What are incumbents such as American Express or Chase doing around the upcoming revolution on mobile payments, commerce and banking? New players – such as Google, Isis, BankSimple and BankNMove – are grabbing the headlines but that doesn’t mean that the established players are sitting still. They are also moving, albeit at a slower pace.
To have the full picture of where this sector is going, it is worthwhile reviewing the mobile strategy of some major players in the credit card and banking space. With this purpose, we will publish a number of blogs covering the main activities and plans of the largest and best-known names in this industry.
The first two blogs on this topic will focus on American Express, a late-comer to the game that now seems to be moving faster than its competitors. Today we will discuss their ‘Acquisitions and Investments’ with the next post focusing on their ‘Partnerships’
Acquisitions and Investments:
1) Revolution Money – American Express bought Revolution Money located in St. Petersburg for $300 million in early 2010. This acquisition was the foundation of AmEx Serve, a digital payment and commerce platform. Essentially, it is an electronic wallet that can be used both online and in bricks-and-mortar stores that accept AmEx.
The idea is that once you sign up for a Serve account, you can link it to any bank account, debit or credit card to fund it. You can then add money, send and receive money to and from anybody that has an e-mail address (and that has signed up with Serve) and manage sub-accounts – for example, your kid’s account that you can easily fund and control.
You can also pay offline – or online – with an American Express Serve pre-paid, reloadable card that is accepted anywhere AmEx is accepted – including ATMs. This is an extremely friendly pre-paid card for the consumer with many free services, such as: Person-to-person money transfers, transfers to and from sub-accounts, purchasing online and in stores and funding your account from a bank account or debit card.
Why would American Express launch a pre-paid service? According to Dan Schulman, AmEx Group President, Enterprise Growth: ‘This card will allow us to focus on serving new demographics’. And this is indeed true: A new customer segment can be added to the mix with little to no added risk. And the trend seems to be growing fast since the amount loaded on prepaid cards will reach $118.5 billion in 2012, up from $1.8 billion in 2006.
But is there any other reason for this new focus? And why precisely now? Given that pre-paid cards are outside the remit of new regulations around fee limits on debit cards, this business could be extremely profitable for the banks since merchants could be paying much higher transaction fees.
As it stands now, the AmEx prepaid card, which drives much of its demand, is a great deal for the consumer and for AmEx, although maybe not so much for the merchant.
2) Payfone Inc – Two weeks after launching Serve, AmEx participated in Payfone’s third round of funding, which raised $19 million from AmEx, Verizon Investments, Roger Communications, Opus Capital, BlackBerry Partners fund and RRE Ventures. As part of the investment, AmEx will integrate Payfone’s mobile payments service into Serve.
Payfone allows you to send charges directly to your cell phone bill by introducing your phone number. No text messages and no pins involved. It is meant to be a very convenient and safer way to do mobile payments.
By checking with the carrier upfront, Payfone is supposed to be able to determine if a consumer has the funds or the credit worthiness to make a purchase, therefore dramatically reducing fraud and identity theft.
3) Sometrics – Just last month, in September, AmEx acquired Sometrics, a virtual currency monetization platform, for $30 million. Virtual Currency has become very big on video games, where users will use their credits to pay for anything from cloths to access to the next game level. American Express will continue the operation of Sometrics’ current business and will work with Sometrics will allow Serve customers to purchase virtual currencies via the platform. Over time, AmEx plans to integrate Serve into the payment path of the games that Sometrics supports.
Sometrics’ in-game payments platform basically powers virtual currency transactions and payments for game publishers while serving location and demographic targeted offers. The company currently supports dozens of payment options (including mobile carrier infrastructure and credit card support) and hundreds of brand engagement ads, reaching a total global audience of more than 225 million consumers in more than 200 countries.
These are AmEx's main acquisitions around mobile commerce and mobile banking. As mentioned above, next week we will discuss AmEx's partnerships and how they are leveraging these acquisitions to better serve customers.
The first thing that you notice on using Facebook Video Calling is its simplicity… This is not an accident. Facebook has designed Video Calling to make it as easy as posting a message. The designers have gone as far as to eliminate the mute or pause-video button, along with other features. Why would Facebook choose not to allow those options?
The design of video calling is the brain-child of Rob Maison, a recent graduate from England that arrived at Facebook last October. He worked closely with Zuckerberg (CEO) and Cox (VP of Product Design) on this product and agreed to make the experience as simple and uncluttered as possible. It is this simplicity that they expect will make Facebook extremely popular with the large untapped market of potential users who have no prior experience with video conferencing and who may even feel overwhelmed by it. Simplicity, in this case, means getting the job done, no bells or whistles!
Meanwhile, Google+ is downplaying simplicity and betting that their Hangouts, with all their features and options, will resonate better with their users whom, it would seem, they are assuming will be savvy enough to use and enjoy them. Although Hangouts are easy to use and intuitive, they were born from a different design philosophy.
Yesterday Facebook came out with its 'awesome product announcement'. Before the announcement, there were a number of articles and posts out there making educated guesses on the likely focus of the presentation. After it, well, I guess the jury is still out...
The new features announced are:
· Group Chat
· New Design
· Video Calling
To be honest, I was a bit disappointed. Group chat and video-calling are both welcomed additions, certainly moving in the right direction but, I was hoping for Video Calling via Skype with up to 5 participants and group chat, both available on mobile devices. My view is that users want to interact with groups – either through voice or messaging – while on the go. With its 750 million users, this would have been a true quantum leap that would have put FB well ahead of G+.
I am already an avid user of FB, Skype and several messaging systems (cannot find a single one that all my friends use - FB would solve that!) but always on the go. I hardly ever turn on my personal laptop (a Mac) but I always have my iPhone, iPad and iPod close to hand. Basically, I will not be using FB in any way differently from how I was using it last week, which is the disappointing part. I am sure that this will come and I understand that this is an incremental process - this really is about building a platform not about a feature or product – but they can’t let G+ get too far ahead in its feature set.
FB’s next big announcement should be 'Project Spartan', expected to be unveiled in the second half of this month. This project will establish a new mobile web app platform that could help the social networking giant gain independence from Apple's App Store. While downplayed by FB, speculation is ripe as to what the specifics of the announcement will be and it’s purpose.
· Gigaom thinks that mobile web-apps still need to prove themselves as a viable alternative to native software.
· TechLand and Gizmodo believe that this is indeed the right path pointing to the success of the Financial Times building their app entirely over HTML5 and the benefits of by-passing Apple altogether.
My view is that FB’s current position, with its very large user base, gives it enough time to play around and figure things out through trial-and-error. It is a matter of how streamlined the process will be...
Happy Social Media Day! Although this is only the Second Annual Social Media Day, it is now a big celebration in many cities around the US, Europe and the World, including San Francisco, NYC, London, Paris, Tokyo... Mashable has been a major promoter of this celebration around the globe. Their cooperation with NYC deserves special mention: Mashable jointly announced with Mayor Michael Bloomberg and Chief Digital Officer Rachel Sterne the proclamation of June 30th as social Media Day.
It is also today that Twitter announces it has now surpassed 200 million tweets per day. This is very respectable number in itself but it is even more impressive if we take into account that it surpassed 50 million tweets per day less than a year-and-a-half ago and that, only two years ago, users just sent 10 million tweets per day. This is the kind of growth that explains the relevance of Social Media Day.
In addition, also today is the day women in Saudi Arabia have decided to remind us of their plea to be allowed to drive (Saudi Arabia is the only country that does not allow women drivers). They have done this by launching ads and messages via Facebook requesting Subaru to withdraw its products from the Saudi market. Subaru heavily targets women buyers across the world by, among other things, sponsoring women-centric events, which seems at odds with selling cars in the only country where women are not allowed to drive. It is Social Media, particularly Facebook but also other channels, that is helping these women publicize their struggle and, hopefully achieve their goal!
And, finally, today the White House announces Obama's first Town Hall to be held over Twitter on July 6th. The president will answer questions about the economy and jobs during a live webcast. Questions can be submitted via the askobama.twitter.com website or by using the hashtag #AskObama. And it is not only Obama who is using Twitter for this purpose. For instance, Republican presidential candidates also plan on debating via Twitter on July 20th, using 140TownHall.com as platform.
Regardless what you do or where you are, you can hardly escape social media's embrace. Enjoy the celebrations!
Despite of how inconvenient, cumbersome and archaic our banking system may be, many of us might find it difficult to move it away from the long-established and respectable institutions that we 'trust' today - even if we have seen how easily some of those institutions could crumble and collapse.
However there are a number of new startups that are trying to entice users to do exactly that. A few of them, are coming up with truly innovative approaches that may very well, capture the hearts and minds of many people and give users enough comfort and transparency to entrust these start-ups with their money.
Three such examples, among many others, are:
1) Think Finance with their Elastic web-based bank account replacement that targets, as their CEO, Ken Rees puts it: '... the underbanked and unbanked - the estimated 60 million people who are not well served by traditional banks'
2) Square, who is targeting the approximately 30 million small business owners in the US that don't have a merchant account or credit card terminal. With only 6 million businesses in the US accepting credit card payments, there is a large untapped market they are ready to serve.
3) BankSimple, a start-up still in stealth mode who wants to offer 'banking on-line' as opposed to the traditional 'on-line banking'.
BankSimple has not yet launched but it is already making quite a splash with over 30,000 people having signed up to be part of the beta launch and over 50,000 ready to open accounts with them as soon as the business is fully up-and-running.
What exactly is BankSimple?
1) BankSimple is not a bank. It will partner with smaller banks who will hold the federally insured accounts.
2) What BankSimple will do is provide an on-line interface that allows users to combine all their credit, savings, checking and termed accounts into one banking card.
3) They will help you manage your money with their predictive money management model (part of their secret sauce). While users only need to concern themselves with a single account, there are actually checking, savings and credit accounts tied to that one login. Those will function behind-the-scenes with Banksimple automatically managing funds and transferring money between the accounts to ensure that the most money is yielding the most interest at any given time.
4) Because their focus is mobile design and usability (the first thing the company did was design its mobile interface), it allows you to do everything with just a few thumbs movements while on the move. For example, it will provide real-time updates on spending via the web and through Android and iOS apps; they will help combat fraud by providing instant alert on purchases and by checking if a user's location matches the location of the transaction to monitor for fraud; they will allow you to deposit a check by taking its picture with your mobile device and to make quick and easy transfers to your Facebook and Twitter friends. And they promise Zappo's style customer service so, if you run into any problems, there will be a expert at the other end of the line to help you out.
5) Finally they promise no fees. Their full revenue is based on taking a percentage of the interchange fees (these are fees that businesses pay to credit card companies to process transactions) and net interest margins.
This sounds like true customer-centric business and operational models. Obviously, we still need to wait for it to launch to see if they do deliver on all fronts but, at the very least, I would say they have the right idea. Perhaps one question mark is around their banking partners. They plan to partner with about 15 institutions. These will have to be smaller banks with no retail presence (similar to the ING Direct model) and with no aspirations of building brand awareness since everything will be branded BankSimple. These banks will need to integrate their systems and products with and cede full control to BankSimple. What banks will they have as partners? Will they be robust even if small and not well-known? For sure they will be FDIC insured but nobody wants to test federal insurance... I trust they will overcome this hurdle - in fact, my understanding is that they already have these partnerships in place - and be able to offer to us the great banking experience that we all deserve and very few of us get!
We all understand that banks could be doing all this themselves but, with their focus on ROI and the use of proven technologies and methodologies, have chosen not to do it. Will they wake up in time to avoid damaging customer migration?