine how mobile banking services have evolved across the region.

Dramatic economic growth and rising household incomes across the region have created a market of mass affluent. This segment carries a mobile phone and is already well accustomed to using mobile banking services to check balances, pay bills and make P2P transactions.

The next step is full mobile commerce, a space where banks and merchants have an important role to play. Together they must build on the mobile wallet, a product banks first provided to make P2P payments, and extend that functionality to enable and enhance new retail experiences.

Let’s say I use my mobile wallet, provided by my bank, to do some shopping and buy some clothes at Store X, for which I also receive some loyalty points as part of the transaction. A few days later I walk into a shopping mall in a different city, where the

same chain just happens to have an outlet. I don’t know this, but I do receive a push notification directly to my mobile phone that says “Hi Pradip, if you are nearby and walk into our store, we will give you a 10 percent discount on your next pair of jeans and you can use your loyalty points”.

Now let’s look at this from the perspective of the store merchant. First, this is a new retail experience that only mobile can deliver. It can’t be done with any other channel because there is no other channel I have on my person at all times, even during shopping and — more importantly — no other channel can deliver location-based services coupled with deep customer insight.

The beauty of this is that this channel allows the consumer to pay from a mobile wallet and not a credit card, which means the merchant does not have to pay the 2-3 percent charge to the credit card company. For the merchant it’s a win-win all around. They get their money up front and without having to pay the fee to the credit card company. What’s more, the merchant now has a deeper relationship with the consumer, one that allows them

to grant loyalty points and thereby encourage a return visit or purchase.

From the perspective of the bank the mobile wallet currently sits outside the core banking system. In practice I can transfer money from my account to a mobile wallet. However, clever banks are also taking advantage of the opportunity to provide me additional wallets for family members, for example.

In this scenario I have the option to open up a family wallet, or perhaps separate wallets for my wife and daughter. I am still the account holder, but the bank has now gained two ‘new’ customers — my wife and daughter — and sees a two-fold increase in transactions and revenues. The additional mobile wallets allow us all to conduct commerce without cash or cards, so we are happy. The merchant also benefits for the reasons I mentioned. The result is a virtuous cycle benefitting the bank, the merchant and the ‘less cash’ consumer.

But banks are not alone.


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They are confronted by new entrants and competition from companies across the merging mobility value chain. Banks must adjust to this reality, which is why Accenture has recently surveyed the Asia Pacific land-scape and developed the Accenture APAC Banking Mobility Maturity Index1.

While it is beyond the scope of this article to discuss the Index and the factors, such as

banking access and mobile subscriptions, that have important implications on a bank’s mobile commerce and wider mobility strategy, it is important to stress that banks have a limited time to master the capabilities to deliver a full mobile commerce experience, one that allows people — especially those ‘born digital’ — to do much more with the mobile phone they already reach for on every step of the consumer journey.

Nearly all of the world’s financially unserved adults live in Africa, Asia and Latin AmericaMillions of adults

East Asia

Adults who do not use formal financial services1

Millions of adults

South Asia

Sub-Saharan Africa

Latin America

Central Asia and Eastern Europe

Arab States

High Income OECD

Total

Figure 3: Based on data from Honohan. 2008: Human Development Index: World Bank

Percent of total adult population that is financially unserved

59

58

80

65

49

67

8

53

876

612

326

250

193

60

2,455

136

FOOTNOTE

1. www.accenture.com/Microsites/accenture-innovation-center-asia-pacific/Pages/index.aspx

FOOTNOTE

1. Regional groupings based on UN Human Development Index

Figure 2: Based on data from Accenture Analysis

A day in the life of a 'less-cash’ consumer society of the future

6.30am >

Top up transport card/mobile

Pay for train ticket

Gain access to office

Transfer money to sister

The cycle continues

Incoming transaction Outgoing transaction Transfer Security transaction

Pay for lunch

Pay for coffee and magazines

Pay for groceries

Pay for taxi

7.30am > 9.00am > 10.30am > 12.30pm 3.30pm > 7.00pm > 9.00pm >

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In the view of Accenture, as the balance shifts from cash to contactless payment, banks operating in Asia Pacific have a unique but fleeting opportunity to extend their reach across the entire socio-economic spectrum and position themselves at the heart of these ‘less cash’ consumer societies and retail value chains of the future. Which value segments and audiences each bank pursues will depend on the opportunities available in their markets and their own ability to compete.

UNBANKED OPPORTUNITIES

While economic growth across Asia Pacific has been dramatic, the GSMA reports1 that 2.5 billion adults, just over half of world’s adult population, are unbanked, meaning they do not use formal financial services to save or borrow.

These unbanked populations have quite basic needs, which first-mover banks such as Dutch-Bangla Bank in Bangladesh are meeting with mobile banking services that include airtime top-up, cash-in, cash-out, utility payment and remittance — to name a few.

In markets such as China, Indonesia, Malaysia and the Philippines, where there is a large population of migrant workers, the unbanked have a particularly strong demand for mobile banking services that allows mobile money transfers within and across national borders.

Interestingly, this is also a space where mobile operators, such as Ooredoo, have a huge opportunity because their footprint allows them to facilitate remittances on a large scale. However, that is the catch. Mobile operators that want to target the unbanked will not want to do it as single

operators. They will want to do it as part of a kind of ecosystem so they can benefit from sharing infrastructure and best practices.

NEW MINDSET

Significantly, banks have the capabilities mix — and the corporate DNA, to extend their services to the world’s unbanked. However, not all have the proper mindset for the task.

The unbanked are not unbanked because they don’t work or earn money. In many cases, the unbanked lack a residential address, or fail to earn a salary that covers the fee structure offered by most banks, and discourages small deposits. However, mobile allows economy of scale, increasing reach and lowering costs and allowing banks to generate revenues by serving a large volume of low income customers.

Here the expectation is that the mobile wallet will evolve to drive financial inclusion by creating a mobile marketplace where the unbanked can buy goods and services, as well as access financial products, such as insurance, that will allow them to plan a secure and stable future.

Financial inclusion will also make it much easier for governments and NGOs (non- governmental organizations) in developing markets to disperse aid and so push money to the mobile wallets of the poor. There is also a knock-on benefit for NGOs — and banks that choose to grasp the opportunity — to provide microfinance. Loans and credit extended to the poor will not only help improve their lives; the wealth created will increase overall GDP and inject new dynamism into local economies.

Clearly, the role of mobile in these markets is to facilitate payments. However, it has the powerful potential to transform entire econ-omies. In some regions, such as Bangladesh, it is possible to glimpse that future today.

However, this progress also raises a question mark over the future role of banks in enabling commerce in unbanked markets. While many banks are no doubt defining the course of mobile commerce, acting as the ambassadors of mobile commerce, it is a herculean task that not every bank can master. Besides, many banks are not able — or willing — to offer additional services to encourage commerce at the bottom of the pyramid. They prefer to focus on serving

Banks have a limited time to master the capabilities to deliver a full mobile commerce experience, one that allows people — especially those ‘born digital’ — to do much more with the mobile phone.

FOOTNOTE

1. www.microfinancegateway.org/gm/document-1.9.40671/25.pdf

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the customers at the high-end with large deposits and high-end devices.

Certainly, the banks, with the exception of those institutions dedicated to driving financial inclusion, will likely not be among the legends in the business. Put simply, 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.

NEW ENTRANTS, CHALLENGES

Driving mobile commerce requires the grit and the power to roll services out to a customer base of 100 million customers and more. It also demands that the company undertaking this is not measured by the same KPIs applied to financial institutions.

Therefore, it is quite probable that large organizations — such as mobile operators, governments, NGOs or even large petro-leum companies — will have the resolve to accept this challenge and drive the transformation of commerce.

And we should not rule out the potential of new entrants to stake their turf in the

global mobile commerce space. Banks may have dominated with banking and payment services, but many will soon find themselves struggling to keep up.

Mobile operators are joining together, and some are teaming up with card issuers, such as Visa and MasterCard to offer NFC and mobile wallet services. At the other end of the spectrum e-money providers such as PayPal and Singapore-based NTS and Korea Smart Card Company, which provides T Money, are capitalizing on their strong presence in certain local markets.

Finally, transport companies are also taking advantage of easy access to customers at the point of sale to offer mobile payment services. Hong Kong’s Octopus card, launched by a local transit company joint venture to facilitate fare payment on the city’s mass transit system, is a good example. The Octopus card has since spread its tentacles to capitalize on growing demand for contact-less payments in other areas of consumer life. Today, this rechargeable stored-value card can be used to pay for parking and fares on all modes of transport, and is accepted by many retailers, including fast food restaurants and supermarkets.

And there other scenarios, enabled by new technologies, that are poised to move commerce to the realm of machines. If we consider the interactions that lead those ‘born digital’ to an actual purchase, we begin to see a path that takes them from one ‘machine’ to another. A typical scenario could look something like this: The digital native watches Smart TV, using the app from the relevant app store to purchase the item they see on TV using their mobile phone. For that transaction there doesn’t really have to be a full-fledged digital wallet; there only needs to be technology in the background that can ‘see’ the machine-to-machine operation between the TV and the mobile phone and relate this to the customer and CRM.

Although cash is unlikely to be eradicated completely in the foreseeable future, the gradual movement toward electronic currencies and virtual transactions is edging us ever closer to a ‘less-cash’ society for both consumers and industry. All indicators suggest Asia Pacific may be first to fully embrace Mobile Life. Now it is up to companies across this emerging ecosystem to adapt to the fast-paced nature of mobile

technology and secure their position in this increasingly competitive mobility landscape.

Pradipto Pal is responsible for driving Accenture’s Mobility footprint in Asia across different industry groups and business functions. He charters new Mobility solution offerings and builds assets by cultivating an ecosystem of leading software vendors.

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At the Money2020 Conference, much of the discussion centered on various types of mobile pay-ment schemes, from person-to -person fund transfers to digital wallets that allow a mobile phone to be used in place of a payment card or cash.

It soon became clear that most of these mobile payment schemes were dependent to one degree or another on merchant- funded offers to finance their operation. In our opinion, the simple replacement of a payment card with a phone does not provide enough value to persuade the average consumer to switch to mobile payments. While mobile payments do have advantages over payment cards and cash, there is a learning curve and switching costs that inhibit adoption. Therefore, consumers must have a powerful incentive to try the new technology.

As it happens, “daily deals” programs such as Groupon and Living Social have already provided an example of the sort of incentive that merchants are willing to finance: a coupon worth 50 percent of the value of a purchase of a certain size. The value of these incentives far exceeds what payment card issuers have traditionally been able to offer based on merchant payment card fees (typically 1 percent or less of the value of a purchase), and even those minimal rewards have provoked a class-action lawsuit and major legislation.

The crucial difference between ‘daily deals,’ or (more generally) direct merchant offers and payment card usage rewards (also known as ‘earn and burn’ programs) is in the restrictions: direct offers are restricted both in which consumers receive them as well as how they can be used. Therefore, a merchant can offer a substantial discount in confidence that it will result in additional sales, and that it can track the return on its marketing investment.

Figure 1 shows payment card usage rewards and direct merchant offers as two poles of a spectrum, with a hybrid system of card-linked offers in the middle.

Card-linked offers are like traditional “earn and burn” programs in that they are associated with a particular payment card, but are restricted in the same way that a direct merchant offer is.

Money 2020 And The Business Case for Mobile Payments: The Role Of Rewardsby Aaron McPherson, Practice Director, Worldwide Payment Strategies, IDC Financial Insights

From the merchant perspective, financial institutions have data about overall spending patterns by their customers, not just their spending with that merchant.


The spectrum of rewards programs

Figure 1: Base on data from IDC Financial Insights, 2013

Standardexchange rates, little targeting

Limited merchant

involvement

issuer and merchant - funded

Variableexchange rates, little targeting

Multiple merchants

Mostly merchant-

funded

Targeted offers based on

spending history

Multiple merchants

Merchant- funded

Targeted offers based on consumer

behavior

Multiple merchants

Merchant- funded

Standard discounts, little

targeting

Single merchant

Merchant and manufacturer

-funded

Mer

chan

t-ce

ntric

Bank

-cen

tric

“Earn and burn”

“Offer malls”

Card-linked offers

“Daily deals” Loyalty programs

Single issuer

Multiple card issuers, with

cosmetic customization

Consumer portal (groupon, living

social)

No issuer involvementSingle

issuer

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BENEFITS

The main benefit of a card-linked offer for a card issuer is the additional revenue it can provide in the form of a commission from the merchant (or more accurately, from an offer syndication network). This revenue can not only offset legally-mandated reductions in overdraft and interchange revenue, but can provide funding to support mobile payment services.

From the merchant perspective, financial institutions have data about overall spending patterns by their customers, not just their spending with that merchant. This allows more precise delivery of customer acquisition offers than is possible through direct mail or advertising.

CONSIDERATIONS

At the Money2020 conference, there was considerable controversy about the card-linked offers model, for several reasons:

• Both financial institutions and merchants had concerns about their customers’ data being used in ways contrary to their inter-

ests; for example, financial institutions feared reputational damage if a merchant failed to fulfill an offer, while merchants worried about their data being used to generate competitive offers.

• Financial institutions are sensitive to charges that they are selling their customers’ financial data, so the programs have to be clearly documented and presented on an ‘opt-in’ basis.

• Merchants are still uncertain about the value of card-linked offers, since they do not have much experience with them, and there are many competing programs with different terms and conditions.

• Both sides see mobile payments as an opportunity to increase their influence over consumer purchasing behavior, and perceive any increase in influence by one side as a loss of influence by the other.

• Merchants believe that the current payment card system costs them more than it benefits them, and are anxious to prevent financial institutions from re-creating this situation in the mobile context.

Overcoming these concerns will require both sides to proceed cautiously but deliberately in order to establish trust and a common understanding of the value of personal financial data.

CONCLUSION

Financial institutions need to more effectively leverage the consumer data that is locked in their debit and credit card products so that they can obtain new revenue streams and reduce their reliance on interchange and overdraft fees. Doing this will require a new willingness to actively partner with retailers to drive new business to their stores. While financial institutions obviously do this today, transaction-based marketing requires that they redefine their customer relationship goals from ‘ownership’ to influence. The more a financial institution increases its influence over its customer’s economic decisions, the more it will secure its own position. In addition, the financial institution will gain more influence over the retailers and manufacturers with which it does business, helping to offset the commoditization of business banking.

Adapted from “Business Strategy: The Strategic Opportunity in Transaction Marketing Programs”

Copyright Notice

The analyst opinion, analysis, and research results presented in this IDC Financial Insights Executive Brief are drawn directly from the more detailed studies published in IDC Financial Insights subscription services. Any IDC financial Insights information that is to be used in advertising, press releases, or promotional materials requires prior written approval from IDC financial Insights. Contact IDC financial Insights at 508-620-5533 to request permission to quote or source IDC Financial Insights or for more information on IDC Financial Insights executive Briefs. Visit www.idc-fi.com to learn more about IDC Financial Insights subscription, consulting, and Go-to-Market services.

Copyright 2013 IDC financial Insights. Reproduction is forbidden unless authorized.

Since 2000, Aaron McPherson has led the global payments research program at IDC Financial Insights. Aaron writes and consults with clients on a wide array of subjects, including enterprise payments, financial supply chain management, mobile and emerging payments, card regulation and international payments.

The more a financial institution increases its influence over its customer’s economic decisions, the more it will secure its own position.

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As banks across the region are warming to mobile apps, strategies and offerings are becoming con-siderably more ambitious. Some are releasing apps full of features and functionality to impress cus-tomers and achieve differentiation; others are seeing the opportunity to develop a mobile app strategy as a chance to revamp their overall presence via the mobile channel. And let’s not forget the vast populations of unbanked or under banked who do not have access to a smartphone. no matter the approach, and the bank taking it, it's clear that the endgame is about enabling financial services that harness mobile to deliver real benefits to all customers.

Throughout 2012 mobility continued to be a key area of focus for financial institutions in Latin America, with smartphone apps emerging as the preferred channel for banks seeking to project a more sophisticated image. In fact, banks enthusiastically embraced smartphones’ inherent advantages despite the reality that a vast majority of the population still relies on feature phones with limited data capabilities.

Due to the growing proliferation of both Android and iOS devices, coupled with mobile network operators’ offers of compelling monthly plans, banks increasingly saw mobile apps as a way to drive mobile banking adoption and create differentiated brand and service offerings. This mobile app phenomenon held true for leading financial institutions throughout the Latin American region, where it was treated as a priority, more so than targeting the unbanked populations.

That said, rural banks and the majority of microfinance institutions continued to offer rudimentary mobile banking services that leveraged the SMS channel. Mass market-focused financial institutions, such as Davivienda in Colombia and Caixa Econômica in Brazil, also proved to be the exception, targeting the unbanked with mobile wallet solutions.

Apart from the proliferation of smartphones, other factors that drove, and will continue to drive, banks’ interest in mobile apps include security considerations, the general lack of a viable USSD alternative, and the penchant of mobile operators to dramatically increase the cost of SMS messages. In some countries banking regulators’ insistence on the use of a second authentication mechanism (2FA), in some cases involving IVR callback, for SMS banking transactions caused financial institutions to appreciate the benefits associated with offering banking via the mobile app.


Mobile Commerce And Financial Institutions In Latin America: An Evolving EcosystemBy Mary A. Gramaglia, Director of Sales, Latin America, Mobile Commerce, SAP

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.

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Despite the challenges, as banks continue to place significant emphasis on mobile apps, service offerings are becoming considerably more ambitious. 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. Many banks leverage the channel to cross-sell new products and give consumers the opportunity to apply for, and receive, on-the-spot credit line increases. Mobile-app-enabled person-to-person transfers leveraging consumers’ Facebook contacts are also gaining traction.

In countries ranging from Costa Rica to Chile, interest is growing in enabling card-less cash-out at ATMs so that consumers who receive funds via P2P transfers, but who are not existing bank customers, can still gain access to their funds via ATM networks. Some services, such as remote deposit capture, a popular feature in the U.S., have been absent in Latin America. This is due to regulation that does not permit virtual deposit of a physical instru-ment, and not because of a lack of interest on the part of either banks or consumers

DIFFERENT APPROACHES GAIN TRACTION

With the widespread focus on mobile apps among many banks who had previously not emphasized the channel, leading banks such as Brazil’s Banco Itau and Banco de Chile — who were at the forefront in deploying mobile banking apps — are now re-visiting their strategy around how applications can best be used to maintain differentiation and deal with escalating costs associated with realizing ambitious plans.

Use of a hybrid container approach for application deployment has gained traction as banks seek out vendors with broad product offerings in an effort to control costs associated with customization. Ambitious, feature-rich offerings are being planned in multiple phases as banks try to quickly make available differentiated mobile apps they can steadily expand and improve upon.

In the midst of all the attention given to the importance of a more sophisticated, app-driven presence, has come the realization for the region’s banks that, for the most part, the mobile channel remains one that is not easily monetized. The mobile channel

was originally seen as a means for reducing costs, and only recently, as a new way to help banks increase revenue through cross-selling products. In the card-less ATM cash-out option, banks with significant physical presence are seeking to reinforce that differentiation through seamless integration with their mobile offerings.

Internet banking offerings are being similarly re-examined, with many banks convinced that superior mobile solutions will highlight deficiencies in their online presence. During 2012 it was not uncommon to see the region’s financial institutions launch Internet banking projects in conjunction with, or in parallel to, app-focused mobile projects. While the majority of initia-tives had the consumer in mind, during the past year Latin American banks increasingly sought to target corporate customers with enhanced, integrated Internet banking and app-driven mobile solutions.

With the mobile momentum continuing its push throughout the region we can expect a variety of trends to accelerate in the coming years. Banks facing limited budgets and the possibility that their IT teams may not be able to manage increasingly sophisticated

mobile offerings are expected to opt for SaaS solutions. This will particularly be the case in the smaller countries of Central America, where actual numbers of mobile users are quite low and banks find it hard to justify significant mobile app related expenditures and the ongoing effort required to maintain them.

The reverse will also be true. In those countries such as Colombia and Argentina, where outsourced mobile banking solutions are already in place, local providers (Redeban and Banelco, respectively) will be challenged to remain relevant in increas-ingly competitive, mobile app environments, in which differentiation will be key. There are also those financial institutions affiliated with a strong retailer – such as Chile’s Banco Falabella and its sister department store chain Falabella, and Mexico’s Elektra, which shares the same corporate owner as Banco Azteca – that will re-imagine the mobile opportunity by leveraging these relationships to develop mobile commerce ecosystems that expand mobile banking offerings to include point-of-sale purchases and encourage customer loyalty.

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.

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Overall, mobility is likely to take different forms depending upon a bank’s level of ambition in the channel, desire for differentiation, size of actual and targeted market, and available budget. What is certain is that Latin American banks will increasingly perceive the mobile app as a key tool for reaching customers now and in the years to come.

Mary A. Gramaglia is responsible for driving sales of the SAP’s mobile banking, mobile payments and online banking solutions in Mexico, Central and South America and the Caribbean. She has extensive international experience in both the telecom and financial services sectors and has worked in sales, marketing and business development for a broad range of blue-chip companies that includes Lockheed Martin, Sprint International and Citibank.

Latin America and the Caribbean region (LACA)1, has been one of the last regions to get swept up by the mobile money phenomenon. Within this region, Mexico and Brazil are the two largest countries, both classified as ’Advanced emerging’. While Brazil was the first country to introduce branch-less banking on a large scale, Mexico is now poised to transform financial services through the new mobile accounts. In this article, we analyze the similarities and contrasts, which are useful in understanding how digital money initiatives are unfolding in the region in 2013. The analysis is based on the continuously updated Digital Money SAGE knowledge base, and the Shift Thought Digital Money Series.

Although Mexico has done much to bring down the costs of remittances from the U.S., the financial crisis is now affecting the volumes. Remittances fell by 1.5 percent in 2012 as compared to 2011, with December 2012 marking the sixth consecutive month of reduction. Meanwhile Brazil, though relatively unaffected by rising unemployment in the U.S., does feel the pinch through the effect on its major trading partner, China.

For Brazil, domestic and regional money transfers are bigger drivers than in Mexico. What is common though is that in both these countries 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.

Since 2007, when M-Pesa Kenya became the wallet that launched a 100 others, Latin American countries largely remained an untouched “black spot” in the mobile money revolution. So it is really interesting to see the picture changing now.


Digital Money Sweeps Mexico And BrazilBy Charmaine Oak, Practice Lead, Digital Money, Shift Thought

FOOTNOTE

1. LACA here refers to Latin America (all of the Americas south of the USA) and the Caribbean

While the majority of initiatives had the consumer in mind, during the past year Latin American banks increasingly sought to target corporate customers with enhanced, integrated Internet banking and app-driven mobile solutions.

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Over 2013, Pakistan, Bangladesh, India, Nepal and many other countries in Asia Pacific are rapidly reducing the ‘leakage’ in reaching money to the poorer population. Mexico is poised to do the same with knock-on effects on both North and South. Looking north, the change in the way remittances are disbursed in Mexico is tipping the balance from cash-

to-cash operators to new entrants like Xoom. Looking south, towards Central and South America, if Mexico does for its domestic money transfer what it did for the international remittances, a lot of other countries are likely to follow with a cookie cutter approach based on these recent developments.

KEY ENABLERS

Mexico has already achieved remarkable transformation in one area. It managed to bring down the average cost of remittances from the U.S. to Mexico to just US$5.57, as against US$11.95 from the U.S. to Brazil1. This was achieved through remarkable collaboration with the U.S. and implementation of direct-to-account, highly competitive services for migrant transfers. This is significant as Mexico is the fourth largest recipient in the world. But even more transformative could be the next set of changes that unfold over 2013 and affect the way money is transferred domestically, and in the region.

The driving force behind taking banking services to the masses is the remarkable ruling from Mexico’s Ministry of Finance, requiring all Opportunidades2 payments to be deposited direct to bank accounts by December 2012.

Considering that as recently as 2011, over 66 percent were paid in cash, this seems an incredible feat to expect. However, the new mobile accounts that are allowed since mid-2012 are the key enablers that

make this possible. Also, Brazil is a shining example, having earlier achieved a transformation to non-cash payments, so that a mere 1 percent are now paid in cash through Bolsa Familia, the social cash transfer scheme equivalent to Mexico’s Opportunidades.

Another key driver towards the transition to non-cash payments in Mexico comes from the Mexican Finance Ministry, Secretaría de Hacienda y Crédito Público de México (SHCP). This is by way of anti-money laundering (AML) regulations that restrict the amount of physical U.S. Dollars that can be deposited in Mexican banks, in an attempt to control money laundering.

It is important to compare the access that markets in Mexico and Brazil have to channels and financial services, in order to understand the need for digital money initiatives.

Figure 1 compares access channels available for outreach in each country. Brazil is already feeling the pain of the mobile operators in developed countries, with mobile penetration reaching historic highs. Mexico, however, still has some

Access channels in Mexico and Brazil

BrazilMexico

255

9182

43

203

11592

25

InternetMobileBankedPopulation

Figure 1: Based on data from The Shift Thought Digital Money SAGE

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.

FOOTNOTE

1. World Bank Remittance Prices, Third quarter 20122. www.oportunidades.gob.mx/Portal/wb/Web/oportunidades_a_human_development_program

http://www.oportunidades.gob.mx/Portal/wb/Web/oportunidades_a_human_development_program

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way to go to put a mobile into the hand of every person. While online payments have taken off in Brazil, it is mobile that has the real potential in Mexico due to the paucity of Internet connections.

PAYMENTS AND ECOSYSTEMS

More importantly, 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. Financial services with a new business model are now available from large retail groups that have set up banks in Mexico. Banco Wal-Mart and Banco Azteca encourage people to bank-while-they-shop. There are also a number of initiatives underway to fill the gap left by a paucity of ATMs and POS.

Brazil, however, has successfully used the banking correspondent route to create strong bank outreach and widespread availability of POS machines. It has also put debit cards in the hands of lower income consumers.

Now Mexico aims to follow that path, through the use of non-bank agents. Since 2008

Mexico has allowed banks to use agents, and since 2010, mobile operators can be the agents for banks. However, concern arises from the dominance of a few players, not unlike the situation in the banking side.

From Figure 2, it is clear that América Móvil owned Telcel, and to a lesser extent Telefónica, could have economies of scale from existing top-up agreements to build new agent networks that may further skew their advantage in the marketplace. Comparatively, the Brazil mobile market is much more evenly distributed between the top four players, as can be seen in Figure 3.

NATURE OF SERVICES

So, the need for the new mobile accounts in Mexico is there. But how fast will the services achieve traction? Do the new services have characteristics that can transcend long established business models of the providers and truly deliver value that attracts daily use? To answer this requires an analysis of the services as they unfold.

One of the earliest to be announced was Transfer, the joint venture launched in

Nextel (NII) 4%

Nextel (NII) 2%

Others 0%

Telcel (America Movil) 69%

Vivo (Telefonica) 28%

Telecom Italia (TIM) 25%

Lusacell 4%

Oi (Telemar) 20%

Movistar (Telefonica) 23%

Claro (America Movil) 25%

Indicative market share - Mexico

Indicative market share - Brazil

Figure 2: Based on data from the author


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October 2011 by Citi Group and América Móvil. Through Telcel, América Móvil controls close to 70 percent of the mobile connections in Mexico. América Móvil, through the Claro brand, is also a dominant player in Latin America. América Móvil has stated ambitions of converting 9 percent of its base to mobile banking by 2012.

The other significant joint venture is Wanda, the brand announced in February 2012 for the Movistar-MasterCard initiative earlier announced in January 2011. The Telefónica Movistar brand has more than 100 million customers in 12 countries in Latin America.

In Brazil the joint venture targets 65 million Vivo customers with a mobile wallet. It will offer an alternative approach to Paggo from Oi, a relatively simple mobile credit card SMS-based payment service supported by an OTA downloadable SIM application.

But where there is a wallet there must be cash in-cash out agents, and this is where the retail sector comes in. When the world’s largest retailer is also a bank, as in the case of Mexican Banco Wal-Mart, it adds a whole new dimension for offering value bundles

to the consumer. Further advantage stems from the availability of better consumer insights, loyalty offers and the creation of multiple revenue streams.

Unsurprisingly then, there are interesting partnerships developing involving players from the banking, mobile and retail industries. One of the most important of these is the launch in Mexico of mobile accounts by BBVA Bancomer and Coca-Cola Femsa, the largest soft drinks manufacturer in Latin America. Through the Coca-Cola chain store Oxxo, branchless banking services can now be offered to support a range of services including money transfer, bill payment, prepaid mobile recharge and in-store payment.

WHAT LIES AHEAD?

In the competition that is developing in each of the markets, it seems the retail payments outreach in Mexico and Brazil could start to become more alike. Mexico stands to benefit with more points of transaction, ATMs and point of sale devices, while implementing agency models already prevalent in Brazil. As prepaid cards

become the ‘mobile accounts’ in Brazil, consumers stand to gain by getting more control when they manage them via their mobiles. This will supplement the debit card services currently offered with the low value accounts. Altogether, there promises to be a great deal of learning for Latin America, and indeed the world, from the services rolled out in these two markets over 2013.

The devil lies in the detail, and in the process of our continuous analysis of digital money initiatives covering more than 32 services around the world, one thing we at Shift Thought have learnt is that no two markets are alike. Ultimately, there is no substitute for taking the time to understand each, in terms of the history and ecosystem, in order to have a better chance of delivering appropriate services and staying relevant.

Charmaine Oak brings a unique perspective, having contributed to the global development of digital money through the leading money transfer company Western Union, a leading bank (Royal Bank of Scotland), a global mobile operator (Orange FT), LogicaCMG (the pioneer in SMS) and Wipro a leading IT provider. Her area of expertise is in mapping opportunities in digital money and providing consulting services based on Shift Thought’s Digital Money SAGE technology.

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.

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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.

PART 2: BANKING IN DEVELOPED MARKETS: TAKING CHARGE OF CHANGE

PART 2: BAnKInG In DeVeLOPeD MARKeTS: TAKInG CHARGe Of CHAnGe

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Out with the old and in with the new. The 'old school', which was all about pushing one-size-fits-all marketing and offers at customers, does not resonate with the customer of today. It’s the customer that now has all the power and access to technology, so the 'new school' is about winning these customers by giving them control of their experiences 24/7/365 days through the channels of their choice. To make this transformation possible most Banks must change their operating model, and generate customer-centric insights 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.

In decades past banks were in quite an enviable position. The power of control was with the bank, and customers adapted their schedules to make visits only during banking hours, accepted bank fees and pricing driven by internal KPIs, not individual needs. Customers avoided switching banks because they had limited access to which products were on offer with the competition unless they actually visited those banks.

Fast forward, and the shift of power has moved 360 degrees, and customers are increasingly in control. Always-on, always- connected, these empowered consumers are doing their banking whenever and wherever they want. Customers also have a desire for more visibility and more services.

As a result of this power shift and the fact banks are being forced to service customers at a lower cost, physical branch banking is in decline. It will soon join 'one-size-fits-all' marketing and advertising on the scrapheap of outdated business models that have failed to accept today's hard truth: consumers want what they want the way they want it.

Increasingly, banks are seeing a clear shift from physical to digital channels. In fact, Citibank has reported that 95 percent of all transactions for Citi in Asia occur outside a branch office1.

But it's not just about flexibility in how customers access information and advice. Customers also want visibility into all their accounts, a one-stop view into their finances that will allow them to make smarter decisions and manage their money whether it’s related to their saving, current, trading, or insurance account. It's a demand banks must meet to remain truly relevant in the 21st century.

(RE)BUILD TRUST

Addressing the requirement that customers have unique needs that merit attention also sends a strong signal that banks are resolved to serve their customers better. This is critical at a time when trust in banks is at an all-time low, especially after the financial crisis and the continuing issues we are seeing throughout Europe and other parts of the world

From the allegations of mortgage fraud at Deutsche Bank to news of rogue traders at UBS, hardly a month in 2012 went by that the financial services was not rocked by scandal or a crisis in management. The industry's reputation has suffered, and now banks must work to rebuild trust.

This is one of the key takeaways offered by the 13th annual Edelman Trust Barometer2. The report, based on a survey of more than 31,000 respondents in 26 markets around the world, measures public trust in institutions, industries and governments. Specifically, the Trust Barometer shows a steep decline in trust in banks from 56 percent in 2008 to 45 percent in 2013.

What can banks do to regain their footing and restore trust? While there are no simple answers here, the Trust Barometer stresses that all industries and governments face the same task and suggests that 'trust building' attributes are clustered around actions that encourage engagement.

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


FOOTNOTE

1. www.theasianbanker.com/press-releases/citi-mobile-clients-top-one-million-mark-in-asia-pacific-region2. www.edelman.com/trust-downloads/press-release/

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BREAKING BARRIERS

Listening to (and responding to) customer needs, acknowledging customer feedback (positive and negative) via social media and offering solutions that help customers in planning their financial futures are items that top the agenda for banks in both developed and developing markets. Many CEOs today talk about ‘customer centricity’ as a key focus.

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

Clearly, building the right backbone and capabilities to enable multi-channel banking is key, especially as many banks are restricted in what they can change in the core due to the cost and ‘heart surgery’ involved. It is not about implementing silo solutions that allow customers to conduct banking regardless of their preferred platform. This approach may bring the customer in, in the short term, but it does not address the problem at its roots.

Voice, ATMs, mobile phones, smartphones, mobile apps, tablets, PCs, personal navigation devices, games consoles — and the list goes on. Banks must not only implement new channels, but they must also develop solid cross product integration to achieve consistency across all customer touch points. Success means a true multi- channel architecture that also provides a consistent 360-degree view of the customer and the various lines of business.

In many cases we have observed first-hand, banks have jumped on the mobile app bandwagon, adding mobile as just another digital channel. While some banks have built bespoke applications and platforms that enable banking and other extremely valuable services using technology like location-based services, there is no underlying platform in place to give banks a consistent user interface or 360-degree view of the customer and products across all platforms.

Our experience shows this is a flawed approach that breeds yet more siloed channels and adds additional costs and strain to the banks, which they cannot continue to justify or support. It results

in a fragmented and inconsistent view of the customer across products and lines of business. For one Asia-based bank this approach is now costing it tens of millions of dollars to just support the release of new mobile applications!

What’s worse, underestimating the need for customer data to be accessible and integrated through all channels may ultimately cost banks competitive advantage. Their decision to build on top of the legacy systems, rather than take the necessary steps to integrate all channels, leaves the door open to new entrants and online giants.

Google, Apple, Facebook and Amazon are just a few of the companies moving full-speed ahead on aggressive customer-centric strategies, aimed at piecing together the clues customers leave behind across all channels (profiles, preferences, past purchases, browsing patterns), develop a single view of the customer and drive commerce with personal and relevant offers. And there are other payment companies and mobile operators that also aspire to take a bigger chunk of the wallet, and they do not have ‘legacy’ systems to weigh them down.

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Ironically, banks are very well equipped to deliver customers more relevant (hence valuable) bundles of products and services provided they take steps to become the authoritative source of consistent customer data across all channels. The ability to move from a one to 1000 offer to customer to a 1:1 offer can become reality with the right architecture in place.

BRIGHT SPOTS

Fortunately, many banks are now seeing the opportunity ahead. They are competing smart, armed with comprehensive strate-gies that harness multi-channel banking to satisfy customers and grow their business. We are seeing this with some of the Tier 1 banks in Australia, including ANZ, and the Commonwealth Bank of Australia, as well as in banks across North America and Europe. This change though is not just evident in developed markets, it is also happening in developing markets like South Africa and Bangladesh.

Standard Bank in South Africa, one of our core banking partners, is one of the most innovative banks in the world. The growth they have seen around ‘Inclusive Banking’

is centered on a multichannel approach. From offering customers remote account opening in the field, hundreds of kilometers from the nearest physical bank, to creative services like ‘funeral plans’, Standard Bank is pushing the boundaries around customer centricity by embracing multichannel. In a country where over 85 percent of the population has a mobile phone, the digital channel is critical for its future.

Another customer Dutch-Bangla Bank Limited (DBBL) is among the pioneers in mobile innovation. Some 87 percent of the population in Bangladesh, a country with a population of 160 million and a mobile penetration rate of just around 60 percent, do not have ‘official’ bank accounts. Determined to drive financial inclusion DBBL made the decision to harness mobile, the channel the unbanked have made an integral part of their lives.

In early 2012, DBBL launched a suite of mobile banking services — and 12 months later — it counted more than 1.2 million new customers with 5,000 to 6,000 new customers joining per day. These customers have deposited more than $7.75 million using the mobile banking platform, not the legacy core banking system.

DBBL's suite of mobile banking services use a technology platform that it currently operates as a separate platform from its core banking system. However, there are plans underway to link these systems to enable a single, integrated view of the customer across all channels. The goal is to use these insights to extend lending services, in the form of microfinance, to the unbanked and the underbanked.

In the more developed markets banks increasingly see multichannel as an essential step in a wider strategy to add value (and encourage loyalty) by providing offers that are completely aligned with the needs of key customer segments. It's all about winning the race to power payments and commerce.

From coupons and vouchers, to location -based services and proximity payments, banks are taking advantage of advances in technology to deliver on the promise of one-to-one marketing. We are seeing first-hand how many of our customers like ATB Financial and CIMB in Canada and RBS Citizens Bank in North America look to use digital channels for new services like QR code payments, remote check deposit and location-based services.

To this end banks in North America, Europe and Australia are adopting customer-centric models that allow them to forge a new value web with them at the center, a position they can claim because they have begun to use analytics to gain deeper customer insights across all channels. Sharing this information with merchants and other players — adhering to personal privacy laws, of course — builds a robust and sustainable business ecosystem. It's a critical next step as the mobile phone morphs into a mobile wallet to ultimately become everyone's new portable and personal point-of-sale.

BREAK AWAY

The evolution of banking mirrors the evolution of technology. IVR, ATMs, the Internet and now mobile banking — each channel was implemented as part of a wider strategy to improve customer access to products. In today's increasingly customer-centric world this outdated approach short changes both customers and banks.

Research shows that consumers demand a single view into their accounts — and every aspect of their relationship with the bank — across all channels. This demand

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.

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will only grow as consumers embrace digital channels to pay bills, conduct commerce, purchase transport tickets and manage their daily lives.

Will customers vote with their feet if banks fail to offer them a single, consistent view of their financial services? Let's just say that the barriers to switching banks (or moving to a new entrant that offers a helpful and more holistic view of consumers' transactions) will be quite low.

For banks, enabling a single and consistent view into customer data on multiple channels not only satisfies customers. It also paves the way for them to generate additional sales, enhance products, refine pricing and improve CRM.

French writer Victor Hugo once famously said, "There is nothing more powerful than an idea whose time has come." After decades of building on top of legacy systems, the arrival of the digital channel being led by mobile and the emergence

of the empowered consumer have come together to create a new urgency for new models. Banks must tear down the silos and replace their product-driven mindset with a singular and sincere focus on the customer. Evolve or get left behind. It’s time for true multichannel platforms.

Simon Paris leads SAP's end-to-end footprint in the Financial Services Industries, that today covers more than 5,700 customers. Previously, Paris served as vice president at HP, where he was responsible for the P&L of a US$17 billion division.

Matthew Talbot is responsible for mobile banking, online banking, mobile consumer payments and mobile inclusive banking. Talbot joined SAP in 2004 via the acquisition of Sybase Inc., where he played a key role in developing the company’s mobile commerce initiative. Previously, he was based in Beijing and Sydney, as CEO of Mobile Internet Group, a Wireless Application Service Provider and publisher.

Business school dogma may dictate that companies must consistently exceed customer expectations to beat the competition. But studies show that delivering simple conve-nience — not bells and whistles — results in satisfied customers and lasting loyalty. This is why RBS Citizens has purposely chosen a solid approach to mobile banking that streamlines important decision -making and removes the friction from moving money.

Research suggests that mobile corporate banking is in its infancy. But, turn that statement on its head, and it’s clear that there is also a first-mover advantage for banks that deliver the services customers appreciate — and use — the most.

Indeed, a strong business case for mobile corporate banking services exists, and research, including a string of surveys

conducted by the Aite Group, sheds some interesting light on what customers expect — even demand — from their banks.

For example, a survey of 300+ treasury executives conducted by the Aite Group highlights key requirements that are just as pertinent today as they were when the research firm published them1 in 2010.

Among the findings: approximately two-thirds of businesses would be at least “somewhat likely” to perform basic transactions over corporate mobile banking services in the next 12 months, while 42 percent described themselves as ‘likely’ or ‘very likely’ to do so. More importantly, the Aite group found that over half (56 percent) of survey participants expressed interest in performing more advanced functions, such as approving transactions and initiating payments.

Fast forward, and these observations, combined with the results of focus group research conducted on behalf of RBS Citizens, underlines the importance of delivering mobile corporate banking

Removing friction To Build RelationshipsBy Scott Manley, SVP, Head of Product Delivery, Channel Treasury Solutions, RBS Citizens


It's all about winning the race to power payments and commerce.

FOOTNOTE

1 www.aitegroup.com/Reports/ReportDetail.aspx?recordItemID=719

http://www.aitegroup.com/Reports/ReportDetail.aspx?recordItemID=719

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services that allow decision-makers to get more done faster using the smart-phones and connected devices that have already become part of their daily routine.

MOBILE EXPLODES

Obviously, mobile plays a central role, which is why RBS Citizens launched accessMOBILE in 2010, a mobile corporate banking offer catering to the needs of commercial customers, ranging from small businesses to large corporations. It currently exists as an iPhone application, allowing customers to approve wires, make transfers and check balances. In the next phase there are plans to offer an Android app, as well as a Web browser experience that works for both Android and iPhone users.

Of course, the meteoric rise of tablets has also had an impact on the mobile roadmap. Research documents the massive increase in tablet sales, showing that shipments have more than tripled.

Against this backdrop, an increasing number of corporations, our target audience

for mobile banking services, have started to issue their executives iPads and tablet devices. It’s a seismic shift that we have observed over just the last 12 months, and clearly one that will continue to impact the banking business. Small business owners are also large users of tablets using them for everything from administrative tasks to cash registers.

CONVENIENCE PAYS DIVIDENDS

But it’s the customer, not advances in technology, that guide strategy, serving as what we like to call the ‘North Star’ for RBS Citizens’ mobile banking offerings. And it’s this singular focus on the customer that confirms we deliver real value when we provide mobile banking services that remove friction and boost efficiency.

Put simply, an approach aimed at merely replicating online services is sure to fail. At RBS Citizens we know that the majority of our online customers who use corporate banking services are cash management professionals that are in front of their PC from 8 to 5 Monday through Friday. However,

What to offer via mobile?

How likely would your business be to consider making the following types of business

2009 2011

Check bank account balance Already do this Definitely/probably would consider

13% 24%

33% 31%

Make internal bank funds transfers

Already do this Definitely/probably would consider

5% 22%

26% 28%

Pay bills Already do this Definitely/probably would consider

5% 21%

29% 26%

Approve debit or credit transactions


2% 22%

17% 32%

Make expedited payments Already do this Definitely/probably would consider

1% 22%

19% 33%

Make transfers between external bank accounts


2% 18%

15% 31%

Approve wires Already do this Definitely/probably would consider

1% 17%

14% 26%

Capture and send check images for remote check deposit using mobile device camera


2% 15%

13% 37%

View and make pay/no-pay decisions on positive pay exceptions


1% 15%

12% 32%

Approve payroll batches and other ACH payments


1% 13%

15% 23%

Figure 1: Based on data from Aite Group study “The ROI of Small-Business Mobile Banking” 2009 and 2011

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.

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the majority of our mobile customers are small-business owners, managers on the move and time-strapped executives that are everywhere but in front of their PC. The former group is the one that delves into the details and handles daily operations, while the latter wants to make sure they have the appropriate oversight to keep things moving while they’re on the move.

Focus group research reveals that roughly 95 percent of our customers do most of their cash management from their desks. It’s the remaining five percent, the decision -makers and the small-business owners wearing a bunch of hats, who need mobile services to move the money. They don’t want or need a month’s worth of data to do reconciliation. They want to approve wires on the move and make decisions on positive pay.

The scenario is familiar. A business owner is on the road, or on vacation, and is contacted to approve a wire in order to get a payment through. We know from asking customers, and from checking this against the majority of calls received through customer care services, that this is where mobile must be harnessed to streamline the process.

That’s why we plan to add additional functionality to accessMOBILE allowing customers to initiate wires by filling in a template on their mobile device. Due to concerns about security and risk our customers will not be able to do free- form wires via mobile, but they will be able to initiate this from a template. It also won’t be possible for customers to change or authorize users via mobile, but the service will allow customers to be the second approver on changes to users within our systems.

POSITIVE IMPACT

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. Customers, particularly small-business owners, are positive about our services, praising the convenience and speed. As fraud continues to rise in the commercial space, treasurers, CFOs and other executives appreciate having the oversight and ability to approve transactions while on the go.

In mobile banking speed is everything. We focus our efforts on making sure the services we offer are faster and easier than those of our competitors. If a competitor service allows customers to conduct business in five minutes, and our service lets the customer accomplish the same task in two clicks, then chances are customers are going to do their banking business with us.

Ironically, our mindset is the exact opposite from what it would be if we were offering a consumer service like news or entertainment. There the endgame is all about finding ways to extend the time people spend on a Website or interact with an app.

At RBS Citizens the goal is to get customers in and out of the service fast. Success is all about creating efficiency and respecting customers’ time. Significantly, that is the ‘wow’ factor about mobile corporate banking services that impresses our customers the most.

After all, this is a customer segment that is time-strapped and short on resources. They are under pressure to do more with less, and mobile banking services that can reduce complexity and remove friction are a huge advantage when it comes to building relationships and driving lasting loyalty.

As Head of Product, Scott Manley is involved in the conceptualization and implementation of emerging technologies and solutions for commercial customers. He focuses on revenue generating and process enhancement initiatives as they relate to Treasury Management solutions including file transfer, online and mobile technologies, secure messaging, and Customer Relationship Management.

It’s a seismic shift that we have observed over just the last 12 months, and clearly one that will continue to impact the banking business.

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components in a single place. Interchangeable modules (bill payment, wire transfers, etc.) would be served up to the device/OS and modality selected by the user, along with a properly skinned front end.

This is the future of electronic banking, and it will take several years to get there. It requires a common middle layer with business logic and messaging infrastructure.

Furthermore, these changes will have profound implications for the vendor community and the financial institutions that rely upon them. Online and mobile banking vendors have already begun to consolidate in the consumer space. They will continue to join forces in the form of acquisition.

Vendors with existing online and mobile port-folios will invest in bringing them together. Tablets will become a natural extension of their solution capabilities. At the end of the day, users simply expect to pick up any device and have the appropriate experience. The burden is on the bank to provide it.

Users are oblivious to the challenges banks have in getting digital banking up to the speed of the Web. These challenges are being compounded by the range of devices (tablets, smartphones, computers) and operating systems, the consumer may want to use to bank. The digital world is moving at light speed, and as banks bolt on additional channel capabilities (such as mobile), it is becoming very difficult to manage. Sure, banks can decide to build an iPhone app, build an Android app, refresh the Web experience, and then build something for the tablet. If this development is done in a siloed manner, it will cost the bank a fortune.Financial institutions and the software vendors that serve them need to come up with a more holistic approach. An ideal scenario would be for the bank to be able to house all of its electronic banking

ONE SOLUTION TO RULE THEM ALL?

Convergence goes well beyond front end online and mobile banking solutions. For a number of years, a group of software vendors have been working on creating a single electronic banking solution. This solution could serve multiple market segments, and has taken on several complex forms over the years (depending on the vendor and its strategy).

For example, there are solutions that serve retail and small business online; others that serve small business and corporate online; and finally, some that have attempted to conquer consumer, small business, and corporate online. This is done by exposing individual modules of functionality (bill payment, wires, ACH, etc.) and providing packaged access to the modules to the various segments (see Figure 2).

The single solution approach has been primarily focused on online banking, though this is bound to change given the criticality of mobile banking. The shift to a device agnostic electronic banking platform is a critical and complex input to a single solution approach.

The Convergence Of Mobile And Online BankingBy Jacob Jegher, Research Director, Celent


It’s certainly challenging to build a single solution; it’s even more challenging, and absolutely critical, to fine tune a segment- customized front end.


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Is it really possible to have one solution to rule them all? Are banks interested in this kind of approach? The answer is not cut-and-dried. However, financial institutions, particularly smaller ones, are gravitating towards single solutions.

• Technology hurdles. It requires a great deal of investment and tech prowess to accomplish this. Some of the software vendors that have gone this route have spent years on this approach and still have not completed their builds. This should invite scrutiny from financial institutions.

Even if the meeting does take place, which group or groups will fund the project? Which group and individual will lead and own the project? This is a totally different story at small banks, where responsibilities, teams, and clients aren’t as segmented.

One solution to rule them all?

Electronic banking platform

Module A

Retail online banking

Small business online banking

Corporate online banking/ cash management

Module B

Module C

Module D

Figure 2: Based on data from Celent

Digital banking must be device-agnostic while providing a tailored experience

Module A

Module B

Module C

Bite sizedModule D

Electronic banking platform

Selective/full

Full solution

Figure 1: Based on data from Celent

Returning users: Log onUser ID

Password

Remember my User IDForgot user IDpassword?

There are a few key challenges here:

Political battles. Large banks are typically very siloed. As such it may not be possible to get the heads of retail online, small business online, and cash management online together at the table to explore this.

JohnQPublic

********

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The convergence of mobile and online solutions is inevitable and comes with a tremendous amount of complexity. It’s important that banks harness technology but don’t always use it as their best foot forward. It’s easy to get caught up in the array of sexy tools and devices on the market, but at the end of the day it’s the customer and their experience that matter most.

Jacob Jegher is a Research Director within Celent’s banking group. Jegher’s research focuses on emerging technologies and business strategies in retail and wholesale banking. He heads up Celent’s online banking research (consumer, small business, corporate cash management) and is a recognized thought leader in this space. Recent research has focused on next-generation online and mobile banking, personal financial management, social media, and financial technology startups

• User experience chaos. Different-size businesses will have different requirements but could access the same technology. The problems creep up on the front end. Should the same user interface to the shared ACH module be provided to large corporations and small businesses? For example, do small businesses even know what ACH is? Many don’t, nor should they have to care. It’s certainly challenging to build a single solution; it’s even more challenging, and absolutely critical, to fine tune a segment-customized front end.

Challenges aside, there’s one very solid factor driving the interest—cost. Purchasing and maintaining one solution as opposed to two or three solutions can certainly be attractive. Tight IT budgets are pushing banks in this direction, albeit at the cost of user experience.

Understanding that small business owners must wear several hats, First Tennessee Bank made the conscious decision to launch a mobile corporate banking service that equipped this customer segment to get more done faster. 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.

If you look at consumer banking services, they are, for the most part, convenient, flexible and easy to use. Our small-business customers are people before they are professionals and have no doubt already been exposed to consumer-facing services through family members, friends or via the media. The small-business owner sees this and says, “Gosh, why can’t I do all my mobile banking for my business the same way?” Our answer is to offer a corporate banking service to meet the very basic — and human — need for simplicity and speed.

In today’s world, agile execution is crucial. But companies aren’t the only ones under pressure to adapt to market shifts quickly. They also require mobile banking services that can keep the pace, allowing their management to make key decisions, conduct transactions and embrace opportunity as it happens. But rather than try to teach seasoned executives new mobile tech tricks, first Tennessee Bank has developed a hybrid approach to mobile corporate banking that builds on the familiar online experience to deliver impressive results.

It has never been easy for companies to be nimble. Large enterprises frequently struggle with a thousand tiny threads of hierarchy that impact their speed and agility, and small-businesses, forced to do more with less, are often constrained by a lack of time and resources.

If this development is done in a siloed manner, it will cost the bank a fortune.

Breaking The Mobile Banking MoldBy Taylor J. Vaughan, Director of Treasury Management Services, First Tennessee Bank


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mobile corporate banking services. To date, the penetration percentage is still in the single digits — but growth momentum shows no signs of slowing.

But, as mentioned earlier, this is also the customer segment that can’t be charged for the new channel, so the challenge for First Tennessee Bank was to deploy the service without high cost to do it.

Fortunately, this is where the ability to build on the bank’s existing online banking back-end systems, rather than launch a totally new mobile service or app, came into place to deliver value to the bank and its customers. Put simply, we basically bolted our mobile banking offer onto the Corporate Online Banking tool from our existing vendor, that also provides the platform for all our banking services, both retail and consumer. In practice, the interfaces that went to all the systems — Automated Clearing House, Account Reconciliation, Demand Deposit Account System and Check Image Systems, among others — interfaces that took the team months to build and implement, were still valid for the mobile banking offer. Therefore, the cost to implement corporate banking services on top of this platform was

FREE AND EASY

We also chose not to charge the customer. Instead we deployed a service that would practically pay for itself.

In many ways, small business customers have more in common with consumers than corporate users. While organizations generally have a team of financial analysts or a staff of accounts receivable clerks, the small business owner is largely a one-man show. On the other hand, we also knew that we would more likely see strong usage and rapid take-up of mobile banking services among small business customers. After all, large companies are often constrained by very clear and protracted policies about how processes have to run, a mindset that can slow adoption of new services because organizations have to change their own internal processes and policies first. Small businesses are faster on their feet because, in many cases, they have to be.

Some 18 months after launch and what was forecast for our corporate mobile banking offer is now fact. As we expected, smaller businesses have been more nimble and willing to make the decision and adopt

very small because the need to build interfaces, often the most expensive part of deploying services, didn’t exist.

By taking a more hybrid approach, bolting onto the infrastructure we bought off the shelf, we were also able to accelerate time-to-market. Allowing some time for the customization that would transform what was essentially an online experience into a mobile one, we were able to get this service up and running in less than 6 months.

FAMILIARITY BOOSTS UTILITY

First Tennessee did not only get more value out of its existing online banking infrastructure -it also used the online service as a blueprint for the mobile offering, rather than build a new mobile banking service from the ground up.

The logic was simple: we didn’t think customers would appreciate having to take the effort to learn and internalize a different model of logging on to use the service. With this in mind, we made sure that customers could use the same ID, the same password,

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response from the customer because they only have a window of a few hours in the morning to let the bank know how to handle these suspicions transactions, which is why it’s also a perfect match with mobile.

With our service, customers can see an image of the check that we have called into question and they can make a decision directly on their mobile phone as to whether the check should be paid, processed or returned.

Finally, we also modified Lockbox, another standard banking service that has been around for years, to cater to customers on the move. In practice, we collect their checks for them, make their deposits for them and make the totals for those daily deposits available on their mobile devices. As a result, customers know exactly what we are going to deposit in their accounts and what amounts are going to be available to them tomorrow, insights that allow them to plan and execute important business decisions.

APPS VS. WEB

Rather than follow the lead of companies — including banks — racing to launch mobile

and the same security profiles they were familiar with from the get-go.

What should the customer be able to do when they logged on? Again we followed the online model, mobilizing the basic functions our customers want and use most. They check their balance, they want to move money and they want to have secondary approval of transactions. The tedious practice of creating the payroll file in the back office is a long and arduous process that customers don’t want to do on their mobile phones. But once that process is completed, then customers do want to review it on their mobile phones. So, we made it possible for the customer to see the totals, see the amount and provide the secondary approval.

Another area we addressed was fraud prevention. We achieved this by allowing customers to use their mobile phones to respond quickly in critical situations. An example is Positive Pay, a service that has been available in banking for years, allowing customers to review transactions that look suspicious to the bank because the customer did not notify the bank in the first place. It’s something that requires a quick

remind them that the corporate mobile banking service uses the same technology. All we are doing is rendering different screens on the exact same security ramp.

GO WITH THE FLOW

At this point, the business benefits of corporate mobile banking services are sharply focused on customer retention and reinforcing the position of First Tennessee Bank as a bank that is on the forefront. We use the tools that help them do their business, and we don’t waste their time with services that emphasize technology for technology’s sake. We also see clear benefits when these satisfied customers become our advocates, telling their business colleagues about the benefits of doing business with a bank that truly understands the pressures of doing more, faster and the proper role of mobile devices in the mix.

Right now it’s all about helping our customers to perform better. But we also see opportunities to wield mobile to boost our own performance. It’s easy to imagine a scenario where mobile can extend and enhance the entire sales cycle, for example.

apps, we decided to buck the trend and design a mobile Web experience that emulated an app, allowing users to use touch to swipe, stretch and scroll.

The result is a mobile optimized Website that looks and feels like an app. The customer doesn’t have the hassle of going into an app store and downloading the right apps and we at First Tennessee Bank have completely avoided the headaches and costs associated with supporting multiple device operating systems.

Interestingly, not releasing a mobile app has allowed First Tennessee Bank to nip many security concerns in the bud. Popular reports about mobile apps that collect and pass on personal data to third parties without asking consent first have turned consumers off on apps, and small business customers are no different.

However, our service is the mobile Web version of what they know — and trust — from online. The security profile is identical to the one they have on their PC. We know that our customers are already quite comfortable with the level of security offered by their online banking service, and we simply

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.

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This is what we envision as the next step in our strategy. It’s innovative, but, in a way, it’s also inevitable. Clearly, mobile has increased business velocity for our customers, making it necessary for them to do more, faster. But mobile also creates an opportunity for First Tennessee Bank to decrease costs, increase customer loyalty and remove the friction from the flow that stands between the customer and the products they want.

Taylor J. Vaughan has been with First Tennessee Bank for 23 years and currently manages the Treasury Management product team. Accredited as a Certified Treasury Professional by the Association for Financial Professionals, Taylor holds a B.B.A. from the University of Hawaii and an M.I.S from Roosevelt University of Chicago.

In this scenario a First Tennessee Bank sales officer goes with their tablet device to the customer, able to show, not tell, a customer the real benefits of our products.

With this tool the sales officer could hone in on the point the customer is not currently using a product and then show how many bank customers are using it, the results they achieve and conclude by doing the complete ROI analysis for the customer. If the customer is sold on the product, then the sales officer can use the same tool to seal the deal, sending a confirmation email to the customer, forwarding a copy of the contract, and providing a delivery date for equipment, such as scanners. This tool would also trigger the back-office to move on the request, ordering the scanners, start the DDA systems to feed the transaction data so there is no delay anywhere in the process.

Connectivity and connected devices are coming together to create more customer touch points and more distribution channels. The assumption may be that everyone is online, but it's important to remember that everyone is not just online. People use a variety of channels every day, switching back and forth between them frequently. From simple IVR calls, to ATMs, to sophisticated apps, people decide the channels they will use to interact with banks, not the other way around.

It's a new multi-channel world where customers are in control, and expect anytime, anywhere access to their financial information via a multitude of channels and devices.

A 2012 report titled "A Biometric Day in the Life"1, commissioned by Time, Inc. and conducted by Innerscope Research, found that people who grew up with the Internet, so-called Digital Natives, switch their attention between media platforms (TVs, magazines, tablets, smartphones or channels within platforms) 27 times per hour, or about every other minute.

Thanks to the proliferation of connected devices — PCs, phones, smartphones, tablets, Smart TVs and games consoles — consumers across all demographics now share a common trait: they are empowered and they are always connected. They have the freedom and flexibility to choose how they interact with their banks. Consumers, already masters at multi-tasking, readily switch between platforms and devices, tailoring their experiences to suit their needs. The pressure is now on the banks to adapt to this shift in consumer behavior and help their customers make 'smarter' decisions based on increased, real-time visibility into all their accounts as they shop, spend and save. Here is a checklist to guide banks as they map out their multi-channel strategies.

However, our service is the mobile Web version of what they know — and trust — from online. The security profile is identical to the one they have on their PC.

6 Ways To Wring More Value Out Of Multi-Channel BankingBy Davor Ebling, Director, Mobile Commerce Solutions, SAP

FOOTNOTE

1. www.timeinc.com/pressroom/detail.php?id=releases/time_inc_study_digital_natives.php


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At the other end of the spectrum, reams of research show time-crunched, slightly older consumers increasingly depend on their mobile phones to manage their daily lives. From researching products, to conducting transactions, to sharing reviews with their social network, this demographic relies on mobile to access advice and make decisions.

URGENT NEED

What do today's always-on, always-connected customers want from their banks?

There’s no single best answer. When it comes to customer service, for example, customer preferences vary greatly. Some want to speak with a call center agent; others want to perform self-service tasks using a mobile app, or an online channel. And a significant and growing group of consumers want 'all of the above'.

Based on this what customer experience can — and must — multi-channel banking deliver? Again, there are no easy answers.

Fortunately, 21st-century PFM for a mass audience: How to Build Everyday Online and Mobile PFM 1, a new report from Javelin

created an "urgent need for the financial services industry to break free from the 1980s thinking about personal finance management (PFM) and redefine it for the mobile mass market of the 21st-century."1 Javelin further found that U.S. consumers "crave a way to view all their account balances in one place," with nearly half of

Strategy & Research, a firm providing strategic insights and research in retail financial services, sheds some important light on the features U.S. consumers would like to see most.

As the report points out, the rise of the empowered and connected customer has

Accept that consumers want choice, and the flexibility to disengage and try another channel if one doesn’t deliver the results they want.

FOOTNOTE

1. www.javelinstrategy.com/news/1394/92/Nearly-Half-of-U-S-Consumers-Want-to-View-All-financial-Accounts-in-One-Place/brochure/280

How U.S. consumers want to view their account balances?

View all account balances

Personal finance alerts

Comparison pricing

Card-reward recommendations

38%

37%

31%

0% 10% 20% 30% 50%40%

Tier 1

Tier 2

Tier 3

49%

Figure 1: Based on data data from Javelin Strategy & Research 2013, from August 2012, N=3,000

Percent of consumers

FOOTNOTE

1. www.javelinstrategy.com/news/1394/92/nearly-Half-of-U-S-Consumers-Want-to-View-All-financial-Accounts-in-One-Place/d,pressRoomDetail

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their customers a single view into all their actions and aspects of their relationship with the bank. Javelin has also identified omni-channel banking in its list of Top Ten Trends for 2013, stating that financial institutions "need to change their perception of omni-channel banking" to see it as "necessary rather than novel".1

Clearly, multi-channel is the next step in the evolution of banking. But how do you get there from here. Here is a checklist of six key tips to help you develop your strategy to offer customers a truly seamless experience, and so enhance the quality of your brand.

#1 Open your eyes. To make meaningful improvements you

need to be clear about how you do things now and what you need to change moving forward. This also means accepting some hard truths in the process. Branch traffic is on the decline, and shows no signs of stopping as time-strapped Boomers and tech-savvy Millennials, a demographic weaned on the Internet, flock to digital channels rather than make the trip to a physical office. Therefore banks must offer a variety of channels to reach and delight customers. If you have been putting off

consumers (49 percent) prioritizing this feature over all other PFM services.

Against this backdrop, the pressure is on banks to start seeing multi-channel as a must-have feature. For banks this means bringing together all customer information across all channels to present customers one unified, integrated, branded, channel -optimized experience. Delivering a connected, consistent experience in real-time is crucial, particularly when it comes to self-service.

‘NECESSARY NOT NOVEL’

'Ease of use' is the new business mantra here. If consumers can’t accomplish what they want within an app, because it's too complicated or too cumbersome, then they want the flexibility to disengage and try another channel, such as online or IVR. But transitioning to another channel often means starting all over again, an experience that will surely end up in increased customer dissat-isfaction — and increased costs to the bank

Significantly, I am not alone in my view that banks need to take steps now to deliver

Within five seconds the customer gets a text message welcoming them to text banking. Similarly, you can use your ATM channel to promote text banking, enabling customers to sign up for text banking while performing a financial transaction at the ATM, for instance.

#3 Be consistent. As I have pointed out, the proliferation of screens — PC, tablets, mobile, smartphone, smart TV, in-car navigation systems

— to name a few (!) is also driving consumer demand for a single view into all their accounts, in one place, in real-time. No matter how you connect with your customers, make sure the customer experience is consistent, harmonious, and optimized for the specific channel. Allow the customer to choose the channel they want to use to get the information or advice they need. No matter the customer's preferred medium of communication, be it e-mail, chat, Facebook, Twitter, or any other communication channels, be ready and be responsive.

#4 Optimize self-service. Customers will try a variety of channels to get things done. Self-service is a great place to start

if you want to remove friction and reap the rewards. Customers that can accomplish what they set out to do will be more likely

your foray into online or mobile, accept that a further delay could cost your business customers.

#2 Focus on the mix. Be imaginative and you can inject new dynamism into all your channels, even ATMs.

Just think of it as another screen and then capitalize on the time you have a captured audience to initiate a new process in just a few simple steps, or introduce a new service to customers most likely to appreciate it. Your customer database will tell you when a customer has married or started a business (because they provided this information in the first place). Present the newlywed customer standing in front of your ATM with a mortgage offer and the option to schedule a follow up call with a banker. Be sure that your back-end system 'knows' about this interaction and notifies that banker to respond. Think creatively about how you can utilize the IVR channel to sign up customers for text banking for example. From experience, we know that close to 80 percent of all IVR calls are simple requests to check available account balances. Why not enable the callers to sign up for text banking via IVR? While in the IVR flow, simply give the customer an option to provide their mobile phone number to sign up for a lower cost text banking channel.

Delivering a connected, consistent experience in real-time is crucial, particularly when it comes to self-service.

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

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superior customer service, and fell short of this goal because the new channels worked independently of the old ones. To complicate matters, backend systems are often not real-time and process transactions in a batch mode, thus not providing customers real visibility into their financial affairs. Research shows customers want one view into their accounts, so don't disappoint them.

#6 Get personal. My list of tips focuses on the steps you can follow to encourage loyalty and increase customer engagement. There are

significant business benefits if you revamp processes to provide a truly 360-degree view of your customer in real-time. You don't just cut the time needed to provide a client a quote, by hours or days. You also build a core set of capabilities to cross-sell and up-sell your products with increased chances of success because you can wield your data, in real-time, to target individual customers with offers that are personal, relevant and highly contextual.

The good news: the technology exists today to analyze huge amounts of data in real-time, opening up new opportunities for you to market to your customers

to stay loyal. But don't just add mobile apps to your arsenal of capabilities. Accept that consumers want choice, and the flexibility to disengage and try another channel if one doesn't deliver the results they want. They may love your app, for example, but they will also appreciate an on-click feature from within the app that allows them to click to call the call center. Keep in mind that customers can grow annoyed if their decision to transition to another channel forces them to start all over again, so make sure to enable customers to start the process in one channel, and then pick up where they left off in another. Real-time channel awareness is key. Customers increasingly demand one view into their entire relationship with the bank, and they expect their bank to have a similar holistic view into them as individuals. Visibility reduces friction and drives positive results for everyone.

#5 Offer real-time information. Make sure your channels work together and share the information

they collect in real-time. Otherwise, you won't have a complete picture of your customer — and they won't have one view into their relationship with you. I know of pilots that started out with a great vision to deliver

with increased precision and relevance. In my view, the ability to cross-sell and up-sell to customers based on completely accurate and up-to-date information, thus delivering relevant offers that are completely aligned with their lifestyles and life stages, is essential for banks to achieve and maintain high performance.

The even better news: the reasons many of my clients list when they explain just why they can't start planning their multi-channel strategy now don't hold up when we compare them to the reality around us.

Clearly, the dizzying array of choices has created a new appetite for multi-channel banking. The impact on financial services will be nothing short of profound.

Davor Ebling has more than ten years of mobile industry experience, and has been focused on the Mobile Financial Services space for more than six years. Prior to joining SAP, Davor was Vice President, Mobile, eCommerce and Payments Strategy with JPMorgan Chase.

MyTH #1 Pursuing a multi-channel strategy in order to deliver on the promise of one-to-one marketing, or Precision Marketing, is prohibitively expensive. There are vendors that can provide this solution right now. And the advance of cloud-based solutions means banks can 'plug in' to get the capabilities they need. What better way to stay in step with the breakneck pace of technology and the proliferation of channels and devices?

MyTH #2 Customers don't see the value in receiving personal offers. A raft of recent reports confirms that today's empowered consumers expect, even demand, relevant offers. Anything else will be dismissed as spam. What's more, people will even volunteer additional personal information if this guarantees them access to personalized offers that offer real benefit. However, consumer surveys also found people lose patience if the offers are intrusive. This is especially true for offers presented on the mobile device.

MyTH #3 Mobile banking is in its infancy, so better skip that channel for now. Press and analyst reports document the hockey-stick growth of mobile banking as customers reach to their mobile phones to pay bills, scan and deposit checks, make transfers and much more (!) And don't ignore the merits of text banking when you develop your mobile banking approach. Text is the primary channel for the worlds 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.

MyTHS


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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.

PART 3: BANKING IN DEVELOPING MARKETS: PLOTTING THE COURSE FOR FINANCIAL INCLUSION AND FINANCIAL SUCCESS

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2012 was a milestone year for mobile banking services in Pakistan. The country’s continued efforts to establish an efficient and thriving banking system underlined the resolve of the State Bank of Pakistan to achieve its goal of financial inclusion and ‘Banking for All.’ Progress on all fronts, including the launch of several new mobile banking services targeting the country’s poor, prompted the World Bank to recognize Pakistan as one of the fastest growing branchless banking markets in the world. AbacusConsulting recounts recent developments in mobile banking and the impact on the local landscape.

Pakistan has made remarkable progress in recent years toward the goal of bringing the unbanked into the formal financial system, an outcome that obviously enriches the socio-economic development of the entire country. To accomplish this the Pakistan government, together with the State Bank

of Pakistan, has established important principles to assist in the creation of an enabling policy and regulatory environment to drive financial inclusion.

Another factor driving this change is the fact that mobile operators and banks have stepped up the introduction of mobile banking services targeting the needs of the unbanked. In November 2012 Waseela Microfinance Bank Limited, in partnership with mobile operator Mobilink, launched mobile banking services in Islamabad. The services, offered under the brand ‘Mobicash’, include top-ups, utility bill payments, cash deposit and withdrawal, fund transfer from account-to-account and person-to-person transfers. Just a few days later Askari Bank Limited, in partnership with mobile payments enabler Zong, launched a mobile banking service under the brand name TimePey.

In Pakistan regulation permits only banks to offer banking services, a requirement that has prompted mobile operators to acquire local banks. The first to market was Telenor, a mobile operator that established Tameer Bank. The next to make its move was Mobilink, which established Waseela Bank for its branchless banking services.

In the case of TimePey, Zong, instead of establishing its own bank, has teamed up with Askari Bank to launch its mobile banking offer, which enables users to pay utility bills, transfer money to specified recipients anywhere in the country, deposit and withdraw cash and carry out account transfers.

The services offered may appear to be quite basic, but the fact that the unbanked can access them anywhere in the country using their mobile phones, is truly transformational.

In fact, the quarterly report issued by the State Bank Of Pakistan for the period July -September 2012,1 reveals that the number of mobile wallets increased by 25 percent, reaching an impressive total of 1.8 million. Significantly, a major driver was the staggering rise (84.2 percent) in Level 0 accounts, the most basic accounts with low KYC requirements and small transaction limits catering perfectly to the needs of unbanked.

The activity level also showed growth, with 66 percent of those total accounts active at the end of the quarter, after posting 30 percent growth during the July-September 2012 period.

Advancing New Frontiers For Financial InclusionBy Abbas Khan, Partner, Financial Sector Solutions, AbacusConsulting


In Pakistan regulation permits only banks to offer banking services, a requirement that has prompted mobile operators to acquire local banks.

FOOTNOTE

1. www.sbp.org.pk/publications/acd/BranchlessBanking-Jul-Sep-2012.pdf


http://www.sbp.org.pk/publications/acd/BranchlessBanking-Jul-Sep-2012.pdf

http://www.sbp.org.pk/publications/acd/BranchlessBanking-Jul-Sep-2012.pdf

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The report also details the growth in the number and value of transactions using m-wallets. Specifically, more than 31.4 million transactions worth some 139 billion Rs (US$ 1.4 billion) have been conducted during the quarter ending September 2012 through branchless banking channels.

wallet services and build more trust in mobile banking services.

While there are no easy answers, it’s clear that education must be part of the solution. The unbanked are obviously not

CALL FOR CREATIVE SOLUTIONS

However, both new and old entrants are confronted by the same issue: a lack of customer awareness. They must therefore work together to encourage use of mobile

Figure 1: Based on data from AbacusConsulting

Status of mobile banking services in Pakistan

Pilot

Dubai Islamic Bank

MCB Bank

Habib Bank

UBank

Growth in m-wallet accounts

Level 0

Level 1

Level 2

Level 3 32,098

48,893

1,079,309

655,311

29,954

49,436

1,012,287

355,704

+7%

-1%

+7%

+84%

July - September 2012

April - June 2012

Figure 2: Based on data from The State Bank of Pakistan

Bill payment and mobile phone top-ups accounted for nearly half (45 percent) of transactions, followed by P2P payments (38 percent). Overall, the numbers tell a positive story and underscore the growing acceptance of mobile banking by the mainstream market.

Will start pilot

Meezan Bank

Live

• Tameer offers Easypasia

• UBL offers OMNI

• Waseela Microfinance Bank offers Mobicash

• Askari Bank Limited offers TimePey

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distribution network and outreach to the unbanked population.

While the brick-and-mortar retail network currently stands at around 11,000 outlets (after 65 years of banking tradition) the number of branchless banking agents totals just over 32,000. Official numbers indicate the agent network is seriously under-utilized,

accustomed to opening and using mobile accounts. It’s a new experience and players must come up with creative marketing strategies and financial literacy schemes that help customers understand and appreci-ate the benefits of mobile banking services.

Another focus must be on hiring and training agents, thus growing the

channels and products, there is also a heavy reliance among customers and not on over-the-counter (OTC) transactions which are predominantly P2P money transfers followed by a complete cash-out payment.

It would appear that customers prefer to store cash, rather than store value, on their

with the average number of transactions per agent per quarter standing at 1,000. At these agent outlets customers can make deposits or withdrawals, transfer funds or pay utility bills.

Despite the significant growth in mobile banking, driven by innovative delivery

Active accounts Inactive accounts

Share of active and inactive accountsAs of end of a quarter

120%

100%

80%

60%

40%

20%

0%Q4 2011 Q1 2012 Q2 2012 Q3 2012

46% 47% 36% 34%

66%64%53%54%

Figure 3: Based on data from Development Finance Group, State Bank of Pakistan

Growth in number and value of transactions

Q1 2012

Value of transactions during the quarter (PKR in millions)

no. of transactions during the quarter (in 000s) RHS

20,000

40,000

60,000

80,000

1000,000

120,000

140,000

160,000 35,000

30,000

25,000

20,000

15,000

10,000

5,000

Q4 2011

79,410 +30%

20,597 +35%

25,272 +7%

28,366 +35%

31,447 +21%

85,092 +23%

115,304 +12%

139,011 +11%

Q2 2012 Q3 2013

Figure 4: Based on data from Development Finance Group, State Bank of Pakistan

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mobile phones. The players are therefore called upon to introduce new and creative approaches that can trigger a change in this customer behavior and so encourage unbanked to see their mobile wallets as instruments that allow them to save money and plan their financial futures.

NUMBERS SPEAK VOLUMES

Mobile technology is enabling the financial inclusion of the unbanked in Pakistan, a country with a population of over 190 million. If we consider that there are only 35 million traditional bank accounts and some 120 million mobile phone users, it is clear that only mobile banking services will serve the financially excluded market, providing them convenient and simple access to services that will allow them to buy goods and

services, pay bills, borrow money and — ultimately — invest in their future.

Of course, mobile banking services today focus on providing quite a basic suite of capabilities and are not yet progressed to enable investment, offer insurance or encourage commerce, but the resolve to push the expansion of mobile banking services is strong.

Clearly, Pakistan’s regulatory environment for microfinance and branchless banking, considered one of the best globally, provides ideal conditions for the advance of mobile banking. However, the real boost comes from market forces and the sheer determination of new and old entrants to stake and protect their turf.

The market for mobile banking services may be in an early stage, but it is also poised for a new stage of growth and innovation. Granted, there are hurdles to clear first. Players must create an ecosystem that sees mobile operators cultivate relationships with verticals, including finance, rather than compete. And radical change must be made in order to establish a complete and unified system of governance to allay concerns that Pakistan is unstable or unsafe.

But there is no denying that it’s gold rush fever as banks and mobile operators step up investments and activities to launch services targeting the unbanked as well as a growing segment of the population that is willing and able to spend US$20 to US$40 on a smartphone device. While the Pakistan economy is set to grow by 2 percent, the market for mobile money services on the whole is forecast to more than double, increasing by 250 percent.

Change is underway in the country and the impact is profound. All major players have mobile on their radar and I expect to see some 20-25 players active in the market in the next 3-5 years. In fact, my own conversations as a consultant with C-level

executives confirm that the vast majority have placed mobile at the center of their services roadmap. What’s more, they confide to me that they fear they will be irrelevant if they don’t participate in this mobile revolution.

Significantly, my experience as a consultant to all industries, not just finance and telecoms, suggests that mobile banking is just the start. The realization is real and growing that mobile can transform all industries, allowing Pakistan to reach the stellar growth rates that have allowed its neighbors — China to the north and India to the south — to achieve and sustain remarkable growth.

Abbas Khan is a Partner and Global Leader at Abacus. He leads the Information Technology Solutions vertical and oversees a broad range of technology services including the firm’s outsourcing services portfolio, mobile solutions, SAP ERP solutions, e-Business and e-Government offerings.

It’s gold rush fever as banks and mobile operators step up investments and activities to launch services targeting the unbanked as well as a growing segment of the population that is willing and able to spend US$20 to US$40 on a smartphone device.

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Mobile banking is an essential component of enabling the developing world to maximize its demographic dividends, increase financial stability and achieve financial inclusion. In many coun-tries the majority of households lack access to basic financial services. fortunately, this is not the case in Malaysia, where Bank Negara Malaysia, the Malaysian Central Bank, is on a mission to transition Malaysia to a high value-added, high-income economy by 2020. A big part of the plan involves the widespread and rapid migration to electronic payments spearheaded by MyClear, a wholly-owned subsidiary of Bank negara Malaysia. It is spearhead-ing the transformation with the launch of MyMobile, a mobile banking services that cater to

users with both feature phones and smartphone devices.

The payment and settlement systems in Malaysia have evolved significantly over the years, supported by a solid regulatory framework and driven by advances in mobile penetration. In fact, the MasterCard Mobile Payments Readiness Index gives the country high marks, noting that Malaysia is well on its way to “building a solid foundation for mobile payments to flourish.”

While consumer adoption in Malaysia is not as high as it is in other countries, people do show increased willingness to use their mobile devices for P2P payments.

Indeed, access to payment systems has broadened, offering greater efficiency and convenience to consumers and businesses. The momentum is significant, and inextricably linked to the resolve of the Bank Negara Malaysia (BNM) to improve the overall efficiency of the payment system and provide meaningful cost savings and benefits to the entire economy.

MyClear is charged with hosting a nation-wide mobile payment infrastructure platform, which it extends to all banks and mobile operators in the country in order to drive the rapid deployment of mobile banking service.

This collaborative approach offers two key advantages. First, because the model is inclusive, not exclusive, it ensures that all stakeholders share a common infrastructure and thus enjoy the benefits delivered by cost savings, reduced complexity and a shorter time-to-market.

Second, this approach unites the stakeholders in a focused effort to educate and empower consumers with the services, skills and financial literacy to manage their personal wealth. They are thus able to offer consumers cost-effective mobile banking services.

MOBILE BANKING PILOT

It is our conviction that it is far better to allow the stakeholders share a platform,

This vision, detailed in the ambitious Financial Sector Blueprint, issued by BNM, sets out the strategies and action plans necessary to transform the Malaysian payment system into one that is highly efficient through more intensive use of mobile banking by 2020.

In line with this mandate BNM has fostered the creation of a mobile banking and payments ecosystem, one that enjoys the support of key stakeholders including financial institutions, the Ministry of Finance, the Malaysia Administrative Modernisation and Management Planning Unit, the Malaysian Communications and Multimedia Commission (MCMC), government agencies and several major mobile operators.

OPEN AND COLLABORATIVE

Importantly, the BNM has also established MyClear (Malaysian Electronic Clearing Corporation Sdn. Bhd.), a wholly-owned subsidiary with a mission to spearhead the migration to mobile and achieve the objectives outlined in the Blueprint.

Accelerating Mobile Banking Through CollaborationBy Siek Kar Teck, Director, Retail Payments Division, MyClear


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Since starting the pilot in November 2011, more than 65,000 subscribers have registered with these banks and more than 355,000 live transactions have taken place.

To date there is a total of 38 million mobile phone accounts in the country, a vast segment that MyClear is targeting. We also expect that this project will grow this year to include one more mobile operator and a few additional banks.

To ensure that every customer, regardless of the type of mobile phone they own, can conduct mobile banking these pilot services use USSD1 a global communication technology that is used to send text between a mobile phone and an application program in the network. Since USSD does not store information, it was considered to be a more secure technology and one particularly well suited to offering mobile banking services for a mass market of consumers, many of whom live in rural areas and villages.

fully hosted by MyClear, than to make the development and deployment of mobile banking services the responsibility of each individual bank. But we do not only believe there is great strength in numbers, particularly when all players are united behind a common goal. We also have great results to report.

Among these is the ongoing pilot of mobile banking services called MyMobile involving three major Malaysian banks: Maybank, CIMB Bank and Public Bank, and three mobile operators, Maxis, Celcom and DiGi.

In practice MyMobile allows customers to check banking account balances and view transaction history, pay for their credit card accounts, manage checks, pay bills for government services, top up mobile accounts and transfer funds (mobile-to- mobile) using the recipient’s mobile phone number, and not the recipient’s bank account details.

SMART MOVE

Following the success of the MyMobile services offer, a mass-market offer built from the ground up to appeal to all customers who own a mobile phone, we are in product development to target specific customer segments, beginning with smartphone owners.

However, it’s not just about offering a mobile app to provide the user experience smartphone users have come to expect and demand. MyMobile Smart is also the first important step in a larger strategy to encourage and enable mobile commerce, an activity that is particularly well suited to smartphone platforms.

Siek Kar Teck oversees Retail Payments Division for MyClear, where he is responsible for brand and marketing of products and services including MyMobile, Interbank GIRO, e Debit, FPX and Direct Debit. Prior to his current role, Kar Teck held a variety of positions in the credit card and prepaid card industry.

We are in product development to target specific customer segments, beginning with smartphone owners.

FOOTNOTE

1. Unstructured Supplementary Service Data


This approach unites the stakeholders in a focused effort to educate and empower consumers with the services, skills and financial literacy to manage their personal wealth.

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populations, access to convenient mobile banking services that put them in control of their financial future.

Traditionally, banks have lacked a clear focus on Pakistan’s low-income population. While this demographic, which accounts for roughly 60 percent of the country’s total population, represents a huge potential market, it has been a difficult one to address.

At one level, this segment of the population, referred to as the unbanked, lacks familiarity with banking services. To complicate matters, the unbanked often find it difficult to trust services they do not know.

This is unfortunate because, even though their savings are meaningful and could be managed to their benefit if they approached a bank, many are overwhelmed by the notion of walking into a bricks-and-mortar building and asking for assistance. A lack of literacy and formal education makes this an even more daunting task. Incidentally, this is why building trust through frequent interaction, which is enabled by mobile banking services, is so critical.

The penetration of formal financial services in Pakistan, where the World Bank estimates only 10 percent of the population or some 18 million people have a formal bank account, has historically remained below par compared to other countries in the region. However, the rapid uptake of mobile phones, which are now in the hands of over 131 million citizens, has encouraged local banks to embrace branchless banking, also called inclusive bank-ing, into their mainstream channel. HBL - Habib Bank Limited, the country’s largest and oldest financial institution, is harnessing mobile technologies to do more than enable the delivery of innovative banking services to the country’s unbanked. It is determined to drive financial inclusion by providing all people, including the poor and rural

START SMALL, THINK BIG

These are early days for mobile companies and financial institutions in Pakistan who are at various stages in their mobile banking strategies. Currently the focus is on remit-tances and utility bill payments. These are two services that have wide appeal and, at the same time, help build trust in mobile banking on the whole as customers make mobile banking an integral part of how they manage their lives.

To be clear, remittances to date are limited to interbank and intrabank remittances, which means money can either be transferred from location to location within a bank’s own office network, or it can be transferred between two different banks operating within Pakistan. There are no international remittances in this bucket.

At another level, banks have been unable to serve the unbanked because the size of their individual deposits made it difficult to justify the operating and administrative costs associated with distributing financial services through a traditional branch banking model.

This is where mobile technologies — as part of a larger Branchless Banking strategy — have come to play a transformational role in finance, allowing banks to offer services that have been specially priced and designed to target this population segment.

With mobile penetration rates in Pakistan nearing 75 percent, it is clear that there is a huge opportunity for banks to deliver services to the unbanked at significant cost savings.

Mapping The Market for Financial InclusionBy Faiq Sadiq, Head of Payment Services, Habib Bank Limited


Mobile banking is just part of a larger portfolio of capabilities that would allow Pakistan to close the gap with other countries in the region and offer a blueprint for other countries around the world working to achieve a similar positive.

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THINKING OUTSIDE THE BOX

At HBL we have piloted the two services, remittances and utility bill payments, and have plans for a commercial launch in Q3 2013. The pilots, which we did not brand or market actively, were quite successful and far exceeded our expectations in terms of volume and results.

The pilots also demonstrated the importance of putting the customer, not technology, first. People want ease and efficiency, and this is what mobile technologies deliver. Unfortunately, meeting these customer requirements has been a bit of an uphill battle for HBL. While the financial regulator in Pakistan is very supportive of our efforts, and the efforts of the entire financial services industry, to transition Pakistan to a higher income economy by empowering the unbanked to participate in society, the same cannot be said for the country’s mobile operators.

In fact, the mobile operators chose not to provide banks the USSD channel for the delivery of mobile banking services to mass market feature phones. Obviously, this required HBL to rethink its approach. We

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. It is a huge jump for the economy and, more importantly, paves the way for a new ecosystem and a change in attitude that will combine to create ideal conditions for the introduction of additional mobile banking and payment services in the near future.

As customers come to understand the benefits of bill payments using their mobile phones they will be open to considering the many other ways mobile banking can improve their lives. They will ask themselves: Can mobile banking allow me to save money on my account? Is it possible to do other transactions or even invest using my mobile phone? This acceptance is critical since we have learned that change is accelerated when it has the support of the people.

In other words, the interest — even eager-ness — of people everywhere to use mobile banking and payment services can be seen as a first step that will allow Pakistan as a whole to transition to a new era marked by great progress and huge efficiencies.

aimed at achieving the much greater goal of financial inclusion. Against this backdrop, mobile banking is just part of a larger portfolio of capabilities that would allow Pakistan to close the gap with other countries in the region and offer a blueprint for other countries around the world working to achieve a similar positive outcome.

But first it is important to understand our vision for financial inclusion.

At its core, financial inclusion is sharply focused on providing all people access to quality financial services, at affordable prices, that allow them to make good, informed decisions about their financial future. However, in Pakistan, a big part of financial inclusion is also about creating the capabilities and infrastructure that will allow government and multinational organizations to manage and distribute aid to victims of natural disasters such as floods and earthquakes.

To date Pakistan has made great strides, providing a prime example for other countries, including the U.S., to follow as they work to provide disaster relief to people in the wake of Hurricane Sandy,

needed a model that customers could use and appreciate, and one that financial institutions could also afford. We considered IVR, but dismissed that since it required institutions to invest in stable systems and speech-recognition software. We therefore decided to develop a telco-agnostic approach that utilizes a smartphone application accessible via mobile data and Wi-Fi.

The realization that banks and mobile operators must work together for the good of the country has prompted regulatory authorities to seek dialogue and demand mobile operators develop a concrete roadmap that will allow financial institutions to offer mobile banking services supported by their mobile networks. Of course, financial institutions, including HBL, are not waiting. HBL is planning to launch the services outlined above, and there are many more in the pipeline.

GREATER GOALS

At HBL we perceive more than a chance to deliver a broader range of mobile banking services. We also see a clear opportunity to introduce innovative products and services

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.

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Faiq Sadiq has been with HBL for 22 years, where his principle activity is to lead and direct the strategies for HBL’s Payment Services Group and work on client sales origination, cross-sell and ensure client satisfaction for the HBL’s corporate and financial institution clients in payments arena. Faiq has held a variety of management positions within HBL, and has served on the panels of United Nations and UNESCO responsible for innovative financing options for education and gender specific issues.

for example. Of course, there is work to be done and everyone is learning by doing. The last natural disaster showed that Pakistan is still limited in its ability to provide relief and must build an ecosystem that allows all organizations, not just a few banks or institutions, to distribute aid to all strata of society when disaster strikes so they can buy food, medicine, or rebuild their homes.

If you consider that, after 60 years of independence, the 45+ banks operating in Pakistan count only 18 million customers out of a population of over 190 million, then you begin to understand the critical importance of financial inclusion. Empowering the unbanked to participate in the financial system, not only improves their quality of life because they can save and plan for necessities like housing, education and life after retirement. It also allows Pakistan to look forward to a safe and stable future because all people are stakeholders and are determined to work toward a common goal of prosperity and growth.

Bangladesh is a country full of contradictions. With a population of 160 million and a mobile penetration of just around 60 percent (or 95.5 million) it would appear that Bangladesh should be lagging in the development and delivery of mobile banking services. However, a 2012 report on Mobile Financial Services by the Bangladesh Bank (Central Bank), reveals the rapid introduction and uptake of mobile banking services over just the last two years, has allowed the country to boost the overall access to accounts among adults significantly.

This progress is due in part to the strong commitment of the government, in tandem with the central bank, to create an enabling environment, which is essential for a commercially viable, competitive and safe market. To date 25 banks have obtained the central bank’s permission to provide mobile banking services. Of these, 15 banks have launched some kind of mobile banking offer.

Another important driver has been the early decision of the regulator to allow a bank-led model, permitting only financial institutions to offer mobile banking services. As a result, mobile operators and banks must seek to cooperate, not compete head-on.

In Bangladesh some 3 million people have made mobile banking services an integral part of how they plan and live their lives. The country continues to witness strong growth and the government, in tandem with the central bank, is determined to drive mobile banking services as part of a wider agenda to achieve financial inclusion. Dutch-Bangla Bank Limited (DBBL) was the first to launch mobile banking services targeting the unbanked. It reports an average of 100,000 customers have been signing up each month since the commercial launch in 2012. To date these customers have made more than 150 million transactions valued over US$300 million and deposited more than US$8.5 million using the mobile banking platform, and the bank is planning a slew of new services paired with new authentication approaches to grow that number exponentially.

Creating New Pathways For The PoorestBy Abul Kashem Md. Shirin, Deputy Managing Director, Dutch-Bangla Bank Limited


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PIONEER APPROACH

While regulations clearly encourage all players to invest their efforts in seeking solutions to reach and serve the unbanked, not all are eager to cooperate, rather than compete.

In the case of DBBL, the bank had negoti-ated with each of the country’s six mobile operators separately. Initially, the mobile operators were reluctant to share the USSD channel with us. After months of negotiations, two mobile operators — Banglink and CityCell — agreed to partner with us.

DBBL launched its service branded “DBBL Mobile Banking” in March 2011, providing customers financial services including: airtime top-up, cash-in, cash-out, real-time ATM withdrawal, debit interest payment, merchant payment, utility payment, salary disbursement and remittance — to name a few. This mix of services has allowed us to attract one million new customers since launch, and we are optimistic that this number can grow to 3 million by end-2013. In fact, several services we offer are ones our competitors are still not able to provide their customers.

Our suite of mobile banking services use a technology platform from our solutions

financial services to the 87 percent of the population that does not yet have a bank account. At DBBL we have 126 bank branch offices, and some 2,400 ATMs located in urban areas, not rural villages.

You might argue that we could drive financial inclusion by simply installing ATMs in villages. However, there is a physical coordination between ATMs and physical branch offices that are needed to feed the machines with money. In other words, to increase the number of ATMs we would also need to build new offices at each location.

You might then argue that the work to achieve this is costly, but do-able. However, this logic leaves out an important variable: Bangladesh Bank regulations limit the number of branch offices a bank can open per year. Imagine that DBBL is only allowed to open 15 physical offices per year and keep in mind that there are at least 460 towns and villages where we should be present in order to meet the local needs of the unbanked.

Do the math, and it would take 40 years to build this banking infrastructure. And even then the poor would have to travel at least 30 kilometers on foot to visit the nearest physical branch office and use our banking services.

vendor, which we operate as a separate platform from our core banking system. However, there are plans to link these systems in the future. This platform uses various technologies (SMS, IVR and USSD) to open accounts and process payments. The main service is a menu-driven service accessed through USSD channels provided under agreements with our mobile operator partners.

This mobile operator agnostic approach allows DBBL to reach the entire population of unbanked, regardless of their mobile provider. Thus subscribers of any mobile operator can do banking transactions through the bank nominated agents, be they Bank recruited or Telco nominated. In practice customers don’t need to open a traditional bank account with DBBL to access the mobile banking services. An individual can open a mobile account by presenting the proper identification and paying a deposit of only Tk 10 (US$ 0.13) at agent outlets.

MOBILE BENEFITS

When it comes to serving the unbanked mobile is not a choice, it is an imperative. In our view, no other approach can extend

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INNOVATE — OFTEN

Access is often seen as the goal of financial inclusion. However, it’s widespread and repeated usage that is needed for Bangladesh to grow and prosper. In fact, providing access to financial services should be understood as a first step in a journey that will ultimately require product innovations in insurance, credit, pensions and government payments.

To drive usage and also to compete successfully against the many banks lining up to steal our lead, DBBL continues to innovate and test the waters for path-breaking new services. Unlike banks in other developing markets, DBBL is not focused on enabling models that allow P2P payments and the like. The goal of our strategy is financial inclusion and developing a savings habit among everyone that will ultimately benefit the Bangladesh economy.

For example, DBBL is currently involved in a pilot with the World Food Program (WFP) to use mobile banking to deliver assistance and allowances to the poor directly onto their mobile phone. It is in the early stages right now, but there are plans to extend this. In yet another pilot we are working with

What’s more, 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. According to the Bangladesh Bank,1 poverty and a lack of education are the chief challenges to financial inclusion, which it defines as “the process of ensuring access to appropriate financial products and services needed by the vulnerable groups of the society at an affordable cost in a fair and transparent manner by banks and financial institutions.”

Clearly, mobile is the only way to deliver mobile banking services at an affordable cost to both the unbanked, who have been left out of the mainstream financial system, and the banks that have invested to offer them in the first place. It’s also the technol-ogy that will transform the entire country, boosting rural economies and national GDP by scaling up money circulation in towns and villages and bringing new creativity to banking services to benefit the poor — and the poorest — of Bangladesh.

mobile service on physical cards. Instead, we opted to enable a cardless transaction and introduced a service called ATM Withdrawal Service.

The positive response to this service alerted us to yet another opportunity, prompting us to be the first to partner with Western Union to provide a channel for remittances. Of course, Western Union is not an account service, which means customers still have to go to a bank and collect the money in cash. To this end we are working with Western Union to introduce a new kind of ‘pull’ service that would provide customers with a PIN number so they can literally ‘pull’ money from Western Union into their mobile banking account. Once this money is depos-ited into their account, they can withdraw the money — in cash — from our ATMs or agents.

In the meantime, we have also partnered with many remittance companies all over the world to introduce the remittance through

an NGO, that provides microfinance loans, to use mobile banking to collect monthly installments. To date the NGO workers must travel around the villages and physically collect the money. Mobile would simplify the process, and also make it much safer.

DBBL was first to the market with bill payment, a service we introduced when we saw that customers demanded a way to pay all their monthly bills — electricity, gas, water — using their mobile phone. However, we soon observed that customers also wanted a service that would allow them to buy and pay for goods in a store with their mobile phones. In response to this we introduced merchant payment services.

Then we found people also wanted to use their mobile phones to withdraw money from an ATM. Since customers lose their electronic banking cards, or simply fail to keep them in a safe place, we determined that the risk was too great to base this

We are also exploring new technologies, such as biometric or fingerprint recognition that will allow people who don’t know numbers or read the alphabet to use mobile banking.

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This is further confirmed by a recent consumer survey documented in a policy paper issued by the Bangladesh Bank.1 While the sample size, one hundred unbanked across the country, was too small to be considered statistically significant, the report said it does provide an important indication that mobile banking services are reaching a growing proportion of the population — and leaving a lasting impression. Interestingly, the vast majority of respondents have a positive view of mobile banking and 75 percent said their primary use of the service is to send or receive money. Rural users stressed that the security mobile offered, allowing them to save money in a safe place, was a huge advantage.

To ensure the unbanked use the services DBBL offer we have sharpened our focus on education and innovation that will empower the poorest of the poor and the illiterate to use mobile banking to better their lives.

A big part of this has been our effort to educate our agents to help our customers. To date DBBL has a network of just over 24,000 agents in place to serve around 1.10 million customers with 60 percent of them making at least one transaction in last three

DBBL Mobile Banking Services. Under these arrangements, wage earners and employees are able to remit their money to DBBL Mobile Banking Accounts from the counters of various exchange houses abroad. Upon receipt of money in their mobile accounts, the beneficiaries can withdraw cash from an ATM or from agents. They can also use the money deposited on the mobile account to conduct commerce or pay utility bills.

Moving forward, DBBL is exploring how it can use mobile to extend lending services, in the form of microfinance, to the unbanked and the underbanked.

THE ROAD AHEAD

Being a pioneer has allowed us to be the country’s leading provider of mobile banking services. More importantly, it has provided us deep insight into what works, and what doesn’t, allowing DBBL to focus attention on improving usability and increasing the value it delivers.

Overall, we have noticed that our customers appreciate simple services that help them manage their lives. Among these are top-ups, cash-in and cash-out services.

to grow its customer base. In fact, we are on track to grow our customer base to 3 million and reach break-even this year. Our approach, which has been to set up our own offices and deploy our own employees to train and monitor agents, has been a little costly but it will begin to generate a profit this year.

Mobile is a new channel allowing us to reach new customers. Therefore our strategy is squarely aimed at customer acquisition, and we are convinced that customer retention will not be a challenge if we observe and listen to customer needs and behavior.

Innovation is key to encouraging use and building lasting customer loyalty, which is why DBBL is determined to launch new products every six months. Customers that are presented with choice, and a line-up of new products to help them better plan and manage their futures, will choose — and stay with —us.

Abul Kashem Md. Shirin has over 28 years of experience in financial services. Since 2008, he has undertaken a variety of roles within DBBL, where he is currently Deputy Managing Director. Prior to that, he was the Head of IT and Cards in both DBBL and BASIC Bank and 8 years with the Government of Bangladesh.

months. Obviously, we cannot educate just over one million customers, so we must equip our agents to take on this task. They must teach customers, in their native Bengali, to use and remember a PIN, for example.

But we are also exploring new technologies, such as biometric or fingerprint recognition that will allow people who don’t know numbers or read the alphabet to use mobile banking. In this scenario customers will authenticate themselves using their finger print and local agents will be equipped with the readers and remote connectivity to scan and accept a finger print as proof of identity for deposits and withdrawals.

The government of Bangladesh is now disbursing allowances to some 20 million of the country’s ‘ultra poor’ on a monthly basis. Most of these beneficiaries have no mobile phone and are illiterate. Thus, the biometric solution will help us to open accounts for those beneficiaries although they do not own a mobile phone. This approach will pave the way for the government to use our system to disburse the allowances to the beneficiaries quickly and directly.

Mobile banking is new to Bangladesh and has opened up new opportunities from our bank

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.

FOOTNOTE

1. www.bangladesh-bank.org/pub/research/policypaper/pp072012.pdf

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than a technology; it is also completely aligned with the lifestyles and life stages of our customer base.

Put simply, mobile is part of the fabric of Indonesian society. It's a must for youth, a life-simplifying tool for the urban and middle class, and a life-saving tool the poor, disabled, and unbanked. It is also the channel that will trigger a new phase of growth and innovation in mobile money and commerce.

Currently, only 50 million, of a population of 200 million, have access to a bank account. The number of bank account holders is expected to rise to 70 million banked by end of 2013. Additionally, the number of mobile phone users in Indonesia is forecast to exceed 150 million unique mobile subscribers.

Key economic indicators suggest this decade will see many unbanked move quickly up the social ladder to emerge as tomorrow's middle class. Reports from the World Bank, confirmed by our own analysts, predict the per capita income of the average Indonesian citizen will rise from US$3000 per year to US$10,000 by the year 2020.

It makes business sense for banks in developing markets to drive financial inclusion, but it takes vision to plan for a day when today's unbanked will be part of the burgeoning middle class. CIMB niaga, the number five bank in Indonesia, is preparing for that future now by rolling out a platform that will allow it to deliver mobile banking and commerce services to this new demographic. The effort is supported by proactive customer education that harnesses social media to reach Generation X and Generation Y customers across all social strata.

Mobile is simply the most effective way to deliver banking services to Indonesia's population of some 250 million spread out across 13,600 islands, a territory that is nearly impossible to serve with physical branch offices. But reach is not the only reason for our decision to offer mobile banking. In our view, mobile is much more

NEW CHOICES

Clearly, the impact of this progress on our society, and our banking business, will be profound.

Obviously, when people are earning US$10,000 per year, they can plan seriously and diligently for a stable financial future. Housing, education, travel, credit cards— all of this and more is possible.

And, when people fully understand what they can hope to attain, the market for banking services will explode and expand. The outcome: popular demand for services that enable much more than person to person (P2P) payments. Customers will require mobile commerce, microfinance and services that allow them to plan and track all their personal affairs using their mobile phones.

At CIMB Niaga we are not waiting for this future; we are pursuing a strategy to accelerate this change and —ultimately — position the bank as the market leader.

At one level, our strategy is sharply focused on driving financial inclusion. However, we

Targeting Tomorrow’s Mass AffluentBy Wan Razly Abdullah, Strategy and Finance Director, PT Bank CIMB Niaga Tbk



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are also well aware of the benefits associated with offering mobile banking services now that will cement customer trust, encourage loyalty and ensure that introducing the other products in the years to come, such as credit cards and insurance, will not be such a hard sell.

DOUBLE VISION

To ride the wave of opportunity coming CIMB Niaga launched Go Mobile in February 2012. The mobile banking service enables bill payments, mobile airtime top-ups and P2P payments to recipients with domestic bank accounts. While it perfectly matches the needs of the unbanked for basic mobile banking services, it also caters to the requirements of time-strapped urbanites for simple, convenient services that help them manage their finances.

Since putting the needs of one customer segment over the other would be like leaving money on the table, our strategy is designed to satisfy the needs of both, supported by proactive marketing to capture the attention of trendy Millennials who consider it a hassle to go to a physical bank for service.

phenomenal. Go Mobile counts 300,000 users as of December 2012 — and the momentum shows no signs of slowing. In an average month we see around 1.5 million log ins to the service and some 250,000 financial transactions.

SMART MARKETING

Clearly, our mobile banking services have been well accepted by our customer demographic, but the real driver has been our promotion of the service to the customers of tomorrow.

Mobile banking is in its early stages in Indonesia. However, we also recognize that a large number of the early adopters are also concentrated in a demographic that includes Generation Y consumers and young urban executives. To communicate our value proposition to these customers CIMB Niaga has chosen to use the media they understand and embrace.

We have invested in digital display advertising online, and we have also produced commercials for YouTube that customers can view and share. We have also been active organizing road shows that we take to shopping malls, university campuses

For the unbanked, Go Mobile is delivered using the SMS channel provided by mobile operators. Some services will also be delivered by USSD, if the handset supports it. It is important that the unbanked can access these services using any make or model of mobile phone.

For the mass affluent, Go Mobile is also available as mobile application across all operating systems that customers can download to their smartphone. With it they can check balances and make transactions. They also benefit from an additional location-based feature that allows them to search for ATMs or branch offices nearby.

What's more, our pricing model is simple, and appeals to both the unbanked and price-conscious customers across all social strata. A transfer between different domestic banks incurs a small fee of US$ 0.50, but is free of charge between CIMB Niaga account holders. Likewise, bill payment incurs only small fees (around US$ 0.35) and only with certain billers. Service fee for purchase of mobile phone airtime top up is free.

The rapid uptake of the services has exceeded our expectations, and growth from a customer base of zero has been

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Rekening Ponsel, our mobile wallet that launched in March 2013 after a successful pilot phase, is a service that builds on our platform that enables customers to make domestic P2P transfers across all mobile networks by just knowing the recipients mobile phone number, not their account. It is also possible for customers to withdraw the money from our branch ATMs using a registered phone number. An ATM card is not needed for this transaction.

Because this mobile wallet does not require users to have a bank account, the amount they can transfer or receive using their mobile phones cannot exceed Rp 1 million, or around US$100. When the transfer is complete the recipient receives a text message alerting them that the amount has been transferred and directs them to the nearest ATM or CIMB Niaga branch to withdraw the funds. At the ATM the recipient can make the withdrawal by pressing a button at the ATM and them inputting their mobile phone number followed by a PIN.

Customers who want to transfer greater amounts must register themselves with the branch, so that means completing the KYC process and showing ID. Once they have done this, the Central Bank permits them

and popular events where we demonstrate the service. To encourage interaction and interest we invite customers to make their own commercials and post them on YouTube, and we award prizes for the best commercials for our services.

Social media is certainly effective, but it is equally important to educate customers about the benefits of the service and applications in everyday life. To accomplish this we have trained all our staff in all our 974 branch offices to use the mobile application and explain it to customers who have queries. This approach also bridges the gap, allowing CIMB Niaga to teach the unbanked, customers who can then go out and show others in their community how to use our services.

MOBILE ROADMAP

Our experience shows continuous education and marketing is key to rolling out mobile banking services successfully and at scale. The effort also paves the way for CIMB Niaga to offer the other services in the pipeline, beginning with a mobile wallet and extend-ing to mobile commerce. Both have a firm position in our roadmap.

to transfer or receive amounts up to Rp 5 million, or US$500.

COMPLETE COMMERCE

Our next focus will be on offering mobile payments and enabling mobile commerce. Building payment capabilities in a mobile phone will bring about new ways of doing things. Along with our passion to be the market leader in mobile banking, we believe that mobile commerce is an important piece to enable end-to-end mobile solutions to our customers.

There are several options in the develop-ment stage, and we are working to ensure that the design of these services is one that is also easiest for our customers to understand. In the future we envision that our customers will take their mobile phones, not their wallets, with them when they leave their home.

Wan Razly Abdullah has held the position of Strategy and Finance Director of PT Bank CIMB Niaga Tbk since July 2009. Prior to this he held a variety of senior positions at Maybank Investment Bank, Northern Trust Company and PriceWaterhouse Coopers.


Obviously, when people are earning US$10,000 per year, they can plan seriously and diligently for a stable financial future. Housing, education, travel, credit cards— all of this and more is possible.

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technology is the only way to extend the provision of financial services to the mass market of unbanked. However, there is a catch. Consumers in Indonesia need to be convinced of the value of mobile money services on the whole.

With mobile network coverage pegged at 90 percent, the Mobile Payments Readiness Index compiled by MasterCard points out that Indonesia 1 “is somewhat behind the average”. Specifically, penetration at 48 percent in the key 15- 64 demographic is lagging behind the index average of 57 percent.

MasterCard stresses that the total number of people who have mobile phones and access to networks “needs to increase in order for mobile payments to develop commercially going forward”.

Much is at stake, according World Bank Group reports the gap between bank account holders and mobile subscribers is only going to increase over the next few years as the mobile subscriber population continues to grow.

Indonesia is in the early stages of a journey that could see the country’s unbanked advance past mobile wallet services offered by mobile operators in the region to embrace branchless banking services, provided by local financial institutions. Bank BTPn discusses the distinction between the two types of services and reveals its plans to disrupt the market with a new and cost-effective model aimed at empowering people at the bottom of the pyramid to manage an interest-bearing bank account.Indonesia is a large untapped market that offers even greater opportunities for first-movers able to make the match between the value proposition they offer customers and the services people genuinely need and appreciate.

With a population of 250 million, of which only 50 million are estimated to have a bank account, it’s clear that mobile

Reports also note that many of the commercial banks operating in the country have been involved in some kind of mobile banking initiative, and almost all have been focused on customer retention. Put another way, commercial banks serve a relatively small proportion of households and their financial services are heavily skewed towards urban areas. This approach neglects a large — and potentially lucrative

SERVICES SKEWED

To date mobile banking has been made available in Indonesia, but it has primarily been offered as an additional channel for those customers who already hold a bank account. Services have been disproportion-ately concentrated on large and developed urban areas including Jakarta, the capital, and Bandung, Surabaya and Denpasar.

Branchless Banking Driven By ‘Disruptive Innovation’By Donny Prasetya, Head of Business Development, btpnWOW!

FOOTNOTE

1. mobilereadiness.mastercard.com/country/?id


90%Mobile coverage

48%

Mobile phone prevalence

Mobile readiness factors in Indonesia

Figure 1: Based on data from MasterCard Mobile Readiness Index

mobilereadiness.mastercard.com/country/?id

http://mobilereadiness.mastercard.com/country/%3Fid%20

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— market of unbanked, the majority of whom work, earn money and are considered creditworthy by MFI1 standards.

Of the unbanked poor who seek credit, about half are deemed to be too small to be commercially viable.

Since most of Indonesia’s banks aim to serve the middle income and above segment, that leaves a large market for BTPN, which is resolved to reach deeply into the poorer strata of Indonesian society. Clearly, mobile is the only efficient and cost-effective way to reach and serve this mass market, but mobile technology alone cannot achieve this ambitious end. It calls for an approach that is radical and disruptive.

DIFFERENCES AND OPPORTUNITIES

But, before detailing precisely how BTPN plans to upset the status quo, it’s important to explain the distinction between mobile banking services, widely available in Indonesia, and branchless mobile banking services, poised to transform the country’s economy and commerce.

Indeed, branchless banking is where we will see the forces of disruptive innovation collide and create new opportunity. Clayton Christensen — an influential business thinker and author of the milestone book The Innovator’s Dilemma1— writes that disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.

Of course, banks are called on to think of new business models, and not just jumble branchless banking into the existing electronic banking channel. Another word of caution here: this new branchless banking might not necessarily be complementary with the traditional retail banking business and could even end up cannibalizing it.

Traditionally, mobile banking services refer to financial transactions undertaken using a mobile device against a bank account accessible from that device. However, mobile banking services have evolved to include mobile payments and mobile money transfers, activities where an electronic store of value is linked to the mobile number of the holder. Thus, the holder is not required to have a bank account. What’s more, the value stored in a mobile wallet can be used as a payment instrument and a transfer instrument.

Branchless banking is a different kind of animal. It harnesses mobile to do more than deliver services; it empowers unbanked to open and manage an interest-bearing bank savings account and improve their standard of living. While it is easy to think of branchless banking as a service enabled by mobile technology, it misses the impor-tance of having an open mind to develop and embrace new models. In my view, any effort made to see branchless banking as a subset of traditional banking potentially imprisons the new service within old paradigms.

FOOTNOTE

1. Monetary Financial Institutions

FOOTNOTE

1. www.claytonchristensen.com/

http://www.claytonchristensen.com/

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in June 2011 and experienced some delays due to a lack of regulation. In November 2012, however, this changed dramatically and in our favor when the Central Bank formally announced its intention to introduce regulations paving the way for branchless banking services in 2013. Take advantage of this window of opportunity we plan to launch commercially in this timeframe.

Assuming that the appropriate set of regulations will be introduced by Bank Indonesia, btpnWOW! will also be the first commercial branchless banking service to allow customers to sign up by completing the KYC process at non-bank agents. This is a service we will build extensively in the next 12 months.

In a nutshell, btpnWOW! will deliver all the standard capabilities associated with interest-bearing bank accounts including account opening, cash-in, cash-out, bill payment and remittance as well as communication features such as CUG1, allowing a group of customers to interconnect via a mobile network at Ultra Low Cost, while at the same time enjoying the convenience of full-service banking over their mobile devices.

WOW FACTOR

For this reason, branchless banking may not be for every bank to implement. It requires a radical approach and visionary leadership that can see beyond today to a tomorrow where widespread financial inclusion can benefit all people. At BTPN we are pursuing a strategy to introduce pure branchless banking for the mass market of unbanked at a price point that undercuts the competition. This is extremely disruptive and allows us to break new ground.

By way of background, BTPN, which was founded in 1958, has 1,600 points of presence including ATMs and branch offices, and serves over one million customers. Our customer base includes 800,000 microbanking and the so-called ‘productive poor’ customers, customers at the bottom of the pyramid to whom we also hope to extend loans as well as financial services moving forward.

To accomplish this goal we began a pilot of branchless banking services in November 2012 called btpnWOW! Planning for the pilot, which now involves approximately 14,000 of our own employees across Indonesia, started

We are mobile operator agnostic in our approach and currently deliver the pilot service using the network belonging to one of Indonesia’s mobile operators. We are confident that our service will be available on all the country’s GSM mobile networks in the course of the year.

Essentially, btpnWOW!, which is slated to launch in Q3 2013, is designed to be a ‘market-first’ service that offers mass market unbanked customers a full-feature bank account paired with low price and a radical value proposition. btpnWOW! will not charge monthly fees, nor will we require a minimum balance. We are confident this offer will be rewarded with long-term customer loyalty toward our brand and bank. We also see btpnWOW! as a tool that equips us to identify individual customers, who would be good candidates for our more traditional lending products going forward.

SUSTAINABLE SUCCESS

Pegged at around 70 million, the unbanked market is huge. However, banks do not need to make huge investments to serve this

FOOTNOTE

1. Closed User Group

Moving forward, we see huge opportunities in commerce, enabling large companies that buy commodities like coffee to pay for those goods directly to the farmers and merchants on their mobile phones.

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segment. Forget sophisticated — or complicated — products. Our focus group research shows the services the unbanked want most center on cash-in, cash-out, bill payment and airtime top-ups. Fortunately, our vendor solution allows us to deliver these basic services, enhanced by mass customization, at large scale and low cost.

Research also shows that banks can reap huge business benefits if they offer the right product mix at the right price level. The right price level is critical since the fee structure offered by most banks discourages — and even devours — small deposits. High monthly fees, which banks must charge to offset administrative costs, can reduce an account balance to zero in just months. Little wonder that one third of Indonesians don’t save at all.

We at BTPN see an opportunity to extend financial access to a huge, untapped market

that would save money with banks — if they only could. We are on a mission, supported by senior management, to innovate banking by using new technology and new models to reach new customers and inject new dynamism into Indonesia’s economy.

The first item on the agenda is to convert our existing customers to btpnWOW! After we achieve this milestone we will target the broader unbanked market. Our aim is to grow our customer base from one million, where it is currently to 5 million by 2016.

We will also rely on our existing customer base to recruit more customers and — ultimately — entire communities for our branchless banking services. To accomplish this we will incentivize certain customers to work as agents for the bank, and thus solve some important issues around distribution and marketing. In both cases our customers will be our representatives.

Donny Prasetya is a Senior Vice President with PT. Bank Tabungan Pensiunan Nasional in Indonesia, currently heading the business development aspect of btpnWOW!, a pioneering branchless banking service in the country. Prior to BTPN, Prasetya was an Associate Operations Officer with IFC who managed the Indonesia Mobile Banking Project.

.

Moving forward, we see huge opportunities in commerce, enabling large companies that buy commodities like coffee to pay for those goods directly to the farmers and merchants on their mobile phones. To date companies that do raw material buying for companies like Starbucks or Mars, have to go through the remote farming communities, lugging cash along with them. It’s hardly an efficient, let alone secure way to conduct business. We are therefore involved in a pilot to provide these independent smallholder farmers an interest-bearing bank account, thus allowing them to accept payments on their mobile phones and — ultimately — build their business.

We will round out this virtuous cycle by using mobile to deliver the unbanked the information and advice they need to plan their futures and make business decisions. It may seem quite a stretch for a traditional bank to host an information portal targeting customers at the bottom of the pyramid, but we are convinced that this is the path we must take to help our customers achieve sustainable performance and a more stable financial future.

At BTPN we are pursuing a strategy to introduce pure branchless banking for the mass market of unbanked at a price point that undercuts the competition.

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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.

PART 4: MOBILe OPeRATORS: PAVInG THe WAY fOR MOBILe PAYMenTS AnD MORe

PART 4: MOBILE OPERATORS: PAVING THE WAY FOR MOBILE PAYMENTS AND MORE

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Excitement grows as Brazil gears up to host the FIFA 2014 Soccer World Cup and the 2016 Olympic Games. However, the main attraction may be the NFC trials taking place in Latin America, which are supported by the GSMA. These trials will enable users to make payments and access information with an nfC-mobile phone. More important, these NFC trials will highlight business opportunities and inspire companies across all verticals to think of new ways to harness NFC to connect with consumers in the context that matters most.

Soccer fans coming from all over the world will land in Rio de Janeiro in 2014. Besides

hosting the FIFA World Cup, Rio is well known for its beauty and tourist attractions. As they prepare for their trip, travelers to Rio will be able to charge their NFC-enabled mobile phones with the tickets they will use to take buses to popular destinations includ-ing the Copacabana beach, the Sugar Loaf and, of course, the Maracanã Stadium.

The GSMA is supporting technology trials in Latin America to show the possibilities of NFC-based interactive experiences and the business opportunities this technology affords the telecommunications industry and other sectors. NFC maturity was running just a few months behind when the London Olympics happened. But now we are in sync for the next big, worldwide event.

NFC TRIALS IN RIO

One of the trials involves RIOCard (a card offered by the public transportation ticket


In Nice, France, for example, visitors can 'touch' a tag with their NFC-enabled GSM phone and actually hear an audio description of a point of interest such as a landmark. They can also access Internet links for the places, artwork and points of interest that interest them by just touching the tag with their mobile phones. Just imagine the potential of these applications when they are deployed in all of the cities hosting the 2014 World Cup and the 2016 Olympics Games.

NFC IN BIG EVENTS

NFC is one of the technologies enabling the Internet of Things, where people can click or touch elements in the real world and bring them into their social Web. The NFC-enabled smartphone is the device that connects the virtual and real worlds, allowing a new dimension of interactivity.

Rather than pay for the bus ride using cash and change, people can pay by simply tapping their mobile phone to an NFC reader. People will use the same mobile phone to access more information about tourist routes, receive restaurant discount

issuer) and several mobile operators in Brazil. The idea is to replace the existing plastic card with an NFC- enabled mobile phone app. This app, which resides in the GSM SIM card, behaves as a secure, digital wallet holding the bus tickets. Companies like Gemalto, NXP and Samsung are also participating in this trial, which will start with 250 handsets delivered by RIOCard by the beginning of 2013.

People use plastic cards in a wide variety of scenarios. They have a card to collect loyalty points from their gas station, a card to track rewards from retailers where they buy, an ID card related to their health insurance and one card for every bank account they hold. All of these cards can be replaced by smartphone apps.

Just imagine the amount of paper and plastic we will be saving by doing this and the positive impact in our environment. Of course, for this to happen the point-of-sale technology and other kinds of NFC readers must be in place first. This is why the GSMA is supporting these proof-of-concept trials, allowing the potential providers to explore the possibilities and set up the right partnerships.

SIM-Based NFC: Enabling A New Level Of Interaction For Latin American Big Events By Valter Wolf, Market Development Director, GSMA

NFC is one of the technologies enabling the Internet of Things, where people can click or touch elements in the real world and bring them into their social Web.

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games they watch or play can be combined in many ways. This brings creative and exciting business opportunities to players across the ecosystem — sponsors, service providers, mobile operators — which are yet to be discovered and explored.

Valter Wolf joined the GSMA in 2012 and is responsible for engaging key ecosystem stakeholders, developing and facilitating traction for selected strategic initiatives of the mobile industry, including SIM-based NFC, Rich Communication and Connected Living. He has broad experience in telecommunications in the Marketing & Strategy area, with working experience in Germany and Brazil.

coupons, collect loyalty 'points' based on places they visit and the games they watch. By doing this, people will also be able to unlock badges, get free goodies, qualify for backstage passes — and much more.

Every big event is made possible by sponsors wanting to interact with their customer base in the best and closest way. NFC lets sponsors link with customers right on the spot. In other words, NFC allows sponsors and service providers to make this connection with people — in the right context — when people are holding the NFC smartphone at a given time and place.

The amount of data generated by the interaction between people using NFC-enabled mobile phones and the buses they take, the places they visit and the

Kenya’s M-Pesa is considered the most successful mobile money solution so far and a good place to look for key success factors. The success of M-Pesa is reflected in the numbers. M-Pesa provides mobile commerce used by over 70 percent of country’s adult population and now processes more transactions domestically than Western Union does globally 2.

What caused M-Pesa to be so successful where other solutions have not? Three important factors are:

1 Compelling Value Proposition. M-Pesa did a phenomenal job in understanding the biggest market need – a better option for urban workers to send money home to their family in rural areas – and developed a mobile money solution that was materially better than existing options. M-Pesa also kept the initial solution simple to under-stand and effectively communicated the value proposition in a way that resonated with consumers.

2 Ubiquity. Like all new payment form factors, mobile money must overcome the chicken/egg syndrome. Enough stake-

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 money is the next big thing in payments and financial services. But, mobile money has not yet lived up to its promise. This collection of successful mobile money solutions answer key questions and offer valuable learnings.

With over 100 mobile money deployments globally, only a handful have reached any meaningful scale. Even bullish forecasts for mobile payments, 100 percent annual growth reaching US$500 billion for 20151, are small compared to the US$10 trillion that flows through payment cards or the US$20+ trillion being paid with cash2. However, learnings from some of the successful mobile money solutions are raising hope that an open network approach to mobile money could achieve global scale in the same way as the global card networks achieved with payment cards.

GSMA is supporting technology trials in Latin America to show the possibilities of NFC-based interactive experiences and the business opportunities this technology affords the telecommunications industry and other sectors.

Open Solutions Could Help fulfill The Promise Of Mobile MoneyBy Sal Karakaplan, Vice President, Mobile Money, MasterCard

FOOTNOTE

1. “Pathways to growth in mobile Payments”, June 2012 by McKinsey2 “MasterCard Advisors Analysis 20123. “Mobile money: Getting Scale in Emerging Markets”, June 2012 by McKinsey


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holders must utilize the mobile money to enable it to reach scale but many stakeholders will not use it until they are confident it is ubiquitous enough to be worth their effort to use. In M-Pesa’s case, Safaricom’s significant national market coverage, over 60 percent1, delivered on the promise of ubiquity. Safaricom did have to enhance its agent network to create ubiquity for M-Pesa funding.

3 Business model that creates value for all stakeholders. It sounds trivial that a new business model should create value for all stakeholders to be successful, but many payment solutions fail because of their inability to address this issue. M-Pesa did benefit from a simple ecosystem with fewer players, but also ensured all ecosystem participants benefited. For example, it paid special attention to the needs of its agent network, aligning it with customer growth to ensure its agents are profitable.

While M-Pesa benefited from specific market circumstances, the three success factors are relevant in every market. In many markets creating an ‘open loop’ mobile money solution could make an

this experience will access a proven framework for value sharing between the different ecosystem players. This solves complex tasks given the divergent interests and objectives. Additionally ‘open loop’ mobile money solutions are also likely to be more cost efficient creating more value for stakeholders to share. This is because of the significant infrastructure investments the card networks have already made and the ability of these card networks to leverage existing banking infrastructure for the banked population to move money in and out of the mobile money ecosystem.

The transition to ‘open loop’ mobile money solutions is already underway. ‘Closed loop’ solutions including M-Pesa, Neteller and Moneybookers are realizing the value of ‘open loop’ and offering open loop payment cards linked to their mobile wallets.

Several ‘open loop’ mobile money solutions have also been launched such as by Western Union in Italy, Etisalat Nigeria in Italy and MasterCard in Africa. Payment system governing bodies like the National Payments Corporation of India are also emphasizing interoperability in their mobile payment solution guidelines.

important difference on the three critical success factors.

1 Compelling Value Proposition. The success of open loop card payment solutions (credit, debit, prepaid) has largely been driven by the rigorous and the disciplined approach for developing compelling value proposition referred to as program management. ‘Open loop’ mobile money solutions will also benefit from this approach and are likely to create compelling value propositions on a sustained basis.

2 Ubiquity. The card networks already have the broad connectivity in many markets. Mobile money solutions that leverage this infrastructure can achieve instant ubiquity.

3 Business model that creates value for all stakeholders. The card networks have also invested heavily to arbitrate large ecosystems of stakeholders equitably sharing the value of card payment solutions. The franchise rules, risk management policies and rich information content ensures the integrity of this value share. Mobile money solutions that leverage

In many markets creating an ‘open loop’ mobile money solution could make an important difference.

FOOTNOTE

1 “Pathways to growth in mobile Payments”, June 2012 by McKinsey

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Sal Karakaplan is a Vice President in the Mobile and Industry Alliances group of MasterCard. He leads MasterCard’s Mobile Money business globally in charge of strategy, product development, product commercialization and partnerships. Prior, Karakaplan was part of MasterCard’s Mergers and Acquisitions team, and led MasterCard’s equity investments in the emerging payments arena.

And mobile money is not the only place where this transition to ‘open loop’ is happening. Transit payment systems globally (Suica Card in Japan, Octopus Card in Hong Kong, Metro Card in New York) are already recognizing the benefits of open payment solutions and are transitioning towards them.

Mobile money solutions that are based on open network based solutions as those offered by the global open card networks are likely to address the key success factors demonstrated by success stories like M-Pesa. And they are not limited to local boundaries, the global interoperability of the card networks could make the mobile money solutions expand beyond the national boundaries.

Taking a pragmatic approach, the group determined early on that 7 of its 17 markets were ready for mobile money services. It then focused its efforts on developing a service offer that matched the needs of customers in these regions based on a keen understanding of local conditions and requirements.

This approach has allowed Ooredoo to identify two distinct customer segments, markets that span large geographic areas, not just individual countries. This is obviously a great benefit when it comes to executing the next step in our strategy to develop a turnkey solution that will allow our Operator Companies access to the technology and know-how that will allow them to roll out mobile money services quickly and confidently across their footprint.

FULFILLING NEEDS

In the first market, which includes countries like Kuwait, Qatar and Oman, many of our customers are migrant or ex-pat workers who desperately need a service that allows them

In february 2013 Qatar Telecom, or Qtel, made the decision to change its brand name to Ooredoo, which means 'I want' in Arabic. The move doesn't only allow the multi-country carrier to create and communicate a coherent identity. It marks a new phase in the group's strategy to deliver mobile money services that are aligned with what its large and diverse customer base genuinely 'wants' and appreciates. From enabling merchant payments to driving financial inclusion, Ooredoo is positioning itself to be a leading provider of mobile money services and one of the world's top 20 mobile operators by 2020.

With over 85 million subscribers across 17 counties Ooredoo has had to make some tough choices in order to meet — and exceed — the expectations of its diverse customer base.

M-Pesa did benefit from a simple ecosystem with fewer players, but also ensured all ecosystem participants benefited.


Preparing To Deliver ‘Advanced’ ServicesBy Rambert Namy, Head of Mobile Financial Services, Ooredoo

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The second market we serve, which includes countries like Indonesia, Iraq, Tunisia and Algeria, is one where mobile money services are squarely focused on driving financial inclusion. Put simply, our offer addresses the two issues countries in this market have in common: a lack of infrastructure and a growing population of unbanked. Thus, our aim is to enable what this population needs most: P2P payments, utility bill payments and airtime top ups.

AGENDA 2020

At Ooredoo our goal is to build trust in our mobile money services, boost customer loyalty through frequent use and — ultimately — offer services that will grow to include microfinance. It is part of a larger group-led initiative we call 'the 20-20', because it is the plan Ooredoo will follow to be one of the top 20 mobile operators worldwide by 2020. Mobile money has been identified as a key capability that will allow us to reach this goal.

At one level, it is about cultivating a customer base of unbanked whom we will empower to access financial services and

to remit a portion of their monthly salaries to their families in their home countries.

We answer this need with a mobile money service, linked to a mobile wallet, that allows this customer segment to transfer money back home directly from their mobile wallet. 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. Cost is another benefit of this market approach since Ooredoo can offer its service in these countries at a price point significantly lower than organizations like Western Union charge.

To put this into perspective: the outgoing flows of remittance in the three markets, Qatar, Kuwait and Oman, total over US$25 billion. However, a mobile wallet situation only addresses one side of the transaction. Ooredoo must also build an ecosystem of partners and players in the receiving countries. Another challenge is the strict regulation regarding international remittance and the requirements for KYC, which are naturally needed to prevent money laundering.

But it's not just about adopting the skills and mindset that will allow us to offer mobile money services. It's also about learning to do what no business school taught us: how to market successfully to the bottom of the pyramid.

A big part of this is educating people about the service, which must be done on-location, not from behind a desk. At Ooredoo experience has taught us we must go out in the field, meet with community leaders and encourage word-of-mouth marketing by connecting face-to-face with customers and fans who can help us recruit new customers.

Of course, this takes time, even years, which is why it may seem that uptake and usage of mobile money services is slow. However, in reality, uptake of mobile money services is healthy and growing. Now it's up to Ooredoo to implement a model that will get the services — and the education — to the people faster.

TURNKEY INNOVATION

It's all about reducing time to market, which we at Ooredoo will accomplish by offering

so improve their lives. Obviously, Ooredoo is also a profit organization that must consider the huge benefit around offering services to our mobile customers — the vast majority of whom are pre-paid users and multi-SIMers who change from one mobile network to another based on the promotions, prices and bundles on offer — that will encourage lasting loyalty.

Put another way, mobile money services are an effective way to combat churn. Customers may switch operators for a better bundle, but they will hardly change bank accounts every day. Providing our customers a bank account will keep them loyal to our brand.

The aim of our initiative is clear, but it is also a complicated undertaking that will require new skills and deep commitment. Since we are essentially asking telecoms professionals to become bankers we are supporting our Operator Companies through programs to share our best practice, and through partnerships with companies across the ecosystem. This allows us to gather valuable know-how and share this expertise with every Operator Company across the group.

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.

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Under the new partnership, Ooredoo customers are able to send money to 284,000 local agents in 196 countries in Europe, the Americas and Asia including India, Pakistan, Nepal, Sri Lanka, Bangladesh and the Philippines. In practice the transfer of the money is almost instantaneous and recipients can collect the cash safely and reliably from the MoneyGram local agents.

The deal is the first in the world of its kind, and represents another improvement in the customer experience delivered by our mobile money services, which is incidentally the fastest-growing financial transfer service of its kind. In parallel to this partnership, Ooredoo will still work to build its own remittance solution, one that will see us establishing a bilateral agreement with the countries in question and so own the customer base. However, this partnership achieves this goal faster, allowing us to claim a bigger role in the remittance value chain.

REAL PROGRESS

Clearly, our efforts are focused on extending financial services to people who have been excluded from the formal banking system. However, we also strive to trigger a shift

our Operator Companies a turnkey solution. Our first step in this direction has been to build a group platform together with our vendor partner, which is fully hosted. Because the platform is cloud-based it provides the Operator Companies a variety of benefits. Chief among these is the guarantee of security and quality of service, and the cost is low because the infrastructure costs are shared.

Additionally, we are building a team of experts that — similar to a SWAT force — comes into the Operator Companies and help them in the implementation phase by providing them expertise and best-practice. The Operator Companies have indicated they are very pleased with our approach and the results, which is quite encouraging.

Our partnership with MoneyGram, which we announced in November 2012, will also allow us to reduce time-to-market for our remittance service. Rather than have to build a remittance solution from scratch, or partner with providers in every single receiving country, we have signed an agreement with MoneyGram that makes it possible — in one go — for our customers to transfer money to almost every country in the world using their mobile phone. This service is currently available to our customers in Qatar.

them to offer couponing, loyalty programs and gift cards.

After all, the unbanked is not unbanked because they have no money. They are unbanked because they live — and work — in areas where there is no physical bank branch office that they can visit. Or they simply don't earn enough money to pay the fees and charges to maintain a minimum deposit. There is a huge market opportunity for mobile operators if they forge the right partnerships. However, the key to success is to move from becoming experts in selling value-added services — which is what operators have traditionally done best — to demonstrating the value of mobile money services to the unbanked, a huge and sceptical demographic that will only embrace these services when they show real benefit.

Rambert Namy heads Mobile Financial Services (MFS) for the Ooredoo Group, which operates in 17 countries and territories and counts 85 million customers. Namy has more than 15 years of experience in the electronic payment space, with specialist knowledge in financial services such as Electronic Payment and Mobile Commerce and all aspects related to stored value applications. Previously, Namy headed the Mobile Money program for the France Telecom Group.

in customer behavior that will encourage savings and spark interest in services around personal credit, microfinance and lending.

Offering so-called advanced financial services is the next step on the group roadmap. It makes sense to offer insurance linked to a remittance service, for example, because if someone is transferring hundreds of dollars, they may also want to consider purchasing health insurance or car insurance. Mobile allows us to leverage our networks, perhaps even in partnership with microfinance institutions, to extend a broader range of financial services to the unbanked.

Moving forward, we are also exploring services to enable commerce, using technologies such as NFC to allow people to make merchant payments. In this scenario we would provide the merchants with the capabilities, starting with a terminal, to accept payments from our customers. In fact, we are looking at mPoss, which is a dongle that merchants can plug into any handset, turning their device into a card reader terminal. Once this framework is in place to accept payments, it's easy to imagine how we could enrich the value proposition of the merchants by enabling

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.

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progress on mobile infrastructure conducive to mobile payments coupled with the existence of a robust ecosystem has helped make Malaysia an international and respected Islamic financial center.

Malaysia benefits from three key factors: high mobile penetration, increasing customer interest in mobile commerce offerings, and an enabling regulatory environment that grants mobile operators with the necessary permissions and licenses to issue mobile wallets and conduct money transfers. Celcom secured a license in 2008, making it a pioneer in the market for mobile money services.

Nevertheless, in such a mature and advanced market, the provision of a mobile wallet service alone is not a differentiator as the concept is not yet widely accepted in Malaysia. To stand out, Celcom must offer additional value and services, which is why we are focused on building an ecosystem that will enable convenience, easy access, and ultimately encourage more utilization and loyalty.

Currently the largest mobile broadband and corporate services provider in Malaysia and part of the Axiata Group of Companies, Celcom is now moving towards integrated multi-access and multimedia services, in line with evolving technologies and consumer behavior in the country. A big part of this vision is about advancing mobile payments, an area where Celcom has made its mark with AirCash, one of the first mobile wallet services to launch in Malaysia. While its uptake is significant, the real innovation may be Celcom’s current plan to integrate AirCash into its larger customer loyalty program.Malaysia boasts a strong banking sector and a vibrant economy where the government estimates only 20 percent of the population are unbanked or underbanked. Significant

Celcom has also been granted a license to operate remittance services with a focus on international money transfer. In practice, AirCash customers can use the service to make outbound remittances, especially the large population of migrant workers who work in Malaysia and who regularly send their salaries to family abroad. The use of mobile phones makes these transactions fast and secure.

To date, outbound remittance from Malaysia is enabled via corridors with two receiver countries: Indonesia, where our parent company Axiata’s Operator Company XL operates, and the Philippines, where Celcom partners with Globe Telecom. Remittance recipients can perform over-the-counter cash outs or store the amount in their mobile wallet. In Indonesia, XL – another Axiata Operator Company – offers a mobile wallet service under the brand XL Tunai.

Currently, airtime top up is the most popular service AirCash supports. However, Celcom working to market remittance services aggressively to customers by first creating more cash-in outlets in relevant areas to serve customers best. We are hopeful that this ecosystem will be in place in 2013,

EXPERIENCE AND REMITTANCE

Celcom, which has over 12.7 million subscribers, has been quick to see the potential of mobile payments. In 2009, we launched AirCash which provides customers the convenience of having a virtual mobile wallet for cashless transactions such as money transfer, airtime transfer, bill payment, and very soon, the ability to purchase physical goods.

With AirCash, customers can deposit money into their Celcom AirCash account from over 1,000 touch points including online channels, Celcom branches and outlets, and Celcom Payment Kiosks. Customers can also withdraw their AirCash balances at Celcom branches.

Through AirCash, customers can pay for their utility bills and Celcom accounts, check their balance in real time, view their last three transactions on their mobile phone. They can also top up airtime in Malaysia or 10 selected countries where Celcom has partner networks. Prepaid users on AirCash can also transfer airtime to other users.

Expanding Mobile Wallet Capabilities To encourage Customer LoyaltyBy Afizulazha Abdullah, Chief Digital Services Officer, Celcom Axiata Berhad


Currently, airtime top up is the most popular service AirCash supports.

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This is the key reason why Celcom launched a series of NFC trials last year that provides users an NFC sticker for their mobile phones. The trials involved closed communities of several hundred users including Celcom company employees and local high school and university students. The aim was to enable seamless NFC payments for food and beverages in cafeterias and school supplies in school shops.

To enable the actual payments, users “tap” the NFC stickers on their mobile devices on the terminal at the point-of-sale. In the back-ground, the terminal communicates with the point-of-sale server, which then communicates to the AirCash mobile wallet. After this live online connection was made, the amount was deducted from the user’s AirCash account and the payment was completed.

A key learning from the results of the trials which lasted several months was the importance of reducing the time taken for payments to match the benchmark of credit cards. We also plan to work closely with credit card merchants or card associations such as MasterCard or Visa this year to enable AirCash as one of the payment sources in their respective networks.

This tap-and-pay approach is an interim solution that allows us to go-to-market with a cashless payment service that is

and are also confident that the subscription of remittance services will increase significantly as a result.

PAYMENT OPTIONS

Payments are a huge part of Celcom’s strategy moving forward. To this end, we have partnered with iPay88, an Online Payment Gateway partner and provider of a one-stop online payment service. Some 2,000 online merchants use the company’s gateway and we want to enable these merchants to accept AirCash as one of their payment methods. So far, Celcom has targeted around 10 of the leading online merchants in Malaysia and hope to extend this to include merchants with physical stores as well in anticipation of the variation in the e-money license approval we will receive from the Central Bank this year to offer mobile payments via NFC.

It is early days for mobile payments in Malaysia and it is important to be flexible and be prepared by enabling the many platforms that enable this service. Smart-phones will no doubt be a big part of this in the future, but with just under 30 percent penetration in Malaysia, it is important for us to enable payments on all mobile phones and not just high-end devices.

Consumer behavior will also change with time, as smartphone penetration grows and consumers grow accustomed by the ease and convenience of mobiles. The key challenge is people – specifically how to boost consumer readiness for mobile commerce. In a mature market like Malaysia where most people have a bank account, customers have to be convinced that this new way of making payments is better than just paying a bill or making a purchase online or with their bank account card or credit card.

No matter when and how it happens, we at Celcom want to be ready for it. Achieving ‘platform readiness’ is our main focus because it is the only way to be prepared to drive, or even lead, Malaysia’s coming cashless society.

Afizulazha Abdullah (Afiz) is Chief Digital Services Officer of Celcom Axiata Berhad and spearheads the development and growth of Celcom’s Digital Services and VAS business by providing leadership and strategic guidance for four business pillars; Digital Commerce, Digital Payment, Digital Advertising and VAS/Content. Prior, Afiz was the Chief Operations, Advanced Data Officer responsible for the data access and VAS/Content business. He has over 22 years’ experience in the Information Technology and Telecommunication industry.

not limited to certain devices or dependent upon a critical number of NFC-capable devices in the market.

DRIVING LOYALTY

Celcom sees the AirCash mobile wallet as a key tool in retaining our existing customers. Its convenience combined with the extensive ecosystem of partners we are orchestrating to enable the convenience of mobile payments goes a long way to encourage customer use. With this in mind, Celcom is exploring models that provide bonuses to our prepaid customers in the form of airtime credit that is transferred directly to their AirCash wallet. Additionally, these customers have the option to use their rewards and loyalty points to pay at one of the many destinations or merchants that accept AirCash as a payment method.

From our mobile wallet to recent NFC trials, Celcom’s overall strategy leverages our position as a mobile operator to play a central role in the value chain. The end-game is all about building key capabilities to enable mobile payments. 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.

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.

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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.

PART 5: RETAIL, CONSUMER PRODUCTS: MASSIVE OPPORTUNITIES AT THE INTERSECTION

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Largely driven by smartphone growth and greater adoption of data services, consumer behavior is revolutionizing the overall retail shopping experience. Yankee Group’s 2012 US Mobile Money Survey, September shows 41 percent of respondents use their mobile phone in-store for a variety of shopping-related tasks such as price comparisons and product reviews. Mobile shopping applications are also a top downloaded application—right on par with social networking applications.What’s even more interesting is the growth in the number of consumers using smart-phones to access product information and coupons. Between 2011 and 2012, consumers using their phone’s camera to scan or use a bar code almost doubled, with roughly 25 percent of consumers now engaged in mobile couponing (see Figure 1).

Why is the mobile couponing trend important? Retailers are looking for new

ways to not only engage with loyal customers, but also avoid ‘showrooming’, whereby consumers use their phone in-store to scan product codes and find a better price online. To foster loyalty and curtail showrooming, retailers need better insight to determine whether a purchase has been made by a new or existing customer, then understand how they can best serve that customer moving forward to build up a true relationship to keep him or her coming back.

From a retailer perspective, the value proposition of mobile payments is in itself rarely sufficient since in almost all cases m-payment systems simply use existing networks such as Visa, MasterCard and PayPal. 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.

Today, we see mobile coupons becoming the gateway to lure shoppers with offers or added value. Three especially hot areas are:

Location-based offers. Businesses today need to think locally. It’s not just about location-based applications, but also


Mobile Shopping And Coupons Transform RetailBy yankee Group


geo-fencing—utilizing virtual perimeters for real-world geographic areas. This technology helps retailers target customers in the physical domain, shifting the power from a defensive price-shopping mode to offensive customer engagement. In fact, Yankee Group’s 2012 US IT Decision-Maker Mobile Money Survey, September, finds that 56 percent of respondents say personalized offers based on location are a high priority, while 43 percent say they plan to deploy personalized offers using location data over the next two years.

Social sharing and engagement. While Facebook looks to add gifting capabilities to its social network, other social gifting companies such as Wrapp and Boomerang are using Facebook integration to offer similar services (see the October 2012

Personalization is the holy grail of business strategies from marketing to customer service, and mobile transactions provide new opportunities for better customization than ever before.

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applications. We also see augmented reality mobile apps coming to the fore. These create a more engaging experience that lets shoppers use their smartphones to scan items or even store shelves to receive personalized product tips, recommendations and coupons.

Mobile Money Strategies Perspective “Facebook Gifts Is No Social-Mobile Savior”). Beyond pure-play social firms, however, we see retailers getting into the social gifting game. Retailers have very little barrier to entry in enabling Facebook-integrated social gifting, and they can readily deliver the goods via their e-commerce or even mobile

is a wired or wireless connection used to transfer product or promotional information and transactional information to enhance the retail operation, as well as the retail buying experience for customers. At the other end of the connection, data is then stored and mined for near real-time intelligence on buying patterns, inventories

Connected devices. Retailers are just beginning to integrate specialized machinery such as POS terminals, digital signage, kiosks and smart vending machines into the brick-and-mortar shopping experience (see the June 2012 Yankee Group report “Reshaping Retail With Connected Devices”). The common thread between these devices

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Retailers are already rolling out connected ATMs, PoS Systems, Kiosks and Vending Machines

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responding to what offers, enabling them to make better decisions. Using mobility improves retailers’ understanding of their customers and the best offers to provide them with competitive differentiation. In the next few years, retailers will continue to build on these early initiatives and move toward streamlining the mobile retail experience. Key examples include:

Social will become measurable. In the next few years, we see social intermediaries continuing to muddy the mobile mix with broader offerings targeted toward loyalty. But we also see offer-oriented companies including Groupon, LivingSocial and even major financial institutions such as Bank of America with its BankAmerideals moving toward measurable transactions. They will realize it’s not about check-ins or deals per se, but engaging customers across the life cycle, from first coupon to commerce to care (see the February 2012 Yankee Group report “Mobile Transactions Across the Customer Life Cycle: Coupons, Commerce and Care”). Personalization is the holy grail of business strategies from marketing to customer service, and mobile transactions provide new opportunities for better customization than ever before.

and consumer demand trends. Retailers are also looking toward self-service solutions and mobile POS as a way to decrease overall service costs, reach new demographics and provide differentiation at the point of sale. In the past year, we’ve seen several large-scale rollouts of each of these solutions and expect the trend to continue in the future as evidenced by our latest forecast numbers. Yankee Group expects a high rate of growth in this segment, from 15 million connections at the end of 2012 to 33.2 million connections in 2016, a CAGR of 22 percent (see Figure 2).

FUTURE OUTLOOK: MOBILE RETAIL LEVERAGES BACK-END DATA TO GET EVEN MORE STRATEGIC

The future will be about measurement and engagement. Within the next two to three years, we will see not only more adoption by consumers, but also more retailers successfully integrating their personalized offers into cardless loyalty programs. Mobile loyalty apps with coupons offer the capability of delivering a unique identifier to each specific coupon and/or customer. This allows retailers to gather more CRM intelligence about which customers are

Devices will become increasingly interactive and ubiquitous. We see low-latency, high-bandwidth broadband networks such as LTE integrated with supportive M2M connectivity modules opening the door to new devices such as self-service kiosks that integrate human interaction. In this example, customers walk up to a kiosk and have the option to interact directly with an agent standing by to exchange information and/or help drive a transaction to completion. These collaborative kiosks will serve as a robust augmentation to existing retail staff, increase sales capacity and improve the overall retail customer experience. While we will see these kiosks pop up in fixed locations, integrating an LTE connection also opens the possibility to deploy kiosks in temporary locations such as malls or at festivals. The widespread availability of 4G connectivity will also catalyze the market for digital signage solutions enabled with real-time streaming of advertising content and store/warehouse surveillance applications via 4G connected cameras.

Data will be more tightly integrated. Overall, retailers will start tying their various mobile initiatives to their own customer data. Retailers will start providing special offers aligned with specific customer attributes, behaviors and preferences at the right time and right location. A broad range of promotion types, including local limited-time offers, point incentives and social-networking-based motivations, will give businesses additional opportunities to engage mobile consumers with tools such as cardless loyalty programs, social gifting, inventory availability, real-time personalized offers, personal shoppers and self-checkout.

Frictionless processes will ease consumer and retailer adoption. In the future, the talk won’t be about technology and whether QR codes, NFC, cardless apps or mobile commerce apps are used. Instead, the focus will be on how businesses can use seamless execution to differentiate their mobile initiatives and drive revenue, enhance loyalty and improve care. Retailers and brands need to ensure back-end systems remain flexible from offer to redemption.

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.




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As a retailer or consumer-centric company, you’ve likely recognized your brand is not entirely under your control, but the customer experience you deliver can be. In the late 1990’s, e-commerce made the industry adapt to selling via new channels, but it led to silos and differing visions of how best to connect with the shopper. Retailers that survived the financial downturn since 2008 got better operationally. As a result, most chose to deliver a better customer experience, with some achieving this by breaking down the silos to unite store point-of-sale and e-commerce processes.

Unfortunately, customers do not think in terms of channels, and most do not think about the shopping process. Retailers must. One approach you can use to map their journey, and improve your capabilities to satisfy your customers every step of the way is to use a methodology called design thinking to understand how shoppers connect with retailers.

Taking this approach allows you to discover how people, processes, and systems can eliminate boundaries between the channels and improve your brand experience. This is key since the advent of mobility, mobile

Shoppers with smartphones are leading the greatest change in retail since the adoption of the barcode, over 40 years ago. How will your business navigate the way in the new, uncharted territory created by this consumer-led sea-change? This overview will help you plot the transformational path your business needs to succeed in mobile commerce and retail.Consumers have more influence and impact on a retail brand than ever before. They are empowered by the smartphone, inexpensive data plans, the Internet, and social networks. Shoppers have unprecedented, instantaneous access to competitive pricing, reviews, advice, and product availability. The smartphone has given shoppers fingertip access to information that can either tarnish your brand or unearth new treasure. People use social networks that span the globe, and in milliseconds a consumer can sink your brand’s reputation or put wind in your sails and more cash in your sales. They are connected. Are you?

information in exchange for value. Thus, in their dealings with retailers, they want time-liness, transparency, and expect retailers to operate with as much ‘tech-savvy’ and openness as they do.

REINVENTING CUSTOMER LOYALTY

There is a resurgence of interest in customer loyalty, but it is being reinvented in the mobile world. Mobile allows consumers to download loyalty apps to their smartphone, replacing the plastic card they have in their wallet. Even your existing loyalty programs can benefit by adding this mobile component to extend your brand to the consumer’s phone, in place of their wallet.

But it’s not just an opportunity for retailers. Smart marketers in transportation, utilities and consumer products companies are exploring how they can deliver relevant, timely information, promotions, and special offers right to the consumers’ smartphone, at their request, using geo-location, purchase and payment history, and the consumer’s declared preferences and interests.

commerce, messaging and mobile payments can change how retailers connect with con-sumers, build loyalty, empower employees, and increase sales with lower risk.

COMMERCE CALL-TO-ACTION

Leading retailers are starting to offer solu-tions that enable the curb-side pickup of grocery orders placed on a smartphone, as well as cross-channel activities that allow ‘click and collect’, enabling consumers to buy online and pick up in store.

Again, the customer doesn’t think in terms of modalities or channels. They naturally use their tablet, PC or mobile phone to research and select what they want to buy. They just know they want to order and pick it up later. They don’t think about how it happens – and they demand it to be seamless.

This ‘instant gratification’ is top of mind with Millennials, a customer segment of digital natives that have grown up with technology and the Internet. Customers in this segment not only expect a good experience, they also care deeply about our planet and causes, and they are willing to volunteer personal


Opportunity At The Intersection Of Retail And MobilityBy Colin Haig, Program Principal, SAP Retail

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This isn’t about deploying simple loyalty software. Organizations are harnessing very advanced analytics and a learning engine designed to deliver value to the consumer, insight to the marketer — and mutual benefit.

TAPPING THE TOUCH POINTS

The use of gift cards are reaching new peaks, in part because they are a staple of holiday sales. Stores love the power of the gift card, and the sister concept of returns cards, where retailers can issue a plastic card as a credit in place of cash, is also gaining traction.

Like loyalty cards, consumers are eager to clean their wallets of plastic cards and look to a day when they neither have to fish them out of their wallets, or know if they even have one on their person.

Emerging mobile wallet technology also answers this requirement with convenience, allowing a retailer to deliver stored-value card capability on a smartphone, with the inherent security of the mobile network, and the ease of text messaging. Retailers are using this approach to remind customers of

prescription renewals, parcels for pickup, or promotions of interest.

Banks in the last decade have also embraced mobile. They use it to create better customer engagement supported by highly interactive, beautiful apps that allow customers to check their account balance, transaction history, and more. We envision retailer credit operations that will harness this as well, potentially combining it with other functionality in a branded app.

RETAIL REVOLUTION

Consumers always have their mobile phones with them, especially while shopping. Although the showrooming trend of visiting a store to investigate a product before purchasing online continues, there is no reason retailers can’t turn this habit of researching products in-store into a new opportunity to connect with the consumer while store staff are at hand to help.

Of course, store staff need to be as empowered as the shopper has become. Many retailers have yet to map out a mobile strategy to engage and enable their store team and the regional and district managers that support them.

Although the handheld barcode scanner we used to call an ‘inventory gun’ is still commonplace, best-run retailers are adopting solutions to equip and educate store staff to improve the service and advice they offer customers in the aisle. With a smartphone, tablet, or other handheld, there is no reason for staff to ever leave the customer’s side to get more information or ask a superior. Store staff can use their devices to check stock price, availability, and locations to ensure that the customer gets instant answers and instant gratification.

Managers can also use mobile to monitor store performance, key indicators and goals. Other solutions with mobile at the center give staff and managers guidance on fast-moving items that need to be reordered, with timely alerts, and all needed information on their tablet. This eliminates the drudgery of walking the aisles and counting product, and waiting to reorder until the day’s sales are done. It saves hundreds of hours in most chains, reduces inventory carried, and helps eliminate out-of-shelf and out-of-stock situations.

REAL-TIME ADVANTAGE

We are also seeing a revolution in POS. In some stores today you can use a mobile device to complete a transaction without queuing up at the checkout. Retailers using mobile POS and other in-store solutions are seeing higher customer and employee satisfaction. They are also able to maximize sales because mobile functionality provides real-time inventory information anywhere in the store. Thus retailers can meet shoppers’ needs and encourage sales because the visibility mobile provides shows and confirms products are in stock.

Mobile empowers consumers to shop on their terms. But mobility isn’t just about making life for the consumer better. It also equips employees — and the entire organization — to serve the customer better by streamlining processes, enabling new loyalty programs and ensuring that consumers get quick and helpful answers to their questions in real-time.

Empowered employees are also engaged employees, and that means greater productivity, pride in their work and improved retention. This has a profound

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.

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impact on staff turnover. What’s more, a mobile strategy can even help retailers win the war for talent, ensuring that Millennials joining the business are much more excited to go to work and aren’t embarrassed by outdated current store technology.

Inevitably, the Information Technology team has to make it all work, and work well.Building a mobile optimized Website isn’t enough. You need to build a comprehensive mobile strategy that covers all aspects of your business – from warehouse, through the shop floor, to the hands for the consumer.

Colin Haig is a domain expert for retail industry trends and store strategy with 25 years of experience in store systems, high technology and telecommunications. He focuses on mobility, store operations, business development, thought leadership, and acts as an advocate for retailers of all sizes.

There is only a small window of engagement on a mobile phone. Selling requires quick one-liners. How can you make a value statement within the first few seconds, when you have the consumer’s attention? How can you connect with your consumer on a fast-moving mobile screen? And how can you move the would-be buyer from ’I intend to buy‘ to ’I will buy‘? Farhan Ahmad, the director of emerging payments at Discover Financial Services, the issuer of the Discover Card, the third largest credit card brand in the United States, explains that “Mobile payment is a small subset of mobile commerce. Mobile commerce is primarily about shopper engagement and marketing.” To paraphrase Farhan: We need to develop a ‘pickup strategy’ to court the consumer before we can close the sale.

What mobile marketing mechanisms will engage with mobile shoppers and stay con-nected and relevant all the way to the cash

register? Twitter’s microblogging, Facebook’s community building, Foursquare’s crowd sourcing, and Google Offers are all valuable tools, but any brand or retailer that is committed to executing a digital strategy across all its customers’ screens needs to establish a direct relationship with shoppers.

While one would think that the social nature of shopping today, where consumers connect with friends in both the real world and their social networks to get feedback on what they should buy, or a second opinion about purchases they are about to make, would give social networking giants the ability to compete with Amazon.com and PayPal. However, this success has so far not materialized.

Though Facebook’s director of business development, David Fisch, has correctly acknowledged that 'social' and 'commerce' are a perfect combination, Facebook has not delivered on its promise to leverage its millions of customers to shop cross-channel. Nonetheless analysts and pundits forecast that sales of physical goods through Facebook and other social networks is set to jump from US$5 billion to

Store staff can use their devices to check stock price, availability, and locations to ensure that customer gets instant answers and instant gratification.

Fast Shopper, Slow Store: A Mobile PlaybookBy Gary Schwartz, CEO of Impact Mobile.


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US$30 billion by 2015. But these numbers are hard to swallow. Facebook folk are there to meet and socialize, not to shop.

North American retailers Banana Republic and Old Navy learned this lesson the hard way. They tried to monetize their Facebook community by opening stores inside the social network. After underwhelming results they shut their virtual doors. Other retailers, including Nordstrom and JCPenney, that tried to cash in on community have also failed. Even GameStop, the world’s largest video game retailer with over 6,600 stores in 15 countries worldwide and online and more than 4 million Facebook fans, shut down shop after six months.

START IT SOCIAL, KEEP IT DIRECT

Clearly, it’s key for brands and retailers to cultivate social ties with consumers and start a relationship in the social Web to kick off the conversation and develop a direct relationship with the consumer. But that is precisely the point: it must be direct.

This is where the mobile channel excels, as the only two-way method of communications (and more) that allows companies to connect with the shopper across all the retail touch points.

Why is mobile so powerful? Because once a direct, permission-based relationship is established between a shopper and a brand or retailer, it cannot be disintermediated.

In other words, competitors who want to own the customer — Facebook, foursquare, Google, Apple — cannot insert themselves between you and your shopper.

Once there is a direct, trusted relationship, the brand or retailer can refine how it uses mobile, and take steps to develop mobile as a targeted and personalized communica-tions channel. This effort pays measurable dividends, improving brand recall and conversion rates. The results are even better if the brand or retailer is up front about the value exchange (that is, the benefits to the consumer when they agree to opt in and receive messages/offers) and clear about the expectations (that is, delivering a clear shopping call-to-action that consumers can understand and appreciate).

FREEDOM OF CHOICE

Success is all about activation. When Amazon.com designed its Price Check app, it offered comparison shoppers several activation channels: MMS, SMS, voice, scan, and manual form input. Read between the lines, and it’s

clear that activation needs to be on the shopper’s terms and accommodate all the channels the consumer has at their disposal.

Activation triggers include 2D barcodes (QR), tapping NFC tags, and direct-from-mobile-phone text opt-ins. Opt-in channels can harness an app download or follow on directly from a Website. Increasingly, the products themselves are part of the picture, as an on-shelf call-to-action.

With so many formats and approaches it is important to understand the differences Here are some tips to guide retailers and brands as they develop an activation strategy to drive engagement — and sales.

1. CLICK

The Web is probably the most logical place to start for most brands, as it extends their existing consumer relationship manage-ment (CRM) opt-in and offers shoppers a choice of channel. As in all marketing, shoppers should be given a choice of channels. Enabling opt-ins through Web forms facilitates the change from large-screen to small-screen messaging that is closer to the point of purchase and point of decision. The key is to immediately engage on the mobile channel after the Submit

Harness NFC to create new use cases and engagement scenarios: Tag a product or poster to enable ‘Tap2Opt-in’, ‘Tap2Web’, ‘Tap2Coupon’, ‘Tap2Shop’. The possibilities are endless.

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button is pressed. (For a good example of this, go to www. maccosmetics.com and view the sign-up page.) Mozilla (Firefox) and Linux (Tizen) are going head to head to capture next-generation developers with their WWeb-based operating system. Mobile-Web tools will allow retailers and brands to increasingly use WWeb-based HTML5 applications and not rely on mobile apps for their consumer engagement.

2. SCAN

2D barcodes, also called QR codes, are showing up on paper media (magazines, newspapers, circulars and flyers), presenting a possible way for companies to bridge the physical (paper) and digital (Internetworlds and inject new dynamism into old media (TV commercials, for example). They’re cheap and easy to implement, and a scan on the part of the consumer using their smartphone moves the shopper to the Web.

However, the long-term goal is to move shoppers to a two-way opt-in relationship. If you want to move the shopper directly to the mobile Web, make sure you enable messaging opt-in on the landing page when they arrive. This will encourage the shopper to grant permission for you to continue interacting with them. Without opt-in, this

is a just an anonymous click meaning you cannot know who the shopper is and you have no opportunity to reengage with this potential customer.

An alternative activation channel that also requires a scan is image recognition. This technology allows consumers to take a photo of a product or advertisement and send it to a cloud-based service that recognizes the image and sends back an offer or communication related to the product. Augmented reality (AR) is an extension of this technology, enabling more virtual interactivity and animation around the image recognition technology. What you see is what you get? It’s not quite that simple. While we wait for Google Glass to become a mainstream add-on to our eyewear, there are substantial barriers to consumer adoption. The biggest marketing hurdle is that most AR solutions require a bespoke application, one that is (presently) not standard or native to the mobile phone. In many cases you need to educate the consumer to download your mobile app first or force them to use your application as a visual interface which is buried behind many mobile clicks and swipes. So ask yourself: If you are required to spend marketing dollars to drive an application download, does it detract from your effort to drive your product and services?

3. TAP

Near Field Communication (NFC) is native to newer Android smartphones in the market, which automatically limits the size of your consumer audience to smartphone owners. To date NFC seems to be all about payments, but it also has huge applications around proximity marketing. Harness NFC to create new use cases and engagement scenarios: Tag a product or poster to enable ‘Tap2Opt-in’, ’Tap2Web’, ‘Tap2Coupon’, ‘Tap2Shop’. The possibilities are endless. Think of tap as a more frictionless scan, enabling contactless marketing that does not require an app and is native to the handset — keeping the consumers always-on and always a tap away from activation.

Samsung’s NFC TecTiles, which allow consumers to program stickers with phone commands, are the first step to what I refer to as ‘CommerceTiles’, which will enable tap-to-buy activation via any media.

The challenge is around building a critical mass in the marketplace. Handset penetration has a way to go. And many in the industry are politely waiting for Apple to include NFC into their next handset launch.

4. TEXT

Text messaging is the only two-way communications channel that has widespread adoption. Surveys show that a whopping 74 percent of smartphone users use SMS, as opposed to email at 14 percent. Text messaging is native to the mobile phone — all mobile phones — and enables brands and retailers to deliver a ‘rich content’ relationship with shoppers that can drive brand loyalty and measurable sales. Significantly, the two direct marketing channels — text and email — also work very well together. Text complements email by providing an actionable reminder that reinforces the email blast. Focus on driving text-based opt-in to a monthly or weekly subscription with brand loyalists, and use text messaging to mobilize existing promotions and engagements that lead to purchase.

In-app push notifications are often viewed as being similar to text messages because they emulate the SMS function on a phone. The only caveat about this messaging channel: it has an in-built limitation of sorts. The in-app alert is tied to the mobile app, which is where the platform provider calls the shots. Thus, the relationship behind the alert is owned by Apple or Google. If the phone owner deletes the app then you have lost this relationship with the consumer.

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That is why, in July 2010, Google’s YouTube jettisoned its Apple-bound phone applica-tion (and nascent community) and moved into the phone’s mobile browser. In the case of Android, the push notifications appear out-of-channel and can often become lost in the bevy of service notifications.

Apple’s Passbook, on the other hand, is an interesting hybrid. It has aggregated coupons, tickets, and vouchers into a super app. It allows brands to send a message to the phone with a ZIP file (digitally signed and blessed by Apple) that inserts a dynamic coupon, ticket or voucher into the Passbook. While the relationship is not two-way, the

and tracked and become what I refer to as an ”offline interactive” strategy.

Once a brand or retailer has acquired a shopper’s opt-in, it can profile the shopper based on geography or call-to-action. It can run mini surveys to hone and deepen the customer relationship. Additionally, the brand or retailer can close the circle by providing SMS offers and deals with embedded trackable URLs so they can see the results for themselves. These deals can be multiple-use or single-use, depending on the bricks-and-mortar point of sale (POS) or online redemption mechanism. As contactless wallets reach critical mass in the near future, tap coupons will also be a viable, more seamless option.

But don’t think you need to jump in firing on all cylinders. Simple activation and conversion strategies continue to deliver amazing results. SMS coupons, for example, are achieving up to 10 times the conversion rates associated with email coupons. Offers sent to shoppers’ mobile devices are consistently three times as likely to be redeemed as the same offers sent to a shopper’s email address.

content can be updated seamlessly by the brand and drives commerce activity.

Finally, Twitter is a very effective communi-cation tool but can confuse the messaging strategy belonging to your brand or store. Think of text is an activation channel for your targeted, always-open customers. Twitter is a more of a microblogging channel that addresses a generalist community.

REDUCE FRICTION TO REAP BUSINESS BENEFITS

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.

In this scenario NFC, QR codes and text can be combined into a single call to action. All activation channels can be serialized and tracked back to the media location to enable the brand to affiliate identify the store, media, and location. This allows for all your traditional media assets, MDF (media devel-opment funds) and products to be activated

Activation dashboard off any media.

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Figure 1. Based on data from the author

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.

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between you and your customers. But be careful not to get distracted, or overwhelmed by technology. Your strategy must be customer-focused first. As technology changes, the principles of loyalty marketing remain the same, and so does the require-ment to court the customer with care.

Article inspired from insights contained in Gary’s new book, Fast Shopper, Slow Store: A Guide to Courting and Capturing the Mobile Consumer.

Gary Schwartz has been named the Mobile Commerce Evangelist of the Year 2013. Schwartz has been at the frontlines of the mobile industry for over a decade and is the author of two books including The Impulse Economy. Schwartz is also a chair at emeritus mobile for the Interactive Advertising Bureau and the Mobile Entertainment Forum NA. As president of Impact Mobile for the past 12 years, he has helped retailers leverage mobile technology to advance their marketing goals.

By creating a frictionless small-screen experience for the shopper, national retailers such as Hot Topic, specialized in music and pop culture inspired fashion, have repeatedly harnessed mobile in the mix to achieve measurable increases in store-based and cloud-based checkout. In 2011, for example, Hot Topic managed to generate nearly ten times (!) the incremental sales off its loyalty community by leveraging the mobile channel.

Hot Topic believes that adding mobile messaging to existing CRM / email marketing programs can produce a significant return on its marketing investment, especially during holiday marketing efforts. Indeed, Hot Topic concludes that mobile messaging, deployed in addition to email, increases overall purchase intent and activity.

But it’s not just retailers like Hot Topic. We see the same strategy deployed by My Starbucks Rewards [See article: "Starbucks: A Mobile Payments Case Study"] by using a clear SMS activation channel on its push advertising.

Messaging, mobile apps, QR codes, NFC — these and more can and must belong to your toolbox of capabilities. Get ready to evolve your strategy to enable direct interaction

However, mobile-optimized Websites also have many advantages, allowing retailers to address the needs of all their customers, not just smartphone owners. From the customer perspective, the mobile Web experience also provides additional comfort (user-friendly and familiar interface) and confidence, in many cases taking the hassle out of researching products and inputting data to complete the transaction.

So, should a retailer build mobile apps into their arsenal of capabilities? Or should they focus efforts on ensuring their mobile Web presence is optimized to remove the friction from finding and buying online and on the move?

It’s not a case of ‘either-or’. To get to the real answers you need to think about what your customers really want out of their mobile commerce experience. The customer must be your starting point.

So, let’s begin with an examination of the mobile commerce use cases that are relevant to your business.

Mobile apps vs. mobile Web is the topic of heated debate in the industry today. But could it be that the question, and the discussion around it, misses the point completely? After all, commerce is about customers, not just technology. A closer examination of the components key to delivering an integrated experience to customers shows that a successful approach is one that uses mobile apps and the mobile Web in the right combination to make shopping across all channels seamless and personal.

A heated debate rages in the industry, one that has spread to mobile commerce. The avalanche of mobile apps have indeed whet consumers’ appetite for apps that can assist them every step of the shopping journey, allowing them to make orders, check prices or put together shopping lists at the moment of inspiration.

Survival Guide: Evaluating The App Vs. Web DebateBy Panagiotis Papadopoulos, Retail Mobile Lead, SAP


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marketers in-store using their mobile phone. In this case, often described as 'scan and pay', consumers use their device to scan a barcode to access information, offers, coupons or just fun content related to the physical object.

Significantly, all these scenarios have one thing in common. They show that mobile by definition is the only channel that has the capability to connect all the other channels that retailers operate (online,

There are three basic scenarios. The first scenario is all about finding ways to extend online commerce into mobile commerce, a use case I call the 'order to home' scenario. The second scenario is where fulfillment is made in the store. An example of this is the 'store pick-up', when the customer uses mobile to order ahead and then pick it up later in a physical bricks-and-mortar location.

Finally, the third scenario is where consumers interact with brands, manufacturers and

in-store, signage) together in one integrated experience. It is also the one channel retailers must get right to deliver a true omni-channel experience to their customers.

PREPARE FOR THE MOBILE jOURNEY

So, let’s apply observation to the apps vs. Web debate. Smartphones have unique capabilities and retailers should carefully evaluate them in order to make the best use of the features and functions built into the mobile phones customers have at their fingertips.

The advance of smartphones has made mobile apps very popular among consumers. Mobile apps, as I will show, harness the unique capabilities of mobile, thus delivering benefit and value to shoppers on the move. However, the advance of the mobile Web and the arrival of HTML5 offer their share of business advantage as well.

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. This is especially true for commerce, whereas the scenarios I mentioned can be powered by mobile apps, mobile Web — or both.

To better understand the benefits and how retailers can apply them to enhance the overall commerce experience let’s compare some of the key capabilities associated with mobile apps and mobile Web.

• Native apps access features and functionality deep in the hardware (such as location) as well as use offline data.

• Development costs to build a mobile Web presence are less than invest-ment needed to design, develop and distribute a mobile app — and there is no need to worry about updating the app to keep in step with frequent changes in devices, operator systems or user requirements.

• The user experience offered by a native app is far more consistent (and smoother).

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

Order to home

• Based on existing e-commerce

• Adds usage of mobile capabilities, scanning, offline etc.

Store pick-up

• Access of products and availability in stores

• Set an order for pick up

• Alerts for pick up readiness

• Extension to up-sell/cross sell in stores

Scan and pay

• Check in stores

• Self-scanning and Self-checkout

• Payment in store

• Offers in real-time and contextual based

• Signage

• POS integration


WEIGHING THE BENEFIT OF APPS AND WEBMobile connects commerce

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MAPPING THE BEST APPROACH

Mobile app or mobile Web? The decision also depends on the use case. A raft of recent research and consumer surveys from companies like comScore, a premiere provider of audience analytics, and Flurry, a mobile app analytics company, suggests that some consumers might have a preference depending on what they want to accomplish. Specifically, Internet users tend to favor mobile Web for shopping and searching. Mobile apps are popular when the task at hand is related to maintaining data, navigation and socializing with others.

With this in mind, many retailers drive mobile commerce by cultivating a strong presence on both mobile apps and mobile Web. Indeed, recent research from companies including Acquity Group1, which measures ‘mobile readiness’ across major retailers shows the race is on, with respondents revealing they are determined to build a mobile Web presence, supported by a mobile app offer, by end-2013.

Why both? To satisfy the customer. Consumer surveys suggest that some customer segments, like Digital Moms,

many retailers are missing out on the mobile opportunity. But the endgame is not just about enabling mobile commerce; it’s about encouraging lasting customer loyalty.

Panagiotis Papadopoulos has more than a decade of experience in the Retail sector, working with global retailers helping them to define and implement their mobile strategy to enable mobile commerce as well as employee -facing scenarios. At SAP he is responsible for product catalog, e-commerce, mobile commerce and SAP’s Mobile Platform.

Indeed, a mobile app, because it is on the mobile device and can tap into key phone features, helps cement a closer connection between the retailer and their customers, and thus encourages loyalty.

In practice, the offline use that the mobile app allows also provides customers a unique and fluid experience. In other words, this feature makes it possible for consumers to shop in places where connectivity is not available, or in-transit, where coverage is not always reliable.

A mobile app experience also respects the role of the consumer in deciding when and how they want to shop in the first place. The consumer must have the flexibility to decide the suitable moment to shop — and have the option to pause the process (perhaps to start the morning commute) and then continue at a more convenient moment. To close the loop a mobile app should also enable the consumer to make an order on-the-move and select the right time slot for pick-up or home delivery.

Convenience is key here, and retailers are well advised to support an experience that puts customers in control. It is no secret that

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.

FOOTNOTE

1. www.acquitygroup.com/news-And-Ideas/WhitePapers/2012-Brand-eCommerce- Audit%e2%84%A2/

mobile-savvy mothers on the move, appreciate the convenience of an app to check prices and offers on the go. As a result, many customers view apps as a utility, one that complements their mobile Web experience, but doesn’t replace it.

CLIMBING THE TRANSACTION TRAIL

Connect the dots, and the ideal mobile commerce journey starts with a mobile optimized Web presence, one that is open to all consumers, not just smartphone users, and also meets the needs of the more traditional customer demographic that prefers to shop online. This should be closely followed by a more personalized experience, best delivered by a mobile app.

Perhaps the biggest advantage of an app is it’s in-built ability to make the best use of device features including the camera, GPS (for location and the delivery of location-based services and offers), WLAN (for Internet access), accelerometer (which detects motion and gesture) and data storage (allowing consumers to save all the information related to products and shopping that matters to them).

http://www.acquitygroup.com/News-And-Ideas/WhitePapers/2012-Brand-eCommerce-%20Audit%25E2%2584%25A2/

http://www.acquitygroup.com/News-And-Ideas/WhitePapers/2012-Brand-eCommerce-%20Audit%25E2%2584%25A2/

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combating showrooming. Many retailers start in mobile commerce by optimizing their online websites for mobile, others develop a mobile app. In both cases the result is the same. They are mobilizing the e-commerce channel. I refer to this stage as mobile e-commerce, or Mobile Retailing 1.0.

This strategy fails to leverage the many advantages brick-and-mortar retailers have over their online counterparts, such as physical stores, showrooms, employees, inventory, and distribution networks. Most of the benefit of mobile commerce will be realized when shoppers are using devices while they are in the store, at the point of decision. But very few retailers have built mobile apps that are designed for the in-store experience.

What if retailers could add the digital recommendation power of, say, Amazon.com, to the in-store shopping experience?

This is what I call Mobile Retailing 2.0.

By adding digital commerce to the physical store through a mobile device you can deliver a highly personalized in-store shopping

Consumers now expect, even demand, personalization. The aim of Mobile Retailing 2.0 is to leverage mobile and enable personalized shopping experiences that build customer loyalty and drive relevant content to customers at the point of decision. Since the point of de-cision is usually in the actual store for brick-and-mortar retailers, the key focus of Mobile Retailing 2.0 is to enable the in-store shopping experience via mobile devices. A day in the life of the average consumer shows how retailers can realize the full potential of the greatest marketing tool ever invented to win the battle for the customer and get the edge on online rivals in the process.

The mobile strategies that retailers have been using have not proven effective at capturing loyalty, boosting sales, or

The problem with apps is that customers are bombarded with apps to choose from. Once they do make a choice they must manually download them. Naturally, customers are inclined to keep only their favorite apps on their phones. Put simply, customers don’t want to download 100 different apps from 100 different retailers. In many cases they will only download the two or three apps from the retailers where they shop most frequently. And they certainly do not want to re-enter their credit card and personal data several times in every app.

Mobile websites are effective at reaching the masses because customers don’t have to download an app to access them. However, the experience of the mobile Web falls well short of reaching the objectives of Mobile Retailing 2.0.

So how can a retailer build something with the complex capabilities of a mobile app, but still manage to make it extremely easy for a customer to discover and use, even if it is the first time the customer has entered the store?

experience. This approach will help retailers to improve customer loyalty, increase sales, and compete with online retailers. The following scenario is an example of Mobile Retailing 2.0 in action. It combines digital commerce capabilities with the power of the physical world by adding highly personalized mobile in-store shopping.

With Mobile Retailing 2.0 this routine is already becoming reality. Wal-Mart, for example, has already begun allowing customers to use their smartphones to pre-scan items and upload them to the self-checkout.

MAKE WAY FOR THE ‘SUPER-APP’

Unfortunately, there is still a major hurdle to getting Mobile Retailing 2.0 capabilities in the hands of the customer. After a retailer has developed the infrastructure and a great Mobile Retailing 2.0 app, they launch the app on the marketplaces to find a few months later that only a few customers have downloaded the app. Even fewer end up using the app on a regular basis.

Has the retailer wasted time and money?


Mobile Retailing 2.0: Connect With The Customer At The Point of DecisionBy Mickey Haynes, Global Principal, Mobility Solutions in Retail at SAP

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Real-time retailing in the store, at the point of decision, will enable brick-and-mortar retailers to maximize their advantages in the physical world to compete with e-tailers and other competitors. This is Mobile Retailing 2.0. The best way to deliver this is to develop a standard platform for retailers to create a Super-App together. Software companies and partners will develop this with them to spread the investment across the industry.

Mickey Haynes leads business development globally for mobile in the Retail and Consumer Products industries at SAP. In this role, he consults with key global Retail and CP customers to develop mobile strategies, architects mobile solutions with internal and partner development teams, and evangelizes strategy within SAP. Previously, Haynes was the Principal Mobility Architect for The Home Depot, the fourth largest retailer in the U.S., where he initiated the mobile commerce program and led the enterprise-wide mobile strategy.

Even if customers do not want to download many different apps, they would likely download a single app that helps them shop at many different retailers.

Conceptually, if there was a single app that had a standard API for Mobile Retailing 2.0, many retailers could then build to this standard and publish to the single app. The single app would recognize the store that the customer is in and launch the mobile app, or storefront, for that retailer. This concept is called an app-within-an-app, or a Super-App.

The Super-App concept would normalize and standardize the unexciting, routine shopping functionality like adding items to a shopping cart, displaying offers, and paying for items from a mobile wallet.

Retailers could differentiate themselves by creating their very own experience and maintaining their own brand. To achieve this they could develop custom components 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.

Most of the benefit of mobile commerce will be realized when shoppers are using devices while they are in the store, at the point of decision.

Mobile Retailing 2.0 in action

When Mary enters the grocery store, her mobile device reminds her to launch the store app. She is rewarded with 100 loyalty points and receives a few personalized offers based on her preferences, buying habits, and trends. Mary reviews the store specials and adds a few items to her shopping list.

As she walks through the store to collect the items on her shopping list, the app guides her from item to item like a GPS device. She taps each item with her phone before adding it to her cart, which builds her electronic checkout list. 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 ones she is buying.

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While I agree that showrooming has always happened (we used to call it ‘cherry picking’), I also believe that the practice is having an impact on retail in ways that the industry has not fully anticipated or accommodated. So my goal here is two-fold: to lay out what I know about the trend, and then provide a few thoughts on how retailers can respond to the showrooming threat.

CONTEXT

In RSR’s benchmark survey on mobile in retail, 88 percent of our retail survey respondents reported that staying on top of how consumers use their mobile phones while shopping is a top-three business challenge for them - the highest response by far of any option on the list. However, in the same survey, 52 percent of respondents also reported that they believe consumer use of mobile phones influences less than 25 percent of the shopping that happens in their stores today.1

According to our pricing benchmark survey respondents, 32 percent say they haven’t seen showrooming happen in their stores yet, and another 13 percent completely

There are two schools of thought about showrooming these days. The first states that showrooming will single-handedly bring about the demise of the retail store. Supporters of this theory look to Best Buy as the prime example of a retailer about to be brought to its knees by showrooming - for a retailer that has outlasted the demise of CompUSA and Circuit City stores, it still struggles to compete in a world dominated by Amazon.

The second school of thought points out that Best Buy has stepped to the fore in embracing showrooming not as a challenge, but as an opportunity. Supporters of this theory say that showrooming has always happened in retail. The only thing that is different is the speed at which it is happening - that mobile phones help shorten the time it takes to do comparison shopping, when it can be done on a screen in your hand rather than via a day’s worth of trips to a bunch of stores. The behavior hasn’t changed; it’s just gotten more efficient.

When Mary walks near the wine section, a store associate, Tim, greets her by name and asks her how she enjoyed the wine she bought last week. Tim notes her comments on his mobile device and suggests a couple of other options, which Mary appreciates and adds a bottle to her cart.

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 ones she is buying.

Showrooming, DeconstructedBy Nikki Baird. Managing Partner, RSR Research


FOOTNOTE

1. The Impact of Mobile in Retail, RSR Research, January 2013. www.rsrresearch.com /2013/01/10/the-impact-of-mobile-in-retail/

When Mary completes her shopping, she pays with her mobile device and does not have to wait in the queue at the POS. All of her coupons, loyalty card, and credit cards are stored in her mobile wallet. She chooses to pay with her store gift card which is very convenient and earns her extra loyalty points when she uses it. She receives a digital receipt that is automatically uploaded to her personal finance software for budgeting and tracking. Mary heads to her car without ever going through a checkout line.


http://www.rsrresearch.com/2013/01/10/the-impact-of-mobile-in-retail/

http://www.rsrresearch.com/2013/01/10/the-impact-of-mobile-in-retail/

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at all. The problem is that both of these mindsets lead to responses that don’t help either the retailer or the consumer - by letting the sale walk away in the case of those who choose to ignore it, or panicky price matching or erratic policies that vary from store to store and customer to customer from those that fear it.

ignore any price comparisons that happen in their stores.1 (Figure 1) Thankfully, only 13 percent fall on their swords and price match, while 37 percent strive to be ‘competitive’.

Just like industry pundits, retailers seem to be of two minds about showrooming - some see it as a threat, and others just don’t see it

The irony is that store-based retailers don’t lose out to showrooming - particularly the online aspect - as often as they might think. ShopSavvy reports that only 30 percent of first-item scans in their app are transacted outside of the current store the shopper is standing in, and of that 30 percent, about half accrue to another local store - not online. Where online retailers make the most competitive inroads is on the second item to be scanned - half of those won’t typically convert in the current store, and these have a much higher likelihood of converting online.1

AVOIDING PANDORA’S BOX

So how do store-based retailers avoid that first scan, the one that opens up the whole basket to showrooming?

First of all, maintain consistency in pricing across channels. Retailers complain all the time that stores have a different cost structure than online, so they have to price differently to accommodate those costs. And yet, merchants for years have averaged their margin across categories or lines so that they can maximize their selling opportunities.

IT’S A MATTER OF TRUST

Either way, retailers are missing out on the driving factor behind what compels a consumer to showroom. To me, it comes down to trust. If a consumer doesn’t trust that the retailer is looking out for her best interests, she’ll pull out her phone and start comparing prices.

What is distressing is that most retailers don’t seem to realize how often they break their customers’ trust, and how much that might ultimately hurt them. Only 15 percent of retailers in our pricing benchmark report that they maintain one price across channels as a response to consumer price comparisons. The majority of respondents either ignore price conflicts completely (43 percent), or continue to maintain channel-specific pricing (23 percent). When your primary showrooming competitor is your own online site, how do you think that makes a store shopper feel? And if they can’t trust you to get them a good deal within your own channels, how long do you think it takes them to think they’d better check around to see how others compare?

0% 10% 20% 30% 40%

What is your policy for responding to mobile price comparisons in stores?

5.0%Beat it

Price match

Ignore it

We haven’t seen it yet

Be ‘competitive'

13.3%

13.3%

31.7%

36.7%

Figure 1: Based on data from RSR's 2013 Pricing Benchmark,to be published April 2013.

The irony is that store-based retailers don’t lose out to showrooming - particularly the online aspect - as often as they might think.

FOOTNOTE

1. RSR’s 2013 Pricing Benchmark, to be published April 2013. 2. Reported by Alexander Muse at RIS news’ Cross-Channel Retail executive Summit, October 2012.

FOOTNOTE

1. Reported by Alexander Muse at RIS news’ Cross-Channel Retail executive Summit, October 2012.

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finds the reviews next to a lower price, this is where the cracks in the customer experience become chasms and the retailer will lose. Again, if the phone is going to come out anyway - and in a context that has nothing to do with showrooming - where do you want that shopper to look for the information she seeks? Your site? Or Amazon’s? And once she gets to your site, what will she find? The easier you make it for her to trust that you’re there to help, the less likely she will be to turn that phone against you.

Yes, there will always be shoppers that cherry pick the best prices from the lowest-cost providers, but no one will keep those shoppers for long (as even Wal-Mart, the low price leader, has found in competing with dollar stores), and only the most careful retailer can make their margin objectives while serving the cherry-picking customer. For the rest, the vast majority of shoppers, showrooming is much more about trust: can your shoppers trust you to provide them with the best information alongside a good deal? If they can’t find that even within your own channels, the game is lost.

Nikki Baird is a managing partner at Retail Systems Research, a market intelligence firm providing insight into the retail industry’s business challenges and technology investments.

Channel-based pricing is channel-based thinking in a world where consumers don’t care about your channel constraints. Run channel-specific promotions if need be, consumers can understand those for the most part, but inconsistency across channels breaks consumer trust - and as soon as they don’t trust you to help them, the phone comes out and the comparison shopping begins.

Second, be proactive about your online assortment. Most retailers these days offer a much larger assortment online than in stores, and yet few do a good job advertising that larger assortment at the shelf. This is as much a break in trust as pricing inconsistency. When a retailer only has three toasters on the shelf, their tendency is to want to push those toasters on the consumer standing there. But if that’s not meeting her needs, where do you want her to go? The phone is going to come out at that point - is it going to be pointed to your site, or to Amazon, what some Millennials have started calling ‘the Google of product search’? A simple sign with a QR code can save the day - and the sale.

Finally, be proactive - and transparent - about your product information. This is probably the number one reason why consumers pull their phones out to begin with - to get ratings and reviews. If a shopper goes to your site and

preparing for the worst, predicting the unfortunate phenomenon will cause a drop in sales and — more importantly — a decline in customer loyalty.

Innovative retailers will turn a problem into an opportunity, using mobile to equip their stores and empower their staff to deliver an omni-channel experience personalized to each customer.

What will distinguish these leaders from the long list of also-rans in retail? Their singular focus on architecting comprehensive omni-channel strategies focused on:

• Attracting and retaining customers • Gaining wallet share and growing revenue • Increasing customer engagement and

boosting loyalty

However, as retailers begin to create a sound mobile strategy they also face many questions and challenges. This article will explore these topics, providing useful recommendations for organizations whether they are just

Gaining an understanding of consumer trends, challenges, influencing factors is the first critical step towards addressing the key dilemmas and questions facing retailers. Chief among these is the search for solutions that will provide a solid foundation upon which retailers can build a successful consumer mobile strategy and effectively close the mobile commerce loop. This article provides some guidance as retailers embark on their mobile journey to accelerate revenues and deliver customer value.

The mobile explosion has taken the retail world by storm. It has empowered consumers, making them more informed and demanding. As a result, showrooming has become one of the biggest challenges retailers face today. Many retailers are


Consumer focus Key To Closing The Mobile Commerce LoopBy Rakesh Gandhi, Senior Director, Mobile Application Solution Management, Consumer Mobile, SAP

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jumping into the mobile fray, or are looking to take their program to the next level.

MOBILE IS NOT jUST ANOTHER BUBBLE

For mobile shopping and commerce 2012 was a decisive year. It was marked by a flurry of activity as several retailers started leveraging mobile commerce to engage consumers. Against this backdrop, research firms reckon mobile commerce transactions will reach impressive heights by 2015. Predictably, the advance of smartphone penetration and usage is driving a sea change in consumer attitudes around mobile commerce and shopping.

The numbers speak volumes. According to a 2012 Ericsson Mobility Report1, by 2018 almost all handsets in Western Europe and North America will be smartphones, compared with only around one third of handsets for Middle East and Africa and Asia Pacific. In addition, the report revealed mobile data traffic doubled between Q3 2011 and Q3 2012. Meantime, comScore, in its 2012 Mobile Outlook report2, found that more than half of smartphone users in the U.S. reach to their mobile phones to

perform shopping activities (research, read reviews, make purchases while in store.

MOBILE DRIVES BRAND LOYALTY AND REVENUE

Mobile with targeted marketing offers a solid ROI toward brand marketing and sales. However, it would appear that many companies are failing to realize the full potential of mobile to reach and influence their target demographic. Indeed, over 60 percent of best in class companies (companies already using mobile marketing) aren’t yet using customer behavior information to target and segment messaging throughout the mobile channel.

Indeed, research firms stress that mobile can make a huge difference, allowing organizations that harness mobile for this purpose to achieve massive improvements in campaign click through, for example.

Mobile apps also play an important role in the daily journey of the mobile shopper. While reams of research show that consumers may download dozens of apps, they only use the apps that offer value. Put another

A good mobile app incorporates the following simple features.

Provides value and convenience

• Saves time during shopping by assisting users to find products in store, social research, product information, etc. literally at their finger tips

• Provides easy and collaborative way to plan shopping with family and peers

• Eliminates need to carry coupon clippings

Provides relevance • Surveys show vast majority of online shoppers prefer retailers that use personal information to improve the shopping experience

• Boosts the store experience (an area where online retailers can’t compete)

• Enables shoppers to access assistance, often in the form of smart personal assistants and smart associates, that help find more information about products and options, pay for purchases and collect points/perks at checkout

Provides personalization features

• Offers best-suited products, promotions and coupons based on shopper buying habits and preferences

• Harnesses other factors, including location, to deliver contextual relevance

• Draws from profile and other information to understand user needs, make product recommendations, and present products, offers, coupons based on personal needs

• Supports a superior shopping experience, one that is well- designed and intuitive — and which adds value, saves time, and money for users and helps drive loyalty, brand image and adoption for the retailer FOOTNOTE

1. www.ericsson.com/res/docs/2012/ericsson-mobility-report-november-2012.pdf2. www.comscore.com/Insights/Presentations_and_Whitepapers/2012/2012_Mobile_ future_in_focus


http://www.ericsson.com/res/docs/2012/ericsson-mobility-report-november-2012.pdf

http://www.comscore.com/Insights/Presentations_and_Whitepapers/2012/2012_Mobile_%20Future_in_Focus

http://www.comscore.com/Insights/Presentations_and_Whitepapers/2012/2012_Mobile_%20Future_in_Focus

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from super markets and hypermarkets to fashion outlets and specialty boutiques. Each caters to its own unique consumer segment, in its own special way. Put another way, a proper strategy has a lot of moving parts — all related to the target customer audience, the nature of business and the brand marketing objectives.

However, one common thread running through all these strategies is the desire to leverage consumer mobile trends to drive revenue.

A successful consumer mobile strategy is the one that takes the following four strategy elements into account:

Market to the consumer. Build consumer awareness by providing personalization with relevance. Examples of this are personalized product recommendations, personalized and relevant offers, and coupons that are based on shopper in-store location, prefer-ences, and past shopping behavior.

Engage with the consumer. Strengthen relationships, drive loyalty, and improve brand image by providing the consumers with tools for shopping research and

way, consumers are more likely to buy from retailers that offer a good mobile app.

THE KEY BUILDING BLOCKS FOR A SUCCESSFUL MOBILE-FIRST STRATEGY

Consumers have multiple choices where they shop. Also, in this day and age, consumers are well informed or have tools and access to carry out research prior to shopping in a physical store, as well as when they are in the premises. The behavior is driving showrooming, a phenomenon that highlight the importance of a key question: ‘How can retailers turn the tide to attract consumers to retailers, drive loyalty, reduce engagement cost, drive personalization and gain wallet share?’

Many retailers have adopted a simple path to optimize their e-commerce Websites for mobile devices. This is no doubt the fastest way to offer a mobile access and represents a relatively good first step. However, this approach must be supported by a holistic mobile strategy to effectively engage, market, and transact with mobile consumers.

The retail industry is broad and is made up of shops of all types and sizes, ranging

These four strategy elements signify the importance of closing the loop of mobile commerce to provide a compelling and immersive shopping experience. They also provide a checklist for retailers creating strat-egies to assist consumers at the most critical stage of the journey, what is also described as “moment of truth”, when the customer is in your store and considering a purchase decision. It is here that your efforts to assist in planning, shopping and post shopping will be most appreciated and valued.

Finally, the fourth strategy element is essential as it is aligned with mobile’s ability to capture consumer data, allowing retailers to analyze consumer insights and behavior in real-time. For marketing and sales, it supports their efforts to drive agile and innovative marketing programs, raise brand awareness, and achieve sales ROI.

planning. This means integrating key capa-bilities that enable a smart shopping list, a personalized product catalogue, access to product information, social ratings, mobile loyalty, and wallet features. Delivering this utility helps drive purchase decisions and encourage ongoing interaction and loyalty.

Transact and self-service. Use the convenience offered by mobile commerce to provide consumers the ability to shop anywhere and anytime: out of store, in-store, and with their smartphone device. This means making sure key capabilities — such as mobile shopping, in-store product scan, shopping cart, POS integration, mobile payment, digital receipts, place order, store pick-up or home delivery — are supported.

Consumer Intelligence. Collect and integrate real-time data and insights into consumer behavior to drive new programs — and evaluate their effectiveness — to help drive sales and high performance.

Put another way, a proper strategy has a lot of moving parts — all related to the target customer audience, the nature of business and the brand marketing objectives.

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platform should bring order to the chaos, providing retailers an effective way to consolidate and seamlessly render data to mobile devices and delivering an omni-channel experience.

Agile, scalable and low cost. TCO is a major concern especially when it is imperative that the complete experience, including mobile Web and mobile apps, work across all target mobile devices.

Feature ready: The platform should ready to support access to new mobile capabilities such as augmented reality, location-based services (including indoor location services), and barcode scanning.

THE WAY TO AN OMNI-CHANNEL FUTURE

Connect the dots, and mobile commerce is not a fad; it’s a fact. Expect it to be an integral part of a comprehensive channel strategy for retailers, particularly as the advance of connected devices smartphones and tablets blurs the barrier between shopping online and in-store.

Rakesh Gandhi, responsible for Consumer mobile solutions and Mobile Commerce portfolio for SAP, works closely with customers in Retail, CPG, Telco, Hospitality and the Travel industry, to help realize the consumer mobile vision. He has over 20 years industry and business process knowledge with Retail, CPG, Chemical and High Tech.

But it’s not just about building the capabilities to deliver a seamless, omni-channel experience. Feedback from consumer surveys clearly indicates that customers appreciate a convenient experience that harnesses the capabilities of their personal devices in order to deliver relevant offers, not meaningless promotions they can dismiss as spam.

Thus the key success factor for marketing and sales departments at retailers everywhere will be to develop and drive a well-defined mobile strategy that provides an immersive, ubiquitous and omni-channel consumer mobile shopping experience (outside the store, in-store and on-device).

Moreover, this offer should close the mobile commerce loop by enabling retailers to deliver offers that are closely tied with the data and insights they glean from all customer interactions: via mobile, online, Web, and in-store activities. Pursuing an omni-channel strategy that grants mobile a central role in the mix allows retailers to drive agile mobile commerce solutions that meet — and exceed — the requirements of retailers for operational excellence and the increasing demand among for consumers for shopping assistance when they need it most.

Connect the dots, and mobile commerce is not a fad; it’s a fact.

THE BENEFITS OF TAKING A PLATFORM APPROACH

Successful execution of a consumer mobile commerce strategy hinges on having a unified enterprise mobile platform that helps mitigate risk of rapid technology and device platform evolution. It provides an effective way for retailers to make their mobile offering agile, offer omni-channel presence and stand resilient — even as the mobile landscape changes.

We believe that taking a mobile platform approach is therefore a critical success factor in executing a mobile first strategy for consumers. The right mobile platform should be able to offer the following key capabilities:

Rapid change and innovation. The platform should provide rich re-usable solutions and services (such as payment, wallet, etc.) for retailers to develop and deploy new consumer solutions in a modular way similar to Lego building blocks. This helps support standardization and speed time-to-market.

Coherence. Most retailers have a myriad of backend systems and multiple channels for interacting with consumers. A mobile

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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.

PART 6: THE ENGAGED CONSUMER: CREATING A PERSONAL(IZED) CONNECTION WITH YOUR CUSTOMERS

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There is much more to mobile commerce than technologies and transactions. Marketers may be slightly confused by the many ways payments are enabled — by mobile messaging, mobile apps or proximity payments, to name a few — but there is a clear consensus that a mobile wallet is more than coupons and currency. Indeed, the reliance of consumers on their mobile wallets to conduct commerce will offer marketers a window into consumer preferences and potentially fulfill the promise of one-to-one marketing.

The world is a buzz with mobile. It is every-where and omnipresent in every commercial conversation, from the boardroom to the showroom floor. A key question that is addressed in these conversations is: What exactly is mobile?

This is followed by: What exactly can it do for our business? How and what do we execute a mobile strategy? What kind of money should we put in to mobile? And, finally, what can we get in return?

While these are great questions, with answers far too detailed for this article, there are two inalienable truths about mobile to understand: 1. Consumers are mobile 2. Mobile gets you closer to your consumer than any other media or sales channel.

When you are close to your consumers by creating awareness and driving engagement, you will earn their loyalty to accelerate the growth of your business. That is why it is vital to understand and embrace mobile as a key element of your business strategy. It is not just good for business; it is critical for long-term survival.

Today, Pandora makes 55 percent of its US$425 million of revenue from mobile, while Google makes 17 percent of its US$41.5 billion in revenue from mobile. The list goes on.

THE FRAMEWORK: MOBILE AND THE PATH TO PURCHASE

To be clear, mobile is not just a smartphone or a tablet. Nor is mobile just a phablet, that

According to the Internet Retailer Mobile 400 Guide the top 400 retailers in mobile racked up a combined $12,135,864,798 in sales via mobile in 2012! Now that is a big number, one that speaks volumes.

Gateway To The future Of Customer Relationship ManagementBy Michael J. Becker, Managing Director North America, Mobile Marketing Association


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channels and media. It is the connective tissue that binds the consumer with the brand. Toys ‘R’ Us said it best, in a world of mobile we need to leverage the omni-channel and enable our customers to “buy from anywhere and fulfill from anywhere.”

To understand mobile in the broader context of consumer engagement, I find it is best to illustrate the dialog through the lens of the path to purchase and/or purchase funnel.

mid-range device between the smartphone and tablet. Mobile encompasses all of these devices and more. Mobile is also the feature phone, the passive monitoring device (i.e. Jawbone UP), the second screen experi-ence, the eReader, the games console, SMS or MMS, apps or mobile Web experience.

In fact, mobile influences and powers a unique, untethered, interactive consumer experience as people engage across all

As shown in Figure 2, there are many steps along the path to purchase, which can be divided into two groups, the Upper Funnel and Lower Funnel. These are separated by the Point of Conversion.

The Upper Funnel refers to the decision making milestones a consumer encounters prior to making a purchase, including:

Awareness. A consumer becomes aware of products, goods or services through paid, owned and earned media.

Consideration. A consumer considers or researches a product via means including the search and the review of paid, owned and earned media. Examples of activity at this stage include watching a video or subscribing to alerts and notifications.

Preference. A consumer develops a prefer-ence for a good or service and expresses this by an action such as adding the product to their shopping cart, inputting it in their wish list, ‘liking’ it in their social network or posting a comment.

The Lower Funnel are the steps the consumer engages in following a purchase or value exchange with a marketer, including:

Service consumption and/or product use. The first step in consuming a service or good, or installing a good.

Loyalty. The process of repeat purchase or use.

Advocacy. The process of sharing one’s experience with the product or good with the marketer, as well as the overall relationship.

And, in the middle of all of this is the point of conversion. A consumer purchases the good or service.

UNDERSTANDING MOBILE COMMERCE WITHIN THE FRAMEWORK

It is critical to realize that, while the purchase funnel may look like a linear flow of consumer milestones, life is not linear. Rather, we must remember that consumers will engage in any of the steps, regardless of the order.

For example, a consumer could discover your product before they search, or are

Conversion Support Advocacy

Loyalty

Lower funnelUpper funnel

Preference

Consideration

Awareness

Mobile marketing path to purchase framework

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.


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even aware of the brand. From there, they will need to be educated, usually via mobile Web browsing, before they are sold. Consumers will also jump around milestones on the path to purchase and so it is imperative that marketers adjust and remain agile across the funnel.

Assume the consumer is ready to buy a product, so they are at the Point of Conver-sion or the transaction point. At this point, the marketer and consumer exchange value for a product. Generally speaking, analysts agree there are three forms of mobile commerce or payments:

Proximity payments. Where payment is made at the point-of-sale and initiated from a mobile phone that uses NFC technology.

Remittances. Where customers use their mobile device to send and receive monetary value - or more simply put, to transfer money electronically person-to person (P2P) using a mobile phone.

Remote Payments. Where the retailer is remote and payment for goods and services occurs via a mobile device enabled by mobile media like mobile Websites, apps and messaging.

Analysts forecast that mobile payments usage will skyrocket in the next five years, with proximity payments accounting for as much as half of all transactions.

MOBILE WALLET AND MOBILE COMMERCE

This view of mobile commerce is powered by what is commonly referred to as the mobile wallet. The mobile wallet — offered by players like Google, Sprint, Isis, PayPal, Square, LevelUp and others — is a software, cloud-based, version of a physical wallet.

Like a physical wallet, the mobile wallet can assume any number of forms and styles. It can hold cash, credit cards, debit cards and loyalty cards. A mobile wallet may also hold coupons, advertisements and promotions, rebates and more.

These assets in the wallet can be used to purchase goods and services, and use a variety of methods to complete the payment and offer rewards. They can send an SMS (as in the case of Shopkick, first mobile app that gives consumers rewards and offers simply for walking into store), or require a consumer to click a button or scan a barcode (as in the case of LevelUp, a mobile app that allows users to link their debit or

Apple will also be playing a major role in the mobile wallet with its Passbook offering that features a number of apps all dedicated to mobile commerce. There is so much that has happened and will continue to happen in the near future. We’re just getting started.

Finally, we have to remember that a mobile wallet will contain more than just coupons and currency. The mobile wallet is also a window into our identity, a tool for managing our relationships, a storage for our political preference and donor status, a hideaway for a key or password, and so much more. Indeed, the mobile wallet is an extension of self and a gateway to the future of customer relationship management.

MORE THAN THE TRANSACTION

There is more to mobile commerce than the processing of a transaction. Mobile commerce is like sunlight in that it is often defined by how it is measured. Depending how you measure sunlight you’ll either get a particle or a waveform. The same thing happens with mobile commerce. Depending on how you measure it you’ll either get a particle (measuring a transaction at a point in time), or you’ll see waveform (the process of commerce from the consumers

credit card to a unique QR code displayed within the app, or pay via a LevelUp card on which their unique QR code is printed).

Additionally, consumers may wave their mobile device across an NFC-enabled point-of-sale terminal. Again, just like it would be using a real wallet, making a purchase pulls from cash consumers have stored in a pre-paid account like a credit card or debit card.

Also, let’s not forget the incentive element of the wallet. Prior to a payment being processed, the mobile wallet can deduct relevant coupons, store rebates, Facebook credits, linked loyalty program point totals that can be converted to real currency. A prime example is Swift Exchange, which allows rewards from multiple programs to be used in various combinations and spent like cash - in places consumers already shop, online or in-store.

Importantly, these deductions are made in real time without the need for consumers to fumble around for discounts or coupons post-transaction, as in the case of American Express crediting a charge after a Foursquare: Check In.

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marketing. As a result, few are executing against a fully integrated mobile marketing strategy throughout their marketing mix. It is a missed opportunity for seamless consumer engagement.

THE RICHNESS OF MOBILE

Beyond the Mobile Marketing Framework and deciphering the value of mobile, it is crucial to understand that we are just scratching the surface.

point of preference to their initial use of the product and service). I refer to this waveform of mobile commerce as the ‘Mobile Commerce Window’ within the overall Mobile Marketing Framework.

Understanding this distinction is incredi-bly important since it will help define how you integrate mobile marketing into your business strategy and the steps you take.

Some analyst reports suggest that most brands rely solely on upper funnel mobile advertising initiatives or lower funnel mobile

have the capability for one-to-one marketing with mobile. However, it is early days. As we continue to peel back new layers of value with mobile, we should move forward. But we should also remain cautious so to not misuse emerging platforms and opportunities. From now on, marketing and commerce will never be the same. Welcome to the mobile world.

Michael Becker is North American Managing Director of the MMA, where he oversees the association’s regional membership, research, strategic initiatives, events and education businesses. He is also Founder and Strategic Advisor to Archer Mobile, an industry-leading mobile marketing solutions provider, as well as founder and publisher of the MMA International Journal of Mobile Marketing. He has authored two books (Mobile Marketing for Dummies and Web Marketing All-in-One for Dummies) and written more than 100 articles on mobile marketing.

For example, on the commercial front, there are inter-related capabilities around the mobile wallet that need to be considered. This includes the integration of retail elements like a mobile-enabled point-of-sale or Website and app, which may include physical goods and services, but may also cover virtual goods.

And, 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. With the appropriate permissions, brands can leverage the context of a consumer’s mobile life. From where and when, to specific consumer behaviors or event ambient conditions (such as, speed, elevation, temperature and possibly even temperament), mobile is going to change everything.

Don Peppers in his seminal work in 1992

coined the term one-to-one marketing. For the last two decades this concept has been science fiction, but no more. We now

The mobile wallet is an extension of self and a gateway to the future of customer relationship management.


Advocacy

Loyalty

Lower funnelUpper funnel

Awareness

Mobile commerce window

Consideration Support

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that they intended to use their devices to research and purchase gifts, décor, food items, and more. A raft of research since underlines the pivotal role of mobile in holiday shopping, and in making routine transactions the whole year through.

This also represents a significant shift in where, when and how consumer engage-ment occurs. Contrary to the approach that many companies are taking when they opt to simply tack mobile onto their existing channels, mobile is not just an extension to online interaction.

Mobility occurs in continuity with the user as opposed to the session-based interactions characteristic to online technologies. Put simply, mobile devices are an extension of the consumer. The mobile phone is always with the consumer, much like a wallet or a handbag. Based on this behavior the mobile phone may replace wallets and purses in the future (though I'm not certain when we’ll see the arrival of a mobile device that can carry spare lipstick and sunglasses, so the handbag is safe for the time being).

As a result, mobile devices serve as the pivot point between online and in store interac-tions. Whether companies provide a mobile

Mobile is changing the game for manufacturers, and retailers alike. empowered consumers are reaching to their mobile phones every step of the journey, to research products, check for reviews and make purchasing decisions. Clearly, mobile applications must assist them in the process, adding value to the experience. But organizations should not miss the opportunity to build mobile into a wider strategy, that is cohesive across all channels, to enable meaningful — and ongoing—customer engagement.

Mobile is transforming the way consumers discover, research, shop and purchase. According to the 'NRF Consumer Holiday Spending Survey', a report published by the National Retail Federation, the world’s largest retail trade association and the voice of retail worldwide, over half (52.9 percent) of those who own smartphones and 64.1 percent of those who own tablets said in advance of the last holiday shopping season

support and connect them are going to be transformed by the mobile consumer. Ironically, there is an upside since research shows shoppers who use mobile and online channels to research and make purchases actually tend to spend more than in-store shoppers. It would seem that more opportunities to shop using more channels increases convenience and encourages consumers to shop more.

Clearly those organizations that can successfully evolve and create meaningful engagement with the mobile consumer, maintain relevance and keep pace with the ever-changing mobile landscape will outpace their competition over the next five years.

In order for organizations to effectively engage the consumer via mobile they first have to understand what experience(s) will deliver value that is significant enough to justify taking space — and thus capturing mindshare — within the user’s mobile universe.

As mentioned earlier, the mobile device is an extension of the user. It contains their personal information and contacts, serves as a line of communication, perceives the world around them and provides instantaneous information access and feedback. Accordingly,

experience for the consumer or not, the consumer is creating their own experience.

Shoppers are creating lists online and accessing them while walking the aisles via their mobile device. Furthermore, the retail storefront has become an access point where the consumer is assembling recipes, putting together outfits and reviewing recommendations via social media.

MOBILE CHANGES THE RETAIL RULES

Showrooming, the practice of evaluating items in store and subsequently purchasing online, is shifting to real-time at the expense of the retailer. Shoppers are comparing products, reading reviews/social media and price shopping with 'Over the Top' retailers or directly with manufacturers on their smart phone while they are in the store. Against this backdrop, research and services paint a dismal picture, documenting that the vast majority of retailers expect to be impacted by showrooming and see sales drop as a result.

Mobile is changing the game for manufacturers and retailers alike. The traditional relationships between these organizations and the agencies that

Reaching The Mobile ConsumerBy Jason A. Oglesby, Director Mobile Solutions Management, SAP


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engagement via mobile should be highly personalized and relevant to the user.

DELIVERING PERSONAL VALUE

Broadly focused interactions quickly become background noise and are filtered or completely discarded. Research from Accenture, a global management consulting, technology services company, confirms that consumers value advertising and offers that are aligned with their personal preferences. Among the findings:

• 3 in 4 online shoppers prefer retailers that use personal information to improve the shopping experience

• 73 percent want 'relevant' ads on their mobile device

• 65 percent like to receive offers to their smartphone based on past purchases while in-store

Consumer engagement begins with creating a delightful and simple way to connect with the consumer that is aligned with your brand and understands how consumers perceive the relationship.

your consumer and how they view their relationship with your business, and how they interact (physically and digitally) with you today based on their requirements. You also need to ask yourself: How do you take that information and, based on it, provide your customers services and interactions that are the most intuitive and comfortable fit with their mobile universe?

However, finding the best way to connecting with the consumer is just the beginning. You must also find a way to deliver value on a personal level to them as an individual.

Interestingly, providing value doesn't just mean offering consumers a discount or giving something away for free.

Research shows that consumers genuinely appreciate a mobile shopping experience that gives them convenience ease of use and confidence that the transaction is secure.

Based on these insights I have identified five critical engagement technologies that support the delivery of a retail experience that offers mobile shoppers value because it is personal, relevant and convenient.

Important questions to ask are: Is the consumer savvy enough to take advantage of a QR scan to reach your mobile presence, or do they need a more step-wise approach? How often does the consumer interact with your brand and products? Not every retailer should be the main attractions in the shopping mall, nor should they behave like this when they approach mobile.

Ecosystems (that is, the shopping mall concept) will be just as applicable via the mobile device. These ecosystems will present game-changing opportunities for the small retailer, allowing them to create alliances with manufacturers where there is the opportunity to have those close relationships.

Ecosystem opportunities will arise not only from the traditional brick-and-mortar organizations that support shopping malls today, but will arise from banking, telecom, communities (think chamber of commerce), social networking and alliances.

Much of this is being driven by the current race to own the mobile wallet, but that is a topic well beyond the scope of this article. The key here is to understand

Organizations that can successfully evolve and create meaningful engagement with the mobile consumer, maintain relevance and keep pace with the ever-changing mobile landscape will outpace their competition over the next five years.

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consumer experience? In an age where a raft of recent consumer surveys point out that shoppers increasingly consult their social communities, or read other customer reviews, before making a purchase, it's clear that shopping has become a social activity.

In addition, it is certainly useful to have access to targeted and personalized offers, offers perfectly tailored to a specific spouse or relative, delivered via a mobile device when gift shopping. This is also where collaborative shopping lists that incorporate the wishes and interests of the entire family, which can come in to enhance the mobile experience.

In both scenarios the user interface itself should be easy to use, intuitively designed and deliver a delightful experience to the consumer. This experience should be immediately identifiable with your brand and create interfaces that are relevant and engaging to the consumer.

It is important to engage methodologies like Design Thinking to work directly with the end-user, or consumer, in defining specific mobile use cases and how those interactions should be structured to facili-

1. Interactive shopping lists

2. Product location, availability and research tools

3. Contextual 1:1 personalized marketing

4. Simplified payment options

5. Immediate rewards

Significantly, these types of services are decoupled from the mobile client and can be leveraged across a variety of channels as well as across product lines and brands. In fact, this engagement should cohesively cross channels so that the mobile experience becomes effortlessly integrated with the individual consumer’s lifestyle.

SHOPPING IS SOCIAL

While it is important to offer a mobile experience that is seamlessly integrated into the consumer’s lifestyle, it is also important to examine the opportunities introduced via social media and community.

Are there ways to leverage social circles in the mobile application that will enhance the

want the opportunity to find the perfect choice. But in reality, what we really want is a great choosing experience. To have the confidence in our preferences. To feel competent rather than questioning ourselves, 'Did I really get it right ?'”

With so many options in the market it is often impossible for the consumer to feel that they have adequately evaluated, compared and selected the right products from all the products available on the market. As a result, retailers and manufacturers are seeing a decline in brand loyalty attributed to the fact that consumers are becoming less sure of their buying decisions. Successfully engaging the mobile consumer should provide the tools to reverse this trend and deliver a great choosing experience.

Consumer fatigue is particularly evident in loyalty and reward program participation. There are only so many loyalty membership cards or keychain dongles that a consumer is willing to carry with them. Mobile applications also appear to have lost their luster. In view of this, organizations that have invested in a mobile presence must develop a strategy that protects their

tate the way the consumer would naturally engage with your brand. This is the user engagement that should determine which mobile technologies are employed in the overall consumer experience.

MOBILE EXPERIENCE GUIDELINES

Too many mobile applications put technology, not people, first — an approach that can backfire because an organization is more committed to delivering an innovative experience as opposed to providing the consumer an intuitive and elegant design they can use and appreciate.

Beyond engagement via user experience, one must also consider the forces competing for consumer mindshare. With global competition and the unparalleled availability of information the consumer is presented with an overwhelming variety of options in the market.

Sheena Iyengar, Professor at Columbia Business School and author of The Art of Choosing, has studied the impact of choice on consumers. She concludes, “Most of us aren’t experts in everything. We say we want more choices because we

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Furthermore, we find that many of these applications are not part of a larger strategy, as they should be. They have been released as little more than a mobile novelty, seasonal or promotional 'Throw away' application, one that rapidly loses relevance and mobile mindshare. Rather than strengthening the brand message these applications achieve the opposite, becoming chaff and diluting brand value in the app stores.

Organizations should therefore seek to create a more durable mobile presence that provides a consistent foundation of engagement services (such as loyalty and rewards, personalized offers and coupons) de-coupled from the end presentation layer on a specific mobile device, or for that matter the engagement channel itself. This foundation should serve as a platform for innovation, allowing an organization to deliver iterative seasonal layouts as well as promotional experiences across multiple device platforms, while the base interactions with the consumer remain consistent and cohesive across channels.

investment and maintains their relevance in the consumer’s mobile universe.

FAST-MOVING MOBILE

The pace of mobile is moving at a velocity that has not been seen before, with new devices released on a yearly basis and significant revisions to mobile operating systems happening as frequently as 2-3 times a year.

As device manufacturers deliver new innovation in every release to stay relevant in this super-competitive market, it becomes very difficult for organizations to build and maintain exciting and engaging mobile experiences on those platforms.

Additionally, organizations are challenged with developing mature mobile engagements in an environment where the target is continuously changing. Thus, many organizations find themselves today in possession of several disjointed mobile applications, all too frequently that have been built within different teams on different platforms.

Furthermore, by de-coupling the complexity from the client tier these organizations will avoid technology lock-in and enjoy the flexibility to rapidly uptake new devices, technologies and support new channels as they appear in the market. Those that do this well, will redefine how we think about loyalty and brand awareness in the years to come.

Jason A. Oglesby is part of the SAP Mobile Solutions Management organization focused upon Consumer Engagement and Mobile Consumer Applications. Previously, he was with Kony Solutions where he served as a senior sales engineer in Banking and financial services. His first experience with mobile was building an application to control a ceiling fan on a Windows CE device while in college.

CONSUMERS IN CONTROL

A significant paradigm shift that we are seeing in mobile is linked to the emergence of the empowered consumer. In other words, the consumer is demanding and defining their mobile experience.

Indeed, catering to this new kind of consumer, one empowered by advances in online and mobile technologies, is a new experience for many companies. In order to engage the mobile consumer and capture their mindshare on their personal mobile device, organizations must deliver value and a relationship that is personalized and intimate, mirroring the relationship users have with their mobile devices.

But organizations can't stop there. In order to maintain and grow that mindshare, the mobile presence needs to evolve and innovate in lock step with the changes made by device manufactures and the changing attitudes of consumers. By employing a reference architecture and building mobile engagement around a foundation of durable services that deliver cross-channel coherence, organizations can create a platform to reduce risk and promote innovation.

Organizations are challenged with developing mature mobile engagements in an environment where the target is continuously changing.

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Mobile technologies have become an integral part of the shopping process. Retailers are under pressure to take proactive action to turn mobile into an asset that delivers revenue and customer engagement. The challenge is huge, but the solution is clear: building an information technology and customer-facing strategy that capitalizes on mobile attributes such as location, activity, and sensor data to delight customers and convince them to come back — again and again.Consumer adoption of mobile devices has grown exponentially with mobile subscribers now amounting to more than 5 billion worldwide. The devices consumers carry

are also more advanced and have more capabilities than their simpler counterparts of the past. Today, there are over 1 billion smartphones deployed globally, and Apple alone is expected to ship nearly 100 million tablets in 2013. In many countries, mobile adoption has also exceeded 100 percent as many individuals carry multiple connected devices.

The widespread adoption of mobile has changed customer expectations across every industry, especially retail. Consumers expect to research, locate and purchase products wherever they are.

Consumers also expect real-time data that is accurate and consistent across a retailer’s Website and its physical locations. Today consumers are using smartphones while in the store to check pricing, inventory availability and product reviews. Retailers now have to contend with ’showrooming’ — the act of a

customer viewing merchandise in a physical retail store only to then purchase the merchandise online or from another retailer.

While showrooming has created challenges for retailers, mobility also provides tremendous opportunity to reach the customer wherever they are and frequently at the point of decision. The challenge is building an information technology and customer -facing strategy that capitalizes on mobile attributes such as location, activity, and sensor data.

ADAPTIVE AND PERSONALIZED’

Leading retailers will use big data processing and real-time analytics software to analyze information from mobile devices, mobile applications, and prior transactions. This will create adaptive and personalized services that get smarter over time through customer -specific data analysis. These smarter services, which Lopez Research defines as Right-time Experiences (RTEs), will deliver

the right information or service, at the point of need to a retailer’s customers and employees.

Right-time Experiences differ from what retailers deliver today because they are adaptable, learning, and predictive. RTEs will analyze a person’s transaction history, analyze mobile data such as location, and respond with information that is relevant to the individual at that moment.

The best services will learn and adapt to a user’s behaviors over time. For example, a customer may always prefer to begin their interaction with a retailer by clicking on the sales page of the mobile Website or app belonging to that retailer. An RTE would learn this user’s behavior and automatically load the sales page whenever the user launches the app or Website.

If the user’s context changes, the RTE should self-adapt. For example, the user experience should adapt as a person moves between devices such as a laptop to a smartphone, or to a tablet.

The engaged Retailer: How Mobile And Big Data Improve Revenue, Retention And ProfitsBy Maribel Lopez, Founder and Principal Analyst, Lopez Research

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.


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POWER OF PUSH

With the appropriate opt-in policy, retailers can tailor the type and timing of an experi-ence by tapping into contextual items such as location, time of day and device type.

For example, a grocer could send a push notification during a customer’s normal commute time after work to remind the customer of a promotion on rotisserie chicken, hoping to prompt that customer to stop in on the way home. An advanced RTE would allow the consumer to pre-purchase the chicken and pick it up at the store.

By combining information streams, retailers can learn more about their customers, more about what services are used, and also what promotions work. For example, if a consumer is using the retailer’s app, the retailer could learn if the consumer used a digital coupon, shared a promotion or scanned a product code.

3 KEY CATEGORIES

Right-time Experiences require retailers to connect internal corporate data sources such as pricing, inventory, and promotions.

RTEs will also link applications to Web- accessible data that lives outside the company such as reviews, product comparisons, transaction clearinghouses, authentication services, and click-to-call services.

While there are many types of RTEs, there are at least three categories that will help retailers increase the average basket purchase, add new customers, and improve overall customer engagement.

Care. Many retailers will begin to improve customer service by providing their employees with on-the-go access to corporate data. For example, Lowe’s has deployed smartphones and several custom apps to its employees. The Lowe’s employee app gives staff access to product availability and inventory, as well as enabling mobile checkout. If a product is out of stock, a store employee can locate inventory, order the product, and solve the customer’s problem. Moreover, 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.

Commerce. Retailers will improve sales with RTEs that link to external information, enable mobile commerce, and integrate commerce across channels. If a retailer’s price is higher than an e-commerce retailer, the store’s manager could offer a competitive price match to close the sale. Tesco offered a new mobile commerce experience by using the walls of a Korean metro station located in Seoul in order to create a 'virtual supermarket' where shoppers can use their mobile devices to choose products and have them delivered. 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. Wal-Mart also offers a 'Pick Up Today' service, which allows customers to check if their desired store has specific items in stock, and, if so, allow them to place an order for the items they want.

Communications. Retailers will use mobile to transform when, how, and what they communicate to their customers. For example, a retailer could offer a check-in option with a mobile app that provides relevant offers based on the user’s

transaction history. Walgreens now offers email, SMS, and push notifications to remind its customers to refill prescriptions. It’s also considering using push notifications to remind customers when to take medications, alert customers when a prescription is ready for pickup, and notify customers when photo prints are ready.

GET READY TO EXCEL

Mobile technologies have become an integral part of the shopping process. Retailers must take proactive action to turn mobile into an asset that delivers revenue and customer engagement. Retailers that understand and prepare for this paradigm shift will create a sustainable, competitive advantage via mobile and big data technology that will undoubtedly put them in position to excel above the rest.

Maribel Lopez, founded Lopez Research LLC in 2008. Prior, Maribel was a respected analyst for over 10 years at Forrester Research, where she provided analysis on multiple topics including network and service strategies, enterprise communications and consumer markets for voice, video and data.

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.

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Today’s retail environment is challenging, to say the least. Connected, informed consumers expect the best products at the best prices, regardless of channel. Fortunately, retailers can meet and exceed these expectations by leveraging Wi-Fi networks to cater to customers based on where they are in the aisles and how they react to offers around them. This approach, focused on reaching the right customers at the right time with the right offer, respects personal privacy and provides retailers the analytics they need to deliver 'precision at the point of decision'.

Under any circumstances, retail is an extremely competitive industry. But today, an uncertain economy and low consumer confidence, coupled with shorter product lifecycles and well-informed, demanding customers, make it especially difficult to

execute a profitable strategy. Retailers have only a narrow window to make the sale and seize the opportunity. Thriving in this environment means maximizing the profit potential of each interaction, transaction, and customer contact.

To reach the right customers at the right time with the right offer, retailers must be able to react to events as they happen. At one level, this means having, and using, the right information. Most retailers can access an enormous amount of data via point-of-sale (POS) systems, for example. But that is information that documents outcomes, providing insights into the purchases consumers make, the channels they use, and the loyalty schemes they appreciate. It doesn't arm retailers to influence purchasing decisions or add value by presenting consumers with deals, discounts or useful recommendations.

It also doesn't equip retailers to contend with “showrooming,” where a customer uses their physical retail store as a place to view products only to then purchase them online - often with the help of a mobile app that

allows consumers to make a purchase at the all-important moment of decision.

Clearly, retailers need to find ways to reach the customer when it matters most. Put another way, they need to insert themselves in the consumer journey where they can offer consumers (especially their most loyal customers) assistance, advice and additional offers they are likely to appreciate. Even better if the store staff can do this before the customer asks or knows they need help in the first place.

Today, technology has influenced the purchase decision, and consumers are bringing their own technology – smart-phones and mobile devices – to help on their shopping excursions. In a world where Cisco findings show 74 percent of smartphone owners use their mobile phones to get real-time location-based information1, retailers need to harness

the power of mobility to reach the loyal customers and market to those consumers in real-time.

DETECT

Retailers can start by leveraging the store’s existing Wi-Fi network to drive a premium consumer experience in store. This is exciting because it allows retailers to wring additional value out the same technology it formerly viewed a cost component. Additionally, with the advent of Next Generation Hotspot (NGH)2 and the .11u3 standard, the seamless and secure roaming of devices from 3G/4G cellular to NGH-enabled Wi-Fi Networks in retail stores will make this transition simple and secure.

Previously, retailers that implemented Wi-Fi, provided by Cisco and other vendors, focused only on access, allowing customers sitting on benches in the mall or tables at


FOOTNOTE

1. Cisco Internet Business Solutions Group (IBSG), January 20132. next-Generation Hotspot is about solving the security and usability problems of today’s hotspots to make Wi-Fi as secure and as easy to use as 3G cellular3. 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.

Detect, Connect And EngageBy Mark Dahm, Senior Manager, Business Development, Wireless Networking Group, Cisco Systems, and Jason A. Oglesby, Director Mobile Solutions Management, SA

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the food lounge to log on to the free Wi-Fi network, branded by the retailer. Some retailers also used the network to access B2B mobility applications to manage inventory or activate signage.

That was then. Today it's becoming increas-ingly clear that these Wi-Fi networks aren't an opex cost. They are investments that will help retailers reach the next level, equipping them to deliver real-time, context-aware offers and assistance customers will find genuinely useful and valuable.

This capability allows retailers to achieve much more than the vision of one-to-one marketing, which is why we call it precision marketing. At its core is the capability to support precision retailing, which is all about influencing in-store buying decisions via special offers based on the consumer's past purchases and explicit preferences.

The next step will be solutions that leverage the indoor-location combined with analytic capabilities to optimize the in-store expe-rience for consumers and retailers. This will pave the way for a connected shopping experience that will bring real-time and location-based deals to shoppers and allow retailers to improve customer service and more accurately track ROI.

CONNECT

The benefit of combining indoor location based services with analytics is to deliver the capabilities that will allow retailers to understand and fulfill customer needs. But its also about arming retailers to accelerate insight, act decisively and affect outcomes. This means harnessing network analytics and powerful data analysis to optimize the supply chain (making sure shelves are stocked) and execute the real-time decisions that will allow them to competitively differentiate their retail experience for every customer who walks in the store.

We believe that retailers should treat customers like old friends coming for a visit. They should be greeted at the door, and they should shown around in a way that pays special attention to showing them the attractions you 'know' they will appreciate the most. In practice this means being able to analyze customer purchasing history, in store inventory information, customer profiling preferences, along with context-based information to determine what sort of offers an individual consumer would value and identify the ways to make it personal and relevant in real time.

The real precision comes when you couple this with a technology like Cisco’s Wi-Fi

access and analytics to provide indoor location services, allowing the retailer deep insights into how customers interact with their physical environment based upon where they are in the store and what they are doing at that point in time.

As the following scenario shows, insights into customer sentiment allows retailers to refine their offers in real-time to accelerate revenue generation and encourage customer loyalty.

Imagine customers carrying a smartphone into their favorite store, instantly connecting to the store’s Wi-Fi network, which prompts them to launch the store’s mobile app. The automatic check-in feature rewards the consumer with loyalty points and the store manager receives customer shopping details (with opt-in permission), using the app’s location service. Leveraging the Wi-Fi network intelligence, the store staff can also get in on the action. They are able to quickly find and assist customers looking for clothing in their size, or an appliance that is extremely energy efficient.

Finally, the shopping experience ends with customers scanning a barcode at the register and getting credit for the points collected. Meanwhile, store management tracks the ROI of the deals and offers sent

through the mobile app and can even forecast inventory levels based on current customer consumption.

ENGAGE

As we have shown, the technology and analytics are coming together to allow retailers to radically redefine the relation-ship they have with their customers, managing even in a high-volume shopping situation to have a one-on-one relationship with them in real-time.

Part of this is building the capabilities to enable shoppers to make smart decisions and receive instant discounts on their mobile devices to put towards their purchases and loyalty programs.

But an even bigger part of this is harnessing technology to help customers when they need it most. 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.

Brands and Consumer Product (CP) companies also benefit because this approach gives them new opportunities to interact with their customers, and new possibilities to work with retailers to create

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.

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shopping experiences that benefit all stakeholders, including consumers.

In practice, the brand or CP has the opportunity to get closer to the consumer while they are in the store and thus better manage their brand and product information. Take a brand like Kraft. Traditionally, they control their brand and promotions through media, using channels that range from print ads and coupons, to online destinations where the consumer logs on to learn new and interesting ways to use Kraft products in preparing a meal.

What a brand can do with the coupons is almost radical. Rather than being in print ads or online, they can be loaded into the retailer's system, which is cloud-based and powered by precision retailing. Imagine a scenario where the consumer enters the store and can receive relevant coupons directly from the brand via the retail system and store them in their wallet to be accessed and redeemed at the checkout.

REVOLUTIONARY RETAIL

This is just one way that the brand or CP can be part of the shopping experience. It's easy to imagine scenarios that completely revolutionize who engages with the consumer and how.

It's also very exciting for retailers and their business ecosystem because precision retailing equips them to overcome the dilemma that plagues all marketing: trackability. Over a century ago, the department-store magnate John Wanamaker observed, “I know half my advertising dollars are wasted. I just don’t know which half.” Real-time information and analytics removes the guesswork, enabling retailers to deliver personalized offers and cross-sell based on items customers have in the shopping carts, or in their purchasing history.

Finally, the technology that powers precision retailing gets smarter over time to satisfy, meet — even predict — customer needs. This is possible because of the option consumers have to rate offers, 'I like this one' or 'I don’t like that one', when they are delivered. After all, information and insights that retailers can gain by just asking their customers has its merits. Through data the system gathers and the information customers volunteer the system learns and adapts to consumers over time.

Moving forward, instead of being assaulted by thousands of offers and being overwhelmed by choice, consumers will be able to receive a limited number of offers that are specifically tailored to them as individuals based on

preferences they established (a combination of consumers' actual consumption and the information they opt in to volunteer). This is the way to build — and deepen —consumer engagement and break the barriers that exist today in reaching consumers.

Mark Dahm is a seasoned professional with a twenty year history of success in Silicon Valley and international markets in the disciplines of Sales, Business Development and Product Management. He has an established track record with Global 100 companies and has held leadership positions with four start-up companies. Mark is a sought after spokesman, panel participant and recognized expert for Wireless and Mobility strategies in the Enterprise, Service Provider and “Connected Consumer” markets.

Jason Oglesby is part of the SAP Mobile Solutions Management organization focused upon Consumer Engagement and Mobile Consumer Applications. Previously, he was with Kony Solutions where he served as a senior sales engineer in Banking and financial services. His first experience with mobile was building an application to control a ceiling fan on a Windows CE device while in college.

EFFICIENT OPERATIONS, NEW OPPORTUNITIES

Retailers can harness network analytics and powerful data analysis to improve their rela-tionships with loyal customers and track the success of sales tactics. Retailers can also leverage these real-time insights to improve their operations.

First and foremost, this technology gives retailers new visibility into customer activity at the aisle level. It's important to stress that — out of respect to personal privacy and simply because it's good business practice — retailers can only see 'dots' on a dashboard that represent consumer footfall. They do not have the capability to identify individual customers as they walk through the store premises.

Retailers are therefore equipped to monitor — in real-time — how specific offers and promotions within the store are performing. One indication is where consumers are going based on traffic patterns, their activity speaks volumes about the products and offers they like. All this is visualized on a heat map that shows where customers ('dots') are spending their time — and money.

Say, for instance, that there is a ‘cold spot’ over by toys. Armed with this insight the retailer can experiment with placement and promotions to catch customer interest and drive sales. More importantly, retailers can run these experiments, and adjust their strategy accordingly, based on real-time analytics and feedback. They can evaluate each promotional campaign and then select the one that delivers the best results for the store — and its customers.

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.

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Loyalty programs are common-place across the retail industry, but now other verticals are exploring such schemes to help them drive revenue and keep customers. A prime example is Canadian transport authority Société de transport de Montréal (STM), which has launched an innovative mobile customer rewards pilot program, delivered by a smartphone app, to thank existing customers and attract new ones.

In 2008 Société de transport de Montréal (STM), Montreal’s transport authority, intro-duced the Opus card, a smart card allowing passengers the ability to load their tickets and monthly passes and providing for extra convenience and security.

In practice commuters can load the transit smart cards at one of over 200 fare vending machines and use it for travel using the STM

system of subways and buses. In addition to storing all fares and monthly passes purchased by the owner, the card can also store customer information, such as email addresses, that commuters volunteer in return for value-added services, such as monthly newsletters and additional insurance if the card is lost.

By 2012 the transport authority reported some three million loyalty cards were in circulation, two-thirds of which were used by commuters on a daily basis.

While STM was quite satisfied by the uptake of the smart card offer, it also saw the untapped opportunity to take the program to the next level as part of a larger strategy to increase ridership by 40 percent by 2020.

To achieve this ambitious goal required a revolutionary new loyalty program. STM wanted to avoid being ‘just another loyalty card that collected points’. It wanted to build an ecosystem of partners and offers that would “reward users on the spot” for their continued loyalty.

INSTANT GRATIFICATION

Given the central role that mobile plays in the lives of Digital Natives, users raised on the Internet, as well as time-strapped commuters, STM made the decision to release a mobile app for the popular iPhone smartphone, announcing plans to follow later with an app for the Android platform.

Interestingly, internal STM company research had also determined that the youth demographic, a key customer segment, would be particularly positive toward a loyalty scheme that could deliver ‘instant gratification’, and even a few surprises, along the way.

Thus, STM was resolved to launch a pilot that would last for a period of six months, that would create excitement — and value — for commuters by offering them relevant real-time offers aligned with their preferences and location. Of course, recognizing that personal privacy is paramount, STM partnered with a vendor that created a firewall between marketers and commuters, making sure the identity of the individual commuter remained hidden.

The pilot, called STM MERCI using SAP Precision Marketing, launched in spring of 2012, inviting commuters via public advertising in stations, and in some cases emails sent to Opus card holders, to download the mobile app. Once downloaded, riders are prompted to input their specific preferences, such as their interest in sporting events, cultural arts, restaurants and other hobbies.

CONTEXT MATTERS

By leveraging the CRM solution of its vendor, STM can delve into OPUS rider histories and preferences to create and deliver personal-ized, geo-localized offers to commuters on the move. The aim is to build an ecosystem of more than 1,500 business partners. The key to success is offering the right individual the right offer at the right time, and at the right place. That formula is what makes this an extremely unique program.

Using the mobile app allows commuters to receive notifications about available rewards from STM business partners, 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


Public Transport Drives Personal LoyaltyBy Pierre Bourbonnière, Head of Marketing at Société de transport de Montréal

Against this backdrop, the mobile app approach effectively places the STM at the forefront in the field of customer relationship strategy


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of local events, as well as over 125 local retailers, ranging from coffee houses to specialty shops. In the backend STM’s ability to segment geo-localized promotions ensures that notifications are a match with the commuters demographics and personal preferences, information they have volunteered in return for relevant offers.

The objective of the program is to under-stand customer preferences and then answer these requirements using a CRM solution that delivers promotions that they can genuinely appreciate because they are personal and relevant.

TRANSFORMATIONAL MODEL

Precision Marketing is a retention program for STM’s most valued customers, and as a way of encouraging the occasional commuter to move up to a monthly or annual pass. In addition, Precision Marketing can also help smooth out peak travel by advising customers of better options, and then reward them for choosing an alternative route or time, rather than adding to the problem.

This is more achievable thanks to STM’s c-level decision to harness mobile to take its loyalty programs to the next level. As Michel Labrecque, STM chairman, put it in a company press release.

“We’ve grown from an era where 1.2 million customers travelled anonymously in public transit to a world where we can communicate directly with every person. The launch of this program responds to a need expressed by a portion of customers. They’ve told us that they want access to solutions in mobile technology that will improve the customer experience. They also appreciate being rewarded for their loyalty.”

Against this backdrop, the mobile app approach effectively places the STM at the forefront in the field of customer relationship strategy. Having deep insights into the habits, behaviors, preferences and needs of its commuters allows STM, and its ecosystem of partners, to deliver offers and notifications that are suitable to the real-time situation and personalized to the individual customer. “It’s our way of thanking and attracting new customers to public transit,” Labrecque concluded.

Clearly, STM is well progressed in developing strategy that will not only generate additional ridership; it will also generate a significant amount of revenue from business partners and retailers eager to connect with the transport authority’s captured audience of commuters.

Whether they are waiting at a bus stop, or just enjoying the ride to downtown attractions, these customers benefit from relevant offers — as well as a reward scheme — that respects their privacy and personal tastes. The program, which connects directly with commuters on the move has the potential in all verticals, not just transport, to seek new ways to use mobile to reward individual consumers for their loyalty.

Pierre Bourbonnière has served as Director of Marketing at STM for the past five years. Prior to this Bourbonnière held a variety of marketing positions at Air Canada and Aeroplan, where he was in charge of premium services such as Concierge, Maple Leaf Lounges, Express check-in kiosks, and Aeroplan benefit packages.

To achieve this ambitious goal required a revolutionary new loyalty program. STM wanted to avoid being ‘just another loyalty card that collected points’.


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Hurricane Sandy, what is hailed as the biggest storm to hit the North Eastern seaboard in history, saw those affected turn to their smartphones to get information from utilities companies about when electricity would be restored. While during times of crisis and power outages, people use mobile devices to gain information to determine and plan the impact of the disaster, this shouldn’t be the only interaction between utilities companies and their customers. Companies should also harness mobile to deliver information and assistance easily and quickly to their customers. Improving self-service is key to increasing customer satisfaction and encouraging lasting loyalty.

Mobile usage showed a peak in New York City on October 29, 2012, when Hurricane Sandy whipped across the Eastern sea-board. Across the area companies prepared

for the impending disaster. Mobile operators advised their customers to text, "don’t call” once the storm hits. Meanwhile, some enter-prising people prepared for the imminent rise in mobile use by setting up services where consumers could create a Twitter account, allowing them to send and receive tweets via SMS. In fact, Twitter reported more than 20 million tweets about the storm between October 27 and November 1, and we can be sure a significant number originated from people using a mobile device.

For utilities companies, maintaining a customer link during such disasters has become a challenge. Storms like Hurricane Sandy show that call centers and Websites aren’t effective when it comes to informing customers. During an emergency, mobile provides a perfect channel, allowing utilities companies to reach out to customers and thus maintain a customer link.

But mobile is not just a robust and critical channel in the wake of natural disasters. Even during normal days mobile has its advantages as a channel that allows these companies to extend the reach of their services to their customers. Indeed, mobile offers tremendous value as it reduces the burden and cost on call centers and enables

Utilities Customer EngagementBy Haridas Nair, Vice President, mCommerce Products and Solutions, SAP



Typical engagement model

Welcome and validation

Action your desire• Request services info• Start/stop service• View bills• Make payments• Update account• Analyze consumption

Report service issue• Capture a photo• Select an address• Enter information• Receive confirmation

Service issue status

View outage information

Confirm restoration of service

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transactions across multiple backend systems, and even handle payments.

KEY CAPABILITIES

Clearly, the best solution is one that provides richness of functionality required for engaging with customers on the mobile, backed by a platform that

provides the robustness required for a consumer mobile service.

So, what could such an application look like? What functionality would it need to support? Unlike a mobile banking app, where perhaps the most used function is checking your balance, closely followed by bill pay – utilities companies must be much more focused on taking customer self-service to a new level.

SAP utilities


self-service. More importantly, mobile allows utilities companies to begin and maintain a two-way dialog with the customer.

ENCOURAGING ENGAGEMENT

Mobile is an ideal channel for interaction and engagement. What would a customer expect and what should a utilities company need to deliver? Figure 1 shows a typical engagement model, detailing the relationship between what customers would want to accomplish and how mobile can support this.

The functionality that customers expect on their mobile or tablet device include services around bill payment, consumption analysis, and the ability to report service issues, as well as access updates and view outage information. In fact an outage provides the perfect opportunity for a utilities company to respond using mobile to deliver a push notification or text message. This represents an ideal way to initiate a two-way interactive communication, one that also allows the utilities company to receive immediate customer feedback on restoration. It’s an exchange that ensures crews can fix lingering problems before they leave the area.

An application that can support these capa-bilities is more than just another mobile app. It is a full-fledged mobile consumer service. Utilities companies planning and designing such a customer-focused mobile service, one that has to handle peak loads, should consider the following four requirements:

Scope of channels. The service must offer support for mobile phones, smartphones and mobile Web, as well as messaging and online channels.

Scale of service. The service should be able to scale to tens of thousands even to millions of users.

Support applications. The service needs to support Web or mobile Web apps that enable customers to register, update their data and change service. Keep in mind that certain actions that require the customer to type in data are best handled via the Web channel.

Span of platform. The platform that will support such a service needs to be a robust transaction platform, one which can handle business logic, integrate and orchestrate

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With this goal in mind, key capabilities necessary for such an application would need to include:

• View and pay current or past bills• Update Account Information• View service details and report

service problems• Display outage information or report

a new outage• Receive important alerts from the

utility company

The benefits of moving to a mobile-enabled engagement channel are many. Customers can pay at their convenience, be notified when payment is due, and manage their billing and payment history on the go.

They are also empowered to use self- service and accomplish what they set out to do on their own terms. They can even report services issues using the in-built camera on their mobile device. Additionally, customers have access to their account anywhere, anytime — convenience they are sure to appreciate.

The mobile channel also enables delivery of important service notices that can either

be pushed to the app or requested from inside the application. This paves the way for utilities companies to deliver new offers and services that are personalized right into the application — precisely when customers are using it

MANAGEMENT AND ENGAGEMENT

Another benefit of moving to a mobile-enabled engagement channel is the data and insights it delivers both utilities companies and their customers. Understanding usage is the first step to managing consumption. By delivering analysis of usage customers can better manage their consumption. Interactive tools can also be provided in the application to understand the consumption patterns of individual rooms and devices.

As utilities companies deploy such solutions to customers they will also learn more about usage and interaction. This, in turn, will trigger a move to smart meters as consumers demand more information about their services delivered to their mobile.

Once consumers become comfortable consuming information about utilities use on their mobile, they will also welcome other services that put them in control, allowing them to regulate the settings for heat and air conditioning remotely anytime anywhere using their mobile phone. In the background thermostats connected to the network can work in conjunction with smart meters to provide customers proactive advice on managing their energy consumption and provide optimum setting recommendations.

The future of Utilities Customer Engagement on mobile is just dawning. And a bright future it is! The possibilities are endless and customers will benefit tremendously from being able to use mobile to manage their consumption, access timely information, and control energy use remotely. Utilities companies will not only benefit from delivering a convenient and cost-effective service to their customers; they will also reap rich rewards as customers move to self-service channels to solve issues, report outages or simply check their bill. Enabling customers to perform a simple task on their mobile goes a long way toward encouraging customer engagement and cementing long-lasting loyalty.

Haridas Nair is responsible for driving the strategy and solutions for Multi-Channel Banking and Mobile Commerce spanning Mobile Banking, Mobile Payments, Mobile Money across Banking and Telco industries, and the extension of Mobile Commerce to new industries like Utilities and Retail at SAP. Prior, he was responsible for driving the strategy and evaluating emerging technologies for the three to five year horizon within Information Technology Solutions Group at Sybase.

In fact an outage provides the perfect opportunity for a utilities company to respond using mobile to deliver a push notification or text message.

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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.

PART 7: DO YOU TAKe MOBILe? neW PAYMenT OPPORTUnITIeS AT ReTAIL

PART 7: DO YOU TAKE MOBILE? NEW PAYMENT OPPORTUNITIES AT RETAIL

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Starbucks launched its mobile based payment system, called ‘mobile pay’, as a feature of its iOS and Android app in January 2011. Customers can associate their prepaid ‘My Starbucks Rewards’ cards with this application that then enables them to use it for their day to day purchases at Starbucks’ outlets. Consumers can also use the application to top-up their My Starbucks Rewards card balance, and the app even helps give directions to the nearest stores, explore the nutritional value of food, beverages and coffees and learn about new offers. In Q4 2012 Starbucks also struck a partnership deal with Square and launched its mobile wallet service across its stores.

PROMOTING THE CHANNEL

Starbucks has run a number of campaigns, and initiated reward schemes to encourage its customers to switch to using the new mobile payment channel, and it has increased transaction volumes successfully. Though the ‘My Starbucks Rewards’ loyalty program already boasted more than 10 million members, the majority of whom voluntarily receive communications from Starbucks, the enhanced loyalty program offers fully digital rewards, and also makes it easier for customers to earn them.

Between August 27 and September 9, 2012, Starbucks ran a mobile campaign called 12 Star Dash to encourage customers to use the Starbucks mobile app to pay for 12 drinks in order to receive a US$5 eGift. In October 2012, Starbucks ran a mobile advertising campaign through its mobile payment channel to increase store traffic, and revenue for its new Verismo System home products.


KEY PERFORMANCE INDICATORS – STARBUCKS U. S.

Since its launch in January 2011, Starbucks customer transactions through the mobile payment channel are estimated to have risen more than 20-fold in the last 7 quarters.

As shown in figure 2 below, at the end of the first full year of being in service, we estimate that Starbucks customers had carried out 26 million mobile payment transactions, with the holiday quarter witnessing a near 2-fold increase quarter-on-quarter.

Starbucks: A Mobile Payments Case Study By Sam Gellar, Analyst, Portio Research

Starbucks mobile payment solution

In-store activity

Figure 1: Based on data from Portio Research Ltd

Note: as of January 2013 rewards program is not associated with Square Wallet

She places her order and plays using the mobile app on

her handset

Customer enters a Starbucks

outlet with her mobile handset

Customer gets reward points in her account which can be

redeemed later

Handset generates a

barcode which is scanned at the

coffee shop

Customer downloads Starbucks App on her

mobile phone

Customer downloads

Square Wallet on her mobile

phone

Customer associates

her Starbucks card with the download app

Customer associates her

credit/debit card with the Square Wallet

One-time setup activity

This is a substantial flow of cash, and Starbucks is leading the way globally in terms of demonstrating a successful implementation of a mobile payment solution.

Or

Or

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Starbucks U.S. mobile payment transactions per quarter (In million, Q1 2011E-Q4 2012E)


Q4 2012EQ2 2012E Q3 2012EQ1 2012EQ4 2011E

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7

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27

31

42

0

10

5

15

20

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30

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45

Starbucks U.S. mobile payment transactions per month(In million, January 2011E-December 2012E)

2011E 2012E

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14

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M1M2 M2M3 M3M4 M4M5 M5M6 M6M7 M7M8 M8M9 M9M10 M10M11 M11M12 M12

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Thereafter, the number of mobile payment transactions is estimated to have risen exponentially, crossing the 26 million transactions per quarter mark by the quarter ending June 2012. We estimate that Starbucks ended the last quarter of calendar year 2012 with 42 million mobile payment transactions during the holiday

quarter, realizing a more than 300 percent year-on-year growth rate.

As figure 3 depicts, monthly mobile payment transactions crossed the 1 million mark in March 2011 for the first time, and quickly reached the 3 million mark by October 2011 in a short span of only 9 months since launch. Over the next

e = estimated

e = estimated

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9 months, this figure is estimated to have crossed the 10 million monthly transactions mark, implying a weekly rate of more than 2 million mobile payments transactions for Starbucks U.S.

Figure 4 shows the various mobile payment transaction milestones achieved by Starbucks U.S. cumulatively. The first 50 million

transactions took 16 months, and the next 50 million a mere 5 months. We forecast that the next 150 million transactions thereafter will be completed in less than 4 months total.

As far as revenues driven through the mobile payment channel are concerned, figure 5 charts the revenues achieved

quarterly by Starbucks U.S. through mobile payments received.

Revenues are estimated to have first crossed the US$ 50 million mark in the 4th quarter of 2011, a year after launch, thereafter marching on to cross the US$100 million mark in 2Q 2012, and inching close to the US$200 million mark

in 4Q2012. In line with the number of transactions, the revenue from mobile payment transactions has also increase more than 20-fold over a period of 2 years.

In total, from the date of service launch and up to the end of December 2012, Starbucks U.S. is estimated to have carried more than US$600 million in revenues from

Starbucks U.S. cumulative mobile payment transactions(In million, January 2011E - December 2012E)


2011E

August 2011: crossed 10 million

December 2011: crossed 25 million

April 2012: crossed 50 million

September 2012: crossed 100 million

Cum

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mob

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2012E

M1 M10

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60

80

100

120

140

160

M2 M2M3 M3M4 M4M5 M5M6 M6M7 M7M8 M8M9 M9M10 M10M11 M11M12 M12

Starbucks U.S. mobile payments revenue per quarter (In US$ million, Q1 2011E-Q4 2012E)

189

137

118

6953

30178

Q1 2011E Q1 2012E Q2 2012E Q3 2012E Q4 2012EQ2 2011E Q3 2011E Q4 2011E

0204060

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transactions carried out by customers using the new mobile payment channel.

This is a substantial flow of cash, and Starbucks is leading the way in terms of demonstrating a successful implementation of a mobile payment

solution. The various revenue milestones are captured in figure 6.

As a percentage of Starbucks U.S. total revenues, mobile payments accounted for just over 1 percent in its first full year of service, ending December 2011.

Starbucks U.S. revenue break-out (in percent, 2011E and 2012E)

2011E

Non - mobile payments revenue

98.7%

Non - mobile payments revenue

94.3%

Mobile payments revenue6.7%

2012E


Mobile payments revenue 1.3%

Starbucks U.S. cumulative mobile payments revenue (In US$ million, January 2011E-December 2012E)

Cum

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2011E 2012E

Q10

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Q2 Q2Q3 Q3Q4 Q1

Crossed US$ 100 million in revenue




e = estimated

e = estimated

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Starbucks mobile payments - way forward (In US$ million, January 2011E - December 2012E)

Ability to pay with the customer’s name/hands-free checkout

Tipping

Making the My Starbucks rewards benefits available to the Square Wallet while paying

Supporting the Starbucks Card as a payment source


BENEFITS AND SUCCESS FACTORS

Revenues are estimated to have first crossed the US$50 million mark in 4Q 2011, a year after launch.

FOR STARBUCKS • An extremely simplified,

aesthetically pleasing mobile POS terminal that facilitates frictionless payment acceptance

• Enhanced customer experience during check-out

• Transparent, simplified, and possibly cheaper, credit card processing fees

FOR CUSTOMERS • Hassle-free payment channel – no

more fumbling with cash or credit cards, and handling a wallet, everyone always has their phone to hand

• Requires no signature

• Receipts are digitally delivered into the Square app installed on the phone

• Enhanced overall customer experience during check-out

This contribution, however, has grown rapidly, and our estimates show that it is already nearing 6 percent for the second full year ending December 2012. This is shown in figure 7.

WAY FORWARD

The Square Wallet will further enhance the payment experience at Starbucks by including additional features, as depicted in Figure 8.

Sam Gellar has more than six years of experience in the telecoms space, covering both the fixed-line and wireless sectors. Geller specializes in VAS related product management, revenue planning and industry research and data analytics.

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Near Field Communications (NFC) is an interesting new technology enabling the exchange of data between two machines. It remains to be seen, however, if NFC will become the standard for mobile payments. Mobile payments with NFC and the Secure Element was designed many years ago, before wide adoption of smartphones, ubiquitous, unlimited 3G and 4G networks, and public Wi-Fi networks. More importantly, nfC payments fail to accomplish the single greatest need of merchants, which is reducing transaction fees. Also, there are other payment methods that have evolved that are far more focused on harness-ing the unique capabilities of mobile to enable payments and — ultimately — encourage engagement. This evaluation of

the alternative mobile payment technologies outlines the benefits and drawbacks, to conclude that the ideal solution may be a combination of 'all of the above'.

Simply put, NFC is a wireless technology to exchange data between two machines that are close to each other. NFC is much easier to use and more secure than existing versions of Bluetooth or other wireless technologies. NFC opens many exciting scenarios for shoppers such as the ability to tap a product and see a video, interact with a smart poster, or even pay for goods and services. These scenarios, as well as many others unrelated to mobile retailing, will help to drive widespread adoption of NFC over time.

Several years ago, banks, mobile operators, and technology companies defined the Secure Element1 to securely store private data (such as credit cards) on a mobile device and transmit that data using NFC. The aim was to enable customers to store credit cards on their mobile phones instead

of in their wallets, thus requiring minimal changes to the existing payment ecosystem.

Unfortunately, when NFC payments were designed, merchants and retailers were absent from the discussion. Most retailers were waiting for widespread smartphone adoption before worrying about mobile payments. Others did not understand the sweeping changes that mobile payments could bring. If retailers and merchants had been part of the discussion, they would have insisted that any payment solution should decrease the costs and risks of plastic credit and debit cards, such as transaction fees, PCI compliance costs, POS costs, and credit card dispute resolution overhead.

NFC is a good technology for some mobile payment scenarios, especially when the payer and the payee are not connected to a network, such as when paying for tickets at a subway station. However, there are many other payment scenarios that NFC cannot support, such as prepayment, money transfer and omni-channel payments.

In addition, many merchants and retailers have their own private label credit cards that they want to encourage customers to use because they have low transaction costs. NFC effectively blocks merchants from getting these cards to the top of the wallet, which tends to discourage rather than encourage use. Merchants are also concerned that NFC payment solution providers would serve up advertisements for products from competitive retailers.

Interestingly, several industry executives have recently voiced these concerns.

• Mike Cook, VP and Assistant Treasurer of Wal-Mart, stated "…I don't think [NFC is] becoming a technology that will handle payments."

• Keith Rabois, COO of Square, points out that NFC has no value proposition for consumers and merchants and stated: "I've never met a single merchant in the U.S. who says 'I want this NFC thing."

• David Marcus, president of PayPal, also spoke out at against NFC at the DLD conference in Germany earlier this

Weighing The Alternatives To nfCBy Mickey Haynes, Global Principal, Mobility Solutions for Retail, SAP


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

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year1, arguing that NFC might actually make the retail experience worse. "Retailers say NFC stands for Not For Commerce," he told the audience.

While it is beyond the scope of this article to examine the merits of these

statements and their applicability to other markets outside the U.S., it is important to understand what retailers expect from a mobile payments solution.

From a retailer’s point of view, the ideal mobile payment solution must:

• Reduce transaction fees associated with credit and debit card transactions

• Work with, not counter to, the retailer’s customer relationship and mobile marketing strategy

• Facilitate top of wallet capability for the retailer’s private label and gift cards

• Provide a holistic solution that supports different mobile and multi-channel payment scenarios

• Improve, or at least not degrade, the customer experience at store checkout

A holistic mobile payment solution must therefore handle the five key payment scenarios outlined below. Following is the use case for each mobile payment method, outlining the benefits and drawbacks to each.

CLOUD WALLET

In a Cloud Wallet, the customer stores one or more forms of payment in a secure online account. Cloud Wallets can be used to do transactions at the POS, to prepay for goods and services, to bypass the POS, to transfer money to other individuals, or to make purchases on devices other than phones. In all of these scenarios, the

customer’s Cloud Wallet connects to the payment device (POS, ecommerce engine, etc.) through a cloud payment service to make the transaction.

Pros

A Cloud Wallet offers great potential. It has the ability to store all payment types — credit, debit, gift card, stored value, bank accounts, etc.— in the cloud where they can be accessed anywhere and by any channel, including mobile, PC, tablet, kiosk, or POS. Nearly any kind of data can be stored in the Cloud Wallet, such as coupons and offers, movie tickets, or any other kind of personal information. The Cloud Wallet can easily be connected to personal finance software to upload itemized transaction data and to manage budgeting and forecasting. Since the customer’s credit card data is never actually stored on the phone, she need not worry about canceling all her cards if she should ever lose her phone. If it does happen, the customer just gets another phone and accesses her data in the cloud, where it is stored securely. The retailer also benefits. Since credit card data is never transmitted to the retailer, the retailer can reduce its dependency on expensive credit/debit infrastructure and business processes.

Key aspects of an ideal mobile payment solution

Omni-channel Pay ahead Pay at POS (offline)

Pay at POS (offline)

Aisle buying

A mobile payment solution should be omni-channel. Customers should be able to buy products from the retailer’s eCommerce site as well as in store products.

Customers should be able to purchase items from the store and pay for them in advance. A customer should be able to pre-order and pre-pay for items like coffee, groceries, food, etc., and have it ready when she arrives, bypassing the queue.

In some cases, neither the customer’s mobile device nor the POS are connected to a network. This is a common scenario for vending machines, train stations, and other self-serve environments.

If either the customer’s mobile device or the POS is connected to the network it is considered an online transaction. This method offers a wide variety of payment options and a very high level of security, which means lower transaction costs.

In the Aisle Buying scenario, the customer self-scans items as she shops. She then pays for items form her phone, bypassing the POS.


FOOTNOTE

1. blogs.wsj.com/tech-europe/2013/01/25/nfc-not-the-answer-for-retailers-says-paypal/

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Cons

Today, Cloud Wallet transactions that are funded by credit/debit cards would be charged at card-not-present rates, which are higher than a standard swipe fee. POS modifications may also be required to communicate with the Cloud Wallet. The retailer would need to carefully monitor the customer experience to ensure that it would not slow down the queue.

Evaluation

The Cloud Wallet scenario does not immediately appear to reduce transaction fees, which is one of the primary goals of the retailer. However, new security offered by mobile devices like multi-factor authentication and location awareness could lead to a much more secure model than mag stripe credit cards. New security features could also lower transaction fees. It is widely expected that, in the near future, credit card providers will offer new ways of handling Cloud Wallet transactions that would be charged at card-present rates.

While working out the transaction fee issue, the Cloud Wallet could be used to fund a stored value account, or gift card, to reduce transaction fees. Cloud Wallets could also link directly to bank accounts for ACH/EFT transfers, which would nearly eliminate transaction fees. Real-time debit to checking accounts would be the ideal solution for the retailer.

The Cloud Wallet offers maximum flexibility to pay with whatever instrument a customer chooses, however they choose, through any channel. It supports all of the four key payment scenarios that we have outlined. To avoid the card-not-present fees, a Cloud Wallet could be integrated with an NFC wallet. This would enable NFC to be used for checkout at POS and cloud to be used for everything else. Since complex POS modifications would be required, Cloud Wallet providers need to work with POS software companies to integrate their capabilities directly.

A private Cloud Wallet (one that is built by the retailer for that retailer’s own customers) could be very interesting, but customers will not want to set up 100 different Cloud Wallets with 100 different retailers.

PAYMENT AS A SERVICE

In this payment scenario a customer funds an account with a Payment Service Provider (PSP) using the payment method of their choice. If the consumer chooses credit or debit as a method, the customer pays the transaction fee. EFT or ACH transfers are usually free. Once the consumer has funded the account, she can begin shopping at any retailer who accepts the PSP. The PSP guarantees retailers a fixed rate transaction fee that is usually more expensive than debit, but less expensive than credit.

Pros

The average cost per transaction for the retailer is likely cheaper than what it pays today. This new form of tender eliminates the dependency on debit/credit cards infrastructure and PCI compliance.

Cons

POS modifications would be required to accept the new tender type. Competition for customer mindshare could develop since PSPs are very interested in collecting data on customer spending habits and selling advertisements that could enable a third party to pop up an advertisement at the decisive moment in an attempt to steal the sale.

Evaluation

This solution does have the potential to reduce transaction fees. What's more, it could work with all of our key payment scenarios. However, it might open up a channel to advertising that could threaten to get between the retailer and his customer.

This model is very attractive, but it seems there is money on the table. The retailer might actually be able to get better rates than the PSP is offering by simply doing what the PSP is doing. The PSP can make money at both ends, charging both the retailer and the customer a transaction fee. If customers are willing to pay extra for debit and credit, then retailers should just build their own Payment Provider system without the risks of opening the door to a third party.

A customer who buys a mobile gift card is much more likely to spend faster and is less likely to go to a competitor.

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Mobile Gift Card

The most successful mobile payment solution so far is the mobile gift card. In the U.S. Starbucks, Target, and Dunkin’ Donuts have adopted this strategy. In this scenario a customer buys a mobile gift card using a credit or debit card. The customer can top up the gift card, or set parameters to auto top up. To pay, the customer simply launches the mobile app and displays the barcode. The POS is equipped with a barcode scanner that reads the barcode, which is just a gift card number, and processes the transaction as it would if the consumer had an ordinary gift card.

Pros

A customer who buys a mobile gift card is much more likely to spend faster and is less likely to go to a competitor. Sales velocity and repeat business increase. The app is also very easy to use for consumers. There are no software changes required at the POS since the barcode simply emulates a gift card number, which the system already knows how to process.

Cons

Since the customer tops up her gift card with credit/debit card information that is

stored in the cloud or on the mobile phone, the retailer must pay a card-not-present transaction fee which is higher than a swipe fee (see Cloud Wallet section). If the card could be topped up via a direct debit (EFT or ACH) transaction rather than to a debit or credit card, much of this fee would be eliminated.

There is a hardware investment required to purchase barcode scanners that can read the barcodes off a mobile phone. The app would be most successful at retailers with frequent re-purchase cycles, such as grocery stores, restaurants, and gas stations.

Customers may not want to download an app from every retailer with whom they want to pay with mobile. Ideally for the customer, one app (like the Starbucks app) could be used to pay at many different retailers.

Evaluation

This solution does not reduce transaction fees because of card-not-present transactions. However, it could be changed to use direct debit so that it actually would reduce transaction fees. This solution would work very well with a retailer’s customer strategy. It could also deliver all of the key

payment scenarios. Overall, Mobile Gift Card payments would be much more lucrative if the top up transaction were cheaper (or free); if the POS hardware was not required (or was cheaper); and if it worked ubiquitously across many retailers.

THE TAKEAWAY

In this evaluation of mobile payment technologies, it's clear that there are upsides and downsides to every mobile payment method. But rather than focus on advantages and shortcomings of each, it's important to take a Big Picture view and see the massive benefits of a solution that combines them all.

Indeed, the best solution would be a single mobile app that works similarly to the Starbucks app but would work at many different retailers and be based on direct debit rather than on card-not-present transactions. This would dramatically lower transaction fees for retailers and offer a very convenient payment solution for customers.

Meanwhile, an integrated NFC + Cloud Wallet approach has the potential to offer the most flexibility while keeping

transaction fees at card-present rates for some mobile payment scenarios.

To deliver the ideal mobile payment solution key players in the ecosystem — including banks, mobile operators, retailers, device manufacturers, and others — must come together, to solve challenges and maximize benefits. This will allow them to not only satisfy their specific business needs, but it will ultimately equip them to engage and win over the customer.

Mickey Haynes leads business development globally for mobile in the Retail and Consumer Products industries at SAP. In this role, he consults with key global Retail and CP customers to develop mobile strategies, architects mobile solutions with internal and partner development teams, and evangelizes strategy within SAP. Previously, Haynes was the Principal Mobility Architect for The Home Depot, the fourth largest retailer in the U.S., where he initiated the mobile commerce program and led the enterprise-wide mobile strategy.

The Cloud Wallet offers maximum flexibility to pay with whatever instrument a customer chooses, however they choose, through any channel.

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with mobile network operator Everything Everywhere. The offer enables merchants to accept transactions using an iPhone, iPad or Android-based device with a neat plug-in card reader. Hot on its heels is O2, a mobile operator that has also announced the launch of a new mPOS service in partnership with Visa Europe and Global Payments. This service allows merchants to accept credit and debit card payments by connecting a chip and PIN pad accessory to their existing smart phone or tablet.

NIMBLE NEWCOMERS

However, there are concerns about how the market is developing. Most mPOS device providers are start-ups. To their credit, these start-ups have been able to innovate in an area where there has been very little movement for the past 30 years. Most of the solutions currently available, however, have been built on newly established payment networks, which may well increase security risks for a stand-alone payment infrastructure.

Also, in order to turn a profit for the provider, mPOS devices need to process a high volume of transactions. Not all providers will

In the last eighteen months there have been more than 30 mobile point of sale (mPOS) solutions launch around the world. This article considers the implications of this trend for banks during what is a pivotal time in the evolution of their customer relationships with merchants.

We have all heard predictions of how emerging mobile payments will reduce or even kill cash, but in terms of actual solutions the market has remained quiet, with one exception: the mPOS device, which has begun to launch to market throughout Europe, North America and Asia. This fast growing cash killer has not emerged via consumer handsets, but through micro merchants, who have until now, relied on cash as their primary means of accepting payment. With mPOS devices growing in popularity, and with merchants showing a real interest, you can tell mobile payments are starting to get close to the mainstream.

A variety of stakeholders are getting in on the act. Social payments company, iZettle, for example, recently launched in the U.K.

be able to achieve such volumes in the time required to ensure commercial sustainability, so it will be no surprise to see many of these start-ups dropping off the mPOS map as the market continues to take shape.

Out of all the players, the banks have been notably hesitant to engage with mPOS technology, and not without good reason. Most of the mPOS devices launched in Europe are chip and signature (or even magstripe and signature) and are, therefore, not EMV compliant. The lack of certified devices available on which a user can enter a PIN (noting that a mobile phone does not constitute a ‘certified device’) has been one of the main factors slowing the development of this new segment, and will inevitably result in an increase in fraud in the market.

These are important factors to bear in mind when considering a possible roll-out of a new acceptance infrastructure. The development of this ecosystem is a significant step for all stakeholders as the industry moves away from a traditional closed-loop environment to open distribution, where suddenly becoming a merchant simply requires a user to download an app onto a mobile device and respond to a few questions. Distribution has gone digital.


What mPOS has done is provide a vehicle for third party stakeholders, like mobile operators and innovative start-ups, to engage merchants in territory that has traditionally been held by the banks and payment schemes alone.

A Serious mPOSitionBy Sirpa Nordlund, Executive Director of Mobile Financial Services, Mobey Forum

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Large, well known stores in the U.S., such as JCPenney, Nordstrom and even fast food chain McDonald’s are now using mPOS devices to reduce queues and make the payment process as pain-free as possible.

REACHING NEW HEIGHTS

As this continues, some of the most successful providers, together with those with the biggest investors, will climb way up into the clouds. The value chain, which started from e-receipts that enable customer recognition and a direct marketing channel, will soon see an mPOS terminal capable of integrating a complete merchant database, along with supporting functionality for customer interaction, marketing, inventory management, account management and more.

This erosion of the banks’ corner comes at a difficult time. Mobile Financial Services (MFS) stakeholders widely acknowledge that value added services, such as e-voucher promotions, mobile couponing and loyalty rewards will play a vital role in driving widespread consumer adoption of mobile payments. Unfortunately, many of

TAPPING NEW SEGMENTS

New mPOS devices are initially targeting an untapped segment: the micro merchants. This segment includes those that have not been able to afford an expensive EMV1

certified point-of-sale (POS) device; mobile merchants who do not have continuous access to electricity; and those that for a variety of other reasons have no available payment option aside from cash.

These factors mean that this is a segment with no competition. What mPOS has done is provide a vehicle for third party stakeholders, like mobile operators and innovative start-ups, to engage merchants in territory that has traditionally been held by the banks and payment schemes alone.

Every bank knows that maintaining rock solid relationships with merchant customers is fundamental to its future prosperity. Even though the current market entry point for mPOS is via micro merchants, we are already beginning to see mPOS solutions climbing up the value chain to the bigger and more lucrative high street stores.

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. Only by doing so can they hope to maintain a watch on who else is approaching them, what they are offering, and how their customers value the increased convenience and opportunities. Equally important is for banks to stay on top of the technology evolution and develop and follow a solid technology strategy within product line development. This level of intelligence is needed if a sound market engagement strategy is to be formed, one that will defend their traditional space and guard against them being marginalized by other players in the ecosystem.

Sirpa Nordlund currently serves as Executive Director of Mobey Forum, and is responsible for the direction of Mobey Forum initiatives and for overseeing the operational management of the group. Prior, Nordlund served ten years at Nokia, where she held several management positions and was also involved with the business development of NFC.

these practices are unfamiliar to banks, which have historically enjoyed some of the highest levels of customer loyalty across any industry sector.

Merchants on the other hand, especially high street retailers, are experts. So, just at a time when the banks would really benefit from forging closer ties with their merchant customers in order to shore up their expertise in MFS, they are gradually being squeezed out of the market.

Lower cost, convenience purchases from big branded merchants are also well suited to this model, together with the value based schemes that accompany this kind of sale. And to ignore this market, is to ignore a much bigger picture. The customer profiling data generated through value added services can be hugely valuable to banks. It can enable them to refine, personalize and market their range of products and services in accordance with individual customer preferences.

As the hardware continues to develop, mPOS solutions will play a key role in collecting and channeling this data, so if the banks don’t establish a presence here, it is hard to see how they will be able to lay claim to any of the resultant streams of data.

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.

FOOTNOTE

1. euro-pay, MasterCard and Visa

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While PayPal is thought to have its roots firmly in online commerce, the company was actually founded to transfer money between Palm Pilot PDA mobile devices back in 1998. The idea was a bit ahead of its time and so the founders decided to focus energies on e-commerce until mobile finally crossed the chasm. Of course, this milestone has been reached, prompting PayPal to tap back into its corporate DNA to power payments using the mobile channel.

The first step was the release of PayPal Mobile, a mobile app for all smartphone platforms that allows users to pay for goods and services, send money and request money immediately through their mobile phone. In practice customers send money without sharing financial information, with the flexibility to pay using their account balances, bank accounts, credit cards or promotional financing.

Enabling mobile payments and commerce is paying dividends for PayPal. In 2012 the company processed US$14 billion in mobile payment volume – more than 3 times the mobile payment volume of US$4 billion it processed in 2011. In 2013 PayPal expects to process US$20 billion in mobile

PayPal is perhaps best known as one of the leading electronic payment providers in the online e-commerce world. But PayPal is also fast becoming a giant in mobile commerce, releasing a mobile app available across multiple platforms that processed US$14 billion in mobile payments volume in 2012, more than 3x the volume it processed the previous year. next on the company agenda is multi-channel commerce, consumer behavior the company hopes to inspire — and influence — by leveraging existing technologies such as QR codes to bridge the physical and digital worlds. 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.

companies jockeying for position. And, PayPal is clearly on a path that will also see it integrated as a payment method at the point-of-sale.

To fully appreciate PayPal strategy in this area it is important to understand how we view the value chain. It’s really quite simple: there is the merchant and there is PayPal. And, depending on whether the customer uses plastic cards or accounts, there is the bank or the credit card company. Neither mobile operators, nor the disruptive players such as Google and Apple have a role in our value chain.

Clearly, payments — and this value chain — will evolve to bridge commerce in the digital and physical worlds. 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. Success is all about making the right technology choices to have huge impact on global commerce and the consumer experience.

payment volume. Moving forward it is clear that global commerce leaders will be the players that build the capabilities to enable commerce across all screens, starting with mobile, of course.

LINES BLUR

The lines between e-commerce, mobile commerce and commerce are blurring. At the end of the day it all becomes commerce, and the channel through which the purchase is made becomes less and less a distinguishing factor.

In the interim it’s critical to enable commerce using the channels consumers currently have at their disposal. To this end PayPal enables payments through mobile Web or mobile apps. Another area of interest for PayPal is payment at the point-of-sale, where proximity technology plays a central role.

There are no clear winners or losers among the enabling technologies, but that hasn’t stopped companies from competing for advantage. The space is crowding fast, with banks, mobile operators and credit card

PayPal: Enabling Payments Anytime, Anywhere And Via Any ScreenBy Tobias Zadow, Business Line Manager Mobile DE, PayPal


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we close the circle and create an ecosystem that benefits our merchants.

In the back-end PayPal, through this app, connects directly to the retailer’s system. Of course, we also build some integration to their system so that product information is synchronized, that way, if the price changes in the merchant system, it also changes in our system. Today the item will be delivered to the consumer, but in the future it will be also possible for the consumer to take the purchase with them, if they so choose.

IMPRESSIVE PROGRESS

The PayPal QRShopping app is available for the iOS and Android platforms, and there are currently no plans to support other devices. We count over 30,000 downloads and dozens of pilots involving local merchants, including major retailers.

Thus, the app lays the groundwork for a larger multi-channel approach that will allow our merchants to use the channels at their disposal — at that place and time — to encourage commerce. The trigger can be a poster at a bus stop, a flyer in a package,

QRSHOPPING

PayPal is technology-agnostic. We embrace everything that makes sense to us as we work to provide customers a secure and stable way to transact. We also prefer to deliver solutions based on already existing technologies, which is why we have launched a solution using QR codes.

Sticking to our strategy of bringing out solutions based on existing technologies, PayPal Germany unveiled the PayPal QRShopping solution in 2012. In practice the mobile app allows consumers to scan the QR code of a given item, choose a special size or color and then add it to a virtual shopping basket within the app, where consumers can pay directly with PayPal. They authorize the order with a four digit PIN, one that they set up the first time they connect their PayPal account with the app.

Importantly, we use a standard QR code, one that sends people who happen to scan the code with an app other than the PayPal QRShopping app — directly to a PayPal landing page where they can read more about the app and the solution. This way

awareness increases from its current low level. Specifically, the Index finds that Germany “scores low on consumer familiarity, willingness and usage of mobile payments.”

Specifically, Germany scores less than half the index average (nine percent versus 20 percent) in mobile commerce familiarity. However, there is a bright spot: in actual usage Germany tracks more strongly than its familiarity numbers would suggest, indicating that a strong consumer awareness campaign could yield positive results.

For German consumers payments have to be simple and secure. That is why PayPal Germany has focused its efforts on providing a simple solution, namely a mobile app that allows people to make payments without having to learn — or trust — a totally new way of transacting.

IMPORTANT LESSONS

Vast differences between demographics also meant that merchants reported mixed results.

Take flower shops. Since the trial took place in time for the holiday season,

an advertisement in a magazine, a com-mercial on TV or a price tag modified to display a QR code. Merchants have used all of these channels — and more — to enable the purchase of items through the shopping window offered by the app.

While PayPal prefers not to disclose the volume of payments made using the QRShopping app, we can say results since the launch in March 2012 have exceeded our expectations. Overall, consumer uptake of mobile payments in Germany, where we count more than 12 million users, is encouraging. Indeed, mobile payments in Germany at the end of 2012 accounted for over ten percent of total payments volume processed by PayPal, up from around just four percent in the beginning the of the year. We expect these numbers to increase significantly over the next two to three years.

This growth is truly significant if we consider that Germany is hardly a market you would associate with high mobile commerce readiness or awareness of mobile payments. According to the MasterCard Mobile Readiness Index1, Germany has an excellent environment for mobile payments to grow and flourish — provided consumers

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.

FOOTNOTE

1 mobilereadiness.mastercard.com/country/?de

http://mobilereadiness.mastercard.com/country/%3Fde

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embraced the idea of scanning a special barcode to order an Apple device from a location that wasn’t really even a store.

And this behavior also gave us at PayPal an idea. While some retailers will no doubt see this technology as a great way to enlarge their store virtually to create more revenues per floor space, our QRShopping solution also provides independent merchants the flexibility to conduct commerce when and where it suits the customer. In other words, commerce is not linked to a place in the physical or digital world; it can happen where the customer is.

The next step is to test more shopping contexts to identify the variables that come together to encourage commerce on the move. It’s all about finding out what works, and then sharing this information with our merchants. We also want to roll this solution out to a broader group of merchants and offer integration modules for several types of shopping carts. That way, shoppers would just need to install a small module, which would be free and cater to commerce online and off.

the merchants benefitted from the fact consumers had gifts and home decoration top of mind. While numbers of orders were processed, this was a clear case where the mobile app was competing head-on with established consumer behavior — namely, cash and cards — and a lack of awareness about mobile payments. Interestingly, the flower shops did see a jump in online orders processed by the standard online shop, showing that advertising QR codes on posters prompted consumers to remember to make their order from the shop’s Website.

At the other end of the spectrum, consumer electronics shops reported very positive results, confirming our observation that the customer demographic — tech-savvy con-sumers and early adopters — and context are decisive in driving multi-channel commerce.

In one particularly interesting pilot, an Apple premium reseller that traveled to trade shows in a remodeled school bus to showcase the newest innovations in Apple devices could finally close the circle, providing consumers a chance to literally buy what they saw on exhibit. Predictably, this demographic, one that was already enamored of technology immediately

But mobile is not the only screen.

In our view, mobile is both an additional payment channel and a bridge that connects the different worlds of commerce. Put another way, mobile payments are a catalyst for all commerce: storefront, online, mobile and even purchasing on the go. This is why

MULTI-CHANNEL COMMERCE

Our vision is to enable payments anytime, anyplace and by any means. We see mobile payments as a catalyst for innovation. The broad features of mobile devices allow us to change the way people are shopping and how merchants interact with consumers.

Global perspective in consumer sentiment in Germany

0%

16%3% 4% 9% 4% 9% 12% 2% 5% 6%

11% 20% 19% 17% 21% 8% 5% 9%25%

50%

75%

100%

FamiliarP2P P2P P2PPOS POS POSm-comm m-comm m-comm

Willing Using

Country score Index average Leading country score

Figure 1: Based on data from mobilereadiness.mastercard.com/germany

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More screens means more opportunity, but is also means more transparency. The pressure on the transaction price in retail is significant, and will even grow. That’s where PayPal will come in with solutions to support our merchants and enable them, and us, to take advantage of additional revenue poten-tial beyond transactions in value added services such as couponing, deals, rewards, and instant commerce that can take place because tight integration enables the eco-system — PayPal, the merchant and the customer — access to up-to-date inventory and product information.

Tobias Zadow started his career at the commerce software provider Intershop, where he worked on the mobile commerce product strategy. In 2011 Zadow joined PayPal, where he is responsible for driving mobile across markets including Germany, Austria and Switzerland.

PayPal provides payment options that offer our ecosystem of merchants the flexibility they demand to transact the way they want, using the channels they choose.

PayPal can offer that flexibility because our own corporate DNA, being a bank and an Internet player, allows us to see beyond mobile to innovate the entire shopping process. Our focus is to change the whole end-to-end shopping experience and that means picking up the customers very early in their shopping experience by empowering them to find product information or deals using their mobile phones. It also means allowing them to choose between different payment methods once they make the decision to purchase.

However, mobile shopping doesn’t necessarily have to take place on a mobile screen. Merchants everywhere, including Germany, are exploring ways to harness the many screens their consumers are exposed to in a routine day — mobile, tablet, ATMs, car navigations systems and smart TVs — to deliver their offers and encourage loyalty.

smartphones to conduct business and make daily decisions. Significantly, people also rely on their mobile phones at every stage of the consumer journey. From researching products, to shopping, to sharing a product review with their social network, people reach for their smartphones. And it’s getting easier and easier to engage with apps considering the inclusion of GPS, accelerometers, cameras and more.

Ironically, smartphones aren’t really smart unto themselves. It’s the mobile apps that have given these devices the information and authority to play a major role in their daily lives. Put another way, it’s all about communication.

The consumers’ love affair with apps has changed the way we think about market-ing. The rise of these third-party apps has created the need for a new kind of conversation, one that allows companies to connect with the people who use their apps and communicate helpful and relevant information. Multiple studies find that the use of mobile apps surpasses use of mobile Web browsers, and analyst research estimates that the total 45 billion app downloads forecast for this

Last year Apple officially took the wraps off Passbook, a new feature of its iOS mobile platform that col-lects coupons and boarding passes into an easy-to-use interface on Apple devices including iPhone and iPod. The app aims to replace every paper ticket or plastic gift card consumers traditionally carry in their wallets, thus ‘mobilizing’ many of the loyalty programs and offers provided by airlines, retailers venues — and more. Apple’s Pass-book is the new mobile marketing imperative: learn how to leverage it to drive sales, boost loyalty, and increase customer engagement.

Smartphones are with us in every situation — every day, all day. They’re the medium that’s with us wherever we go and allows us to record our daily routines, stay up to date, manage our social and business lives, and figure out what to do next and where. As a result, people are increasingly moving away from personal computers and using their

Mobile shopping doesn’t necessarily have to take place on a mobile screen.


How Apple’s Passbook Ushers In The Third Mobile Marketing WaveBy Joe Beninato, General Manager, Digital Wallet, Urban Airship

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year — double the number of downloads in 2011 — will be nearly seven-fold by 2016.

Fortunately, there are several tools that can be used to help businesses build mobile relationships with their consumers. We’ll assume at this point that we all understand SMS and its power to help acquire customers.

The next step in a mobile strategy is push notifications to help drive customer engagement and loyalty. For a bit of clarity, push notifications are messages sent from the app directly to the devices’ ho me screen or to the notification center. Contrary to SMS messages, push notifications are sent over the data network, which means no relationship with the carrier is required. Push messaging allows businesses to send targeted messages that bring users back to the app to help build loyalty, increase customer engagement and most importantly, drive sales.

As more companies fine tune their push messaging campaigns to drive mobile relationships with their customers, we have seen remarkable results that directly impact the bottom line. Effective push

messaging has been shown to double app user retention and quadruple engagement, making push notifications mobile’s primary system of engagement. In 2012, Forrester included push notifications as part of its messaging mandate, recognizing it as a must have communications channel alongside traditional mail, telemarketing, email, social media and SMS.

TURNING MOBILE UPSIDE DOWN: ENTER PASSBOOK

Solutions like Apple Passbook lower the barriers to entry for both businesses and consumers. Businesses can more rapidly and inexpensively have a persistent presence on consumers’ devices through passes that can be dynamically updated on the fly.

Consumers can easily add passes to their phone, received through email, SMS, Web pages and banner ads, marrying their intent to mobile loyalty and reward programs. And for both businesses and consumers the whole process is more streamlined, integrated and convenient. Marketers can more easily close the loop between mobile acquisition and conversion, while

Marketers can more easily close the loop between mobile acquisition and conversion, while consumers have everything they need on one device with time-and location-relevant popups automatically helping them maximize their value.

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.

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consumers have everything they need on one device with time- and location-relevant pop-ups automatically helping them maximize their value.

Think of Passbook as a hybrid connection to your consumers. You extend an offer, sending through email, SMS, banner ads, and once the consumer downloads the pass to their phone, you now have a direct relationship with them on their mobile device and you can now message them directly.

Another powerful opportunity for companies is mobile payments. Many analyst reports predict significant numbers of consumer brands will integrate payment into their branded mobile apps by 2015. We are already seeing customers integrate payment into their mobile wallets. The possibilities are endless with managing the entire customer lifecycle within Passbook and each company will have various uses for Passbook as all companies, regardless of vertical, are interested in increasing brand awareness, increasing customer engagement and driving sales.

Mobile loyalty. The consumer finds value in the app and uses it regularly. This is encouraged through periodic and valuable push messages and additions of passes in the form of coupons, tickets, use of loyalty cards, mobile payments and more.

Mobile lifetime value. The app stays on the consumer’s phone and is used regularly; a competitive lock-in.

So, what is your Passbook strategy?

MOBILE RELATIONSHIP CYCLES

As with any marketing solution where marketers have clear methods for achieving their acquisition, engagement and retention goals, the same can be said for the mobile relationship. It’s a relationship that spans the following phases and stages.

Mobile discovery. The consumer receives a physical promotion in the form of SMS, email, banner ad or a pass. The consumer does a search within the app store or a Web search.

Mobile trial. The consumer downloads the app or adds a pass to Passbook.

Mobile engagement. The consumer receives a message from the app or from the pass.

Mobile conversion. The consumer receives a message about a helpful feature from the app or redeems their pass.

Global mobile traffic (Growing rapidly to 13% of internet traffic)

0%6/1212/116/1112/106/1012/096/09 12/08

5%1% in 12/09

4% in 12/10

13% in 11/12

10%

15%

Figure 1: Based on data from Urban Airship

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Global smartphone vs mobile phone users2012E

Figure 2: Based on data from Morgan Stanely research estimates. KPCB Kleiner Perkins

Note: one user may have multiple devices. Therefore the number of actual smartphone and mobile phones devices in use

is likely higher than the user data shown here.

0

1,000

2,000

3,000

4,000

5000

6,000

Glob

al u

sers

(MM

)

Smartphone Mobile phone

5B mobile phone users

1B smartphone users

Despite tremendous ramp so far smartphone user adoption has huge upside

To stay focused on your core business, it’s imperative to partner with a company who gets mobile relationship management.

You know your business better than anyone else. To stay focused on your core business, it’s imperative to partner with a company who gets mobile relationship management. You need to speak to your customers today and you don’t have time to wait for engineers to build passes and send messages for you. It’s time to take matters into your own hands. Marketers can now build passes in a matter of minutes to reach your most profitable and loyal customers.

You’ve segmented your customers by gender, interests, purchasing habits, location, location history and so much more. Make that information work for you in the most lucrative and growing space today - mobile. In a matter of minutes you can build a pass to be delivered right to someone’s smartphone or tablet with an offer that will stay with them until they use it. You can see 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.

There are no more excuses for not having a mobile strategy today. And not having an app is no longer an excuse for not establishing a relationship with your customers on their personal devices.

As the General Manager, Digital Wallet, Joe Beninato is responsible for the strategy and execution of Urban Airship’s passbook initiatives. Since graduating from MIT with a degree in aerospace engineering, he has worked with more than fifteen startups, serving as founder, employee, investor or advisor. Actively involved in the Silicon Valley startup community, Beninato has served on the board of directors for Presto, When.com, eDaycare (acquired by Arrowsight), and the non-profit Churchill Club.

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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.

PART 8: CLOSInG THOUGHTS: THe ROAD AHeAD

PART 8: CLOSING THOUGHTS: THE ROAD AHEAD

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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? MAYA Design, a leading pervasive computing design firm, and the inspiration behind the new book Trillions: Thriving In The emerging Information, guides us through the wonders and challenges of “the next information revolution.”

Since the rise of mass-market computing—some 25 years ago—we have been climbing a mountain of technological change. Let’s call it PC Peak. As we approach the timber-line, just when we think the summit can’t be too much farther ahead, a much bigger mountain comes into view. Let’s call that one Trillions Mountain. It’s steeper, towering

over the current landscape. And the terrain? The uncharted territory at the intersection of pervasive computing and people.

It’s a fantastic and unprecedented journey that lies ahead, taking us from a state where information was contained in PCs and devices to a space where, thanks in part to the advance of mobile, information isn’t ‘in’ anything. Instead, we will live in the information, in a new collective default state of ‘connectedness.’

The number of computing devices now surpasses the number of humans on the planet — and the momentum shows no signs of stopping as companies build microprocessors into everything from cars and clothes, to pills and packaging. Already industry manufactures more transistors than grains of rice and, in a few more years, the number of microprocessors will climb into the trillions, creating a world literally permeated with computation.

To discuss the outcome — in all its majesty and complexity — is beyond the scope of this article. But there are some hugely

PART 8: CLOSING THOUGHTS: THE ROAD AHEAD

pleasurable end in itself, should be charged with writing the codebase of humanity’s future. Programmers may be the gods of the microworlds they create, but alone they are not suited to lead the next phase of the Information Revolution.

Moreover, preparing to unleash and exploit trillions of opportunities will require us to build an entirely new information architecture, one very different from the Internet we know today. It must be designed from the bottom up to liberate information, allowing it to flow and flourish. And we must work to ensure that control over much of the data isn’t once again concentrated in the hands of a few powerful companies.

CONTEXT ADDS VALUE

Today, we are arguably on the cusp of a fourth revolution: the Age of Trillions. No one disputes the evolving phenomenon itself, though some argue that it is merely a continuation of the PC revolution. We think that pervasive computing represents a profoundly different relationship of people

important developments, largely inevitable, that will impact every single one of us.

For a start, the world of Trillions will encompass much more than the Internet of Things, the vast network that will take shape when embedded sensors gain the ability to communicate, or the vision of machine-to-machine (M2M) communications that companies have worked towards for more than a decade.

In a trillion-node-network computing is turned inside out. Systems morph into eco-systems where simplicity is supreme and interoperability becomes a sacrament. More importantly, our connectedness can breed catastrophe if we fail to be disciplined (yet adventurous), rigorous (yet fluid) and open (yet controlled).

We will also have to abandon the idea that people should become computer literate. That’s precisely backward. The hard truth is that computing should (and must!) become human literate. This means saying good-bye to the notion that geek culture, which thrives on obscurity and sees technology as a

Big(ger) Data Pushes The BoundariesBy Mickey McManus, President and CEO, Maya

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to information, and that eventually it will be understood as a distinct epoch of human history. As an intrinsically networked phenomenon, it will also continue the historical trend of acceleration. A decade in the era of pervasive computing will bring unimaginable changes.

The impact on all industries will be profound. But the real excitement starts when these microprocessors join the conversation, communicating with themselves and with us.

In the case of retail, for example, the explosion of sensors points the way to a hyper-relevant future where companies can tap into Big Data to understand the in-the-moment context of the consumer to deliver real-time, context-aware offers.

In fact, at MAYA we are working on this right now, developing prototype packaging that can ‘sense’ when consumers — people who likely appreciate the product or intend to purchase the product — are nearby.

Triggered by the person’s presence the package could light up to get their attention or even suggest the consumer buy another

after he didn’t pay his suppliers or staff. Over time, and as the credit rating fell, he simply closed down the business, fired all the employees and disappeared. In reality he changed his address to the address next door, hired everyone back and got back to business-as-usual.

Framing the information in a Trillions mindset, introduces new and radical transparency. Banks, businesses, even brands, are naked when seen through the Trillions lens, an outcome that has the potential to change the rules — dramatically.

For example, in the heyday of advertising big business was made by convincing consumers that a story about a particular brand was true. After all, the company behind the brand (and its activities) was essentially hidden within a black box. While storytelling will continue to be a powerful means of inspiring and setting the context for a brand, false or misleading storytelling will be the emperor who has no clothes. The accelerated feedback loop and radical transparency of Trillions will drive a blending of marketing and product development so that customers’ true stories and passions about a brand will take center stage.

product to make the meal complete. In this scenario tortilla chips could suggest a spicy dip as an accompaniment, and the social network of products, enabled by sensors everywhere that infer what we want and need, could ‘manage’ that purchase process all the way down to the real-time delivery of a relevant discount coupon to the customer’s mobile device and chalking up new loyalty points to the supermarket club card.

TRANSPARENCY AND TRANSFORMATION

Banking and finance will also be transformed by pervasive computing. We have worked with a commercial credit ratings agency to enrich its stockpile of business and credit data with unique identifiers for the companies, executives and even locations associated with each organization. This has allowed us to piece together formerly unrelated records about businesses that uncover indicators of fraud and deceit that would have otherwise been completely hidden.

One example that stands out is a businessman who made a habit out of opening companies that started with a good credit rating and then plummeted

The explosion of sensors points the way to a hyper-relevant future where companies can tap into Big Data to understand the in-the-moment context of the consumer to deliver real-time, context-aware offers.

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Add trillions of sensors to the mix and Big Data gets even bigger, allowing a new breed of companies to get in on the action. Trillions is a very, very big number. 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.

Consider what could happen if you harvested and shared all the information your current products could capture or ‘know’ about their surroundings and use over time. For example, the vibration sensor in my garage door opener can share what it learns in real-time with the tens of millions of other door openers across the country to detect earthquakes (not just moving garage doors). Additionally, optical sensors on those same garage door openers can capture information about the degradation of paint on car surfaces that may be invaluable to paint manufacturers.

BIG DATA, BIG DEAL

On the face of it, you could argue that embedding trillions of sensors into devices (from watches to washing machines) and consumer touch points (from in-store displays to outdoor signage) lays the groundwork for Big Data and even bigger opportunities for companies that collect, collate, distribute and monetize what futurist, author and consultant Alan Moore calls the “black gold of the 21st century.”

Little wonder that Fortune magazine has dubbed Big Data ‘the next big thing’. 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 create new products and services, and even spawn entirely new businesses. There are already significant— and competitive — advantages to leveraging Big Data.

The value of the information you collect, the needs you discover, the patterns that emerge, and the behaviors that you can foster is inestimable. After all, anything multiplied by a trillion is an interesting number. But the biggest benefit may be to your customers, people that will have come to expect, even demand, relevance in marketing, communications, applications, services — everything — because technology and data have come together to make it all possible.

Mickey McManus is president, CEO, and principal of MAYA Design, a leading technology design and innovation lab. In 2005, McManus spearheaded the launch of MAYA’s Pervasive Computing practice to help companies kick-start innovation around business challenges in a vastly connected world. To explore the emerging value at the intersection of design, technology, and business, McManus co-authored Trillions: Thriving in the Emerging Information Ecology (Wiley 2012). His work has been published in Bloomberg Businessweek, Fortune, Fast Company, the Wall Street Journal, and Harvard Business Review.

DATA EXHAUST

Today, there is a lot of what I like to call ‘exhaust data’ that companies do not yet capture or monetize, virtually throwing it away. In the Trillions world there will be no waste. Instead, we’ll have a kind of informa-tion carbon cycle that will close the loop on data the way that the carbon cycle in nature recycles the building blocks of life. Nothing goes to waste, and if you don’t move fast enough you become food for something else.

It’s all about understanding the value of your information and planning for an economy built on t-commerce (trillions commerce). This approach to Big Data can fuel big(ger) growth for your business. The importance of this change cannot be overstated, which is why we strongly advise companies to explore ways to foster relationships (even with strange bedfellows) and make sure that their products are part of the information flow. In the Age of Trillions every product becomes an accessory to every other product or service.

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.

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on serving the mass market segment, which consists of pensioners, micro/small business owners and productive poor through more than 1,800 outlets across Indonesia. www.btpn.com

Celcom Axiata

Celcom is Malaysia’s first and foremost mobile telecommunications provider with over 12.7 million customers. Currently the largest mobile broadband and corporate services provider, Celcom is now moving towards integrated multi-access and multimedia services, in line with evolving technologies and consumer behavior in Malaysia. Celcom is part of the Axiata Group of Companies, one of the world’s largest telecommunications companies, with more than 180 million customers across 10 Asian markets. www.celcom.com.my

CIMB

CIMB Niaga was established as Bank Niaga in 1955. It offers a comprehensive suite of banking products and services, through an expanding delivery channel network of 974 offices across Indonesia that includes 590 branches, 330 Mikro Laju units, and 54 cash/payment points. CIMB Group, Malaysia’s second largest financial services provider and one of ASEAN’s leading universal banking groups, holds a

AbacusConsulting

Through a combination of latest business methodologies, state of the art technological tools, and world class services AbacusConsulting promises a deep scale, industry focused, and technology driven intent. The target is to help the clients realize their dream of being the market leader. AbacusConsulting also has a strategic focus on developing and delivering mobile commerce solutions to financial institutions and telecom sectors. www.abacus-global.com

Accenture

Accenture is a global management consulting, technology services and outsourcing company, with approximately 259,000 people serving clients in more than 120 countries. Accenture Mobility helps organizations embrace business to employee (B2E), business to consumer (B2C), business to business (B2B) and machine to machine (M2M) business opportunities. www.accenture.com

BTPN

Founded in 1958, PT Bank Tabungan Pensiunan Nasional Tbk. (‘BTPN’) is a leading mid-size and publicly listed commercial Bank in Indonesia focusing

Tennessee and 19 FTN Financial Group offices in the U.S. and abroad. First Tennessee has the leading combined market deposit share in the counties where it does business and one of the highest customer retention rates of any bank in the country. www.fhnc.com

GSMA LATAM

The GSMA represents the interests of mobile operators worldwide. Spanning more than 220 countries, the GSMA unites nearly 800 of the world’s mobile operators with more than 230 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers and Internet companies, as well as organizations in industry sectors such as financial services, healthcare, media, transport and utilities. The GSMA also produces industry-leading events such as the Mobile World Congress and Mobile Asia Expo. www.gsma.com

HBL

HBL was the first commercial bank to be established in Pakistan in 1947. Over the years, HBL has grown its branch network and become the largest private sector bank with over 1,500 branches and 830 ATMs

97.9 percent stake in CIMB Niaga. www.cimbniaga.com

Cisco

Cisco (NASDAQ: CSCO) is the worldwide leader in IT that helps companies seize the opportunities of tomorrow by proving that amazing things can happen when you connect the previously unconnected. www.cisco.com/go/cmx

DBBL

Dutch-Bangla Bank Limited (DBBL) started operation is Bangladesh's first joint venture bank. From the onset, the focus of the bank has been financing high-growth manufactur-ing industries in Bangladesh. DBBL's other focus is Corporate Social Responsibility (CSR). Due to its investment in this sector, DBBL has become one of the largest donors and the largest bank donor in Bangladesh. The bank has won numerous international awards because of its unique approach as a socially conscious bank. www.dutchbanglabank.com

First Tennessee Bank

The 4,500 employees of First Horizon National Corp. (NYSE:FHN) provide financial services through more than 170 First Tennessee Bank locations in and around

APPENDIX

Company Descriptions

http://www.btpn.com

http://www.celcom.com.my

http://www.abacus-global.com

http://www.accenture.com

http://www.fhnc.com

http://www.gsma.com

http://www.cimbniaga.com

http://www.cisco.com/go/cmx%20

http://www.dutchbanglabank.com

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trends such as social, cloud and big data technologies. Lopez Research combines survey-based research and predictive analysis to gain insight into coming trends. Its clients include start-ups, software vendors, networking vendors, enterprise IT leaders as well as telecom providers. www.lopezresearch.com

MasterCard

MasterCard (NYSE: MA) is a technology company in the global payments industry. It operates the world’s fastest payments processing network, connecting consumers, financial institutions, merchants, govern-ments and businesses in more than 210 countries and territories. MasterCard’s products and solutions make everyday commerce activities – such as shopping, traveling, running a business and managing finances – easier, more secure and more efficient for everyone. www.mastercard.com

Maya

MAYA Design Inc. is a technology design firm and innovation lab founded in Pittsburgh, Pennsylvania, to help companies design more usable and useful technology products, as well as information-rich services and environments. It has established a pervasive

across the country and a customer base exceeding five million relationships. With a presence in 25 countries, subsidiaries in Hong Kong and the U.K., affiliates in Nepal, Nigeria, Kenya and Kyrgyztan and representative offices in Iran and China, HBL is also the largest domestic multinational. www.habibbank.com

IDC Financial Insights

IDC Financial Insights assists financial service businesses and IT leaders, as well as the suppliers who serve them, in making more effective technology decisions by providing accurate, timely, and insightful fact-based research and consulting services. Staffed by senior analysts with decades of industry experience, our global research analyzes and advises on business and technology issues facing the banking, i nsurance, and securities and investments industries. www.idc-fi.com

Lopez Research

Lopez Research LLC, founded in 2008, is a market research and strategy consulting firm that specializes in IT and communica-tions technologies. The company’s mission is to understand how mobile transforms business by integrating with other market

MyClear

Malaysian Electronic Clearing Corporation Sdn. Bhd. (MyClear) is a wholly-owned subsidiary of Bank Negara Malaysia. Incorporated in October 2008, its main objective is to provide an efficient and reliable infrastructure for e-payments, interbank funds transfer, settlement and securities depository. For payment services, MyClear provides real-time high value interbank funds transfers and operates the national check clearing system. For retail services, MyClear provides the e-Debit, Interbank GIRO, Financial Process Exchange (FPX), Direct Debit and MyMobile services. www.myclear.org.my

Ooredoo (formerly QTel)

Ooredoo (Qatar Telecom) provides a full range of telecommunications services in Qatar and across its presence in 17 countries. Ooredoo is part of the Qtel Group, a leading international communications company, with a significant presence in the MENA region and Southeast Asia, and a consolidated customer base of 83.7 million as of June 2012. Its companies include Indosat, Asiacell, Wataniya, Nawras, Nedjma and Tunisiana. www.ooredoo.qa

computing practice to help companies design smart connected products, environments, and services. The name is based on an acronym coined by the industrial designer Raymond Loewy, and stands for Most Advanced Yet Acceptable. The company's tag line is "taming complexity." www.maya.com

MMA

The Mobile Marketing Association (MMA) is the premier global non-profit trade association established to lead the growth of mobile marketing and its associated technologies. The MMA is an action oriented organization designed to clear obstacles to market development, establish mobile media guidelines and best practices for sustainable growth, and evangelize the use of the mobile channel. The more than 700 member companies, representing nearly fifty countries around the globe, include all members of the mobile media ecosystem. www.mmaglobal.com

Mobey Forum

Mobey Forum is a global, bank-driven business association working to accelerate the evolution and adoption of MFS. It develops white papers which offer advice and guidance to banks and other stakeholders within the MFS ecosystem. www.mobeyforum.org

http://www.lopezresearch.com

http://www.mastercard.com

http://www.habibbank.com

http://www.idc-fi.com

http://www.myclear.org.my

http://www.ooredoo.qa

http://www.maya.com

http://www.mmaglobal.com

http://www.mobeyforum.org

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its affiliation with RBS allows it to extend its reach to more than 38 countries, providing local expertise and in-market operations on a global basis. www.citizensbank.com

RSR Research

Retail Systems Research (RSR) is the only research company run by retailers for the retail industry. RSR provides insight into business and technology challenges facing the retail industry ecosystem, and thought leadership and advice on navigating these challenges for specific companies and the industry at large. www.retailsystemsresearch.com

SAP

As market leader in enterprise application software, SAP helps companies of all sizes and industries run better. From back office to boardroom, warehouse to storefront, desktop to mobile device – SAP empowers people and organizations to work together more efficiently and use business insight more effectively to stay ahead of the competition. SAP applications and services enable more than 197,000 customers to operate profitably, adapt continuously, and grow sustainably. www.sap.com

PayPal

With more than 123 million active accounts in 190 markets and 25 currencies around the world, PayPal enables global commerce. PayPal provides a fast, safe way to pay and get paid online, via mobile devices and in store. PayPal is an eBay (NASDAQ:EBAY) company headquartered in San Jose, Calif. with international headquarters in Singapore. www.paypal.com

Portio Research

Portio Research Ltd is an independent research company that provides high- quality reports on the mobile and wireless industry, and offers a wide range of custom-ised research services. Its studies specialize in the products and services connecting mobile customers, subscribers and network operators, giving a clear picture of the market, competitors and customers, industry trends and futures to facilitate decision-making and strategy. www.portioresearch.com

RBS Citizens

As part of the Royal Bank of Scotland Group (RBS), RBS Citizens Financial Group is one of the world's leading commercial banking institutions. RBS Citizens has non-branch offices in more than 30 states in the U.S. and

Urban Airship

Urban Airship enables brands to build relationships with their customers through services that streamline delivering highly targeted, cross-platform mobile push messages and Apple Passbook passes. Billions of push messages and tens of thousands of passes are delivered monthly, sparking exceptional consumer experiences, driving app engagement and increasing customer loyalty and lifetime value for leading brands such as CBS Interactive, ESPN, Groupon, Shopkick, Walgreens, Warner Bros. and Waze. www.urbanairship.com

yankee

Yankee Group, a division of The 451 Group, is the preeminent research and advisory firm equipping enterprises to grow revenues and profit in the mobile world. Yankee Group forecasts that the mobile revolution is a $3 trillion market opportunity and dramatic changes brought on by this revolution will play a larger role in the lives of consumers, workers and enterprise decision-makers. In response, Yankee has made the mobile revolution its complete focus as a research and advisory services provider. www.yankeegroup.com

Shift Thought

Shift Thought specializes in knowledge relating to Digital Money, monitoring market developments in this rapidly growing industry across 32 key services and 200+ country markets. Shift Thought has developed the Digital Money SAGE technology to analyze and share knowledge across multiple perspectives including digital money market opportunities, initiatives, technologies, players and regulatory environments. The firm provides regional reports, country entry strategy and advice on business development, strategic partnerships, market development and product development. www.shiftthought.co.uk

STM

STM is La Société de transport de Montréal, offering public transit to more than 1.3 million customers everyday on the island of Montreal. It provides subway services at 68 stations and with 228 bus lines, and has won best public transit company in North America in 2010. www.stm.info

http://www.citizensbank.com

http://www.retailsystemsresearch.com

http://www.sap.com

http://www.paypal.com

http://www.portioresearch.com

http://www.urbanairship.com

http://www.yankeegroup.com

http://www.shiftthought.co.uk

http://www.stm.info

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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

Acknowledgements

© 2013 SAP AG or an SAP affiliate company. All rights reserved.

no part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.

Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.

national product specifications may vary.

These materials are provided by SAP AG and its affiliated companies (“SAP Group”) for informational purposes only, without representation or warranty of any kind, and SAP Group shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. nothing herein should be construed as constituting an additional warranty.

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries. Please see http://www.sap.com/corporate-en/legal/copyright/index.epx#trademark for additional trademark information and notices.

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