The Mobile Moments Of Opportunity (Or Why Mobile Wallets Haven’t Caught On)

The mobile wallet space continues to evolve. Maybe devolve is the better word.

Square’s Wallet is off the market (if you consider the Apple Store to be the market, that is). Visa’s is off the market (if you consider the US to be the market, that is). Lifelock’s mobile wallet is off the market (regardless of how you define the market).

On the other hand, Amazon just launched its mobile wallet (if you consider a “beta” version to be a product launch, and if you consider what they did launch to be a “mobile wallet”).

Initial reviews have not been particularly complimentary. TechCrunch called it a “quiet debut.” @heathervescent called her interaction with the wallet “BO-RING.” @mdudas tweeted “Amazon released a joke of a mobile wallet product today.” Mike’s beef with the product (expressed in a public tweet) is that “It only stores digital versions of loyalty & gift cards, there’s zero payment functionality.”

A comment from a Bank Innovation article caught my eye:

“The app does not (yet) have the ability to store credit and debit cards, which seems to be integral for a mobile wallet.”

That’s the essence of the issue here. What is a mobile wallet, and what, exactly is “integral”?


Regardless of how you define mobile wallets, or what is or isn’t integral, some of the consumer data regarding the concept is perplexing. According to a Media Post article:

“While most consumers (78%) are aware of digital wallets, only about a third (32%) has ever used them, according to the 2014 Digital Wallet Usage Study by Thrive Analytics.”

Let’s do some math here. About two-thirds of mobile phone subscribers (who comprise about 85% of consumers) have a smartphone. That means about 56% of all consumers have a smartphone. If one-third of all consumers have used a digital wallet, then more than half (~57%) of all smartphone owners have used a mobile wallet, if the Thrive study is correct.

But I don’t think it is. That percentage seems way too high. Maybe the Thrive study’s numbers refer to percentages of smartphone owners, not all consumers (note to Media Post: That’s kind of an important distinction).

The Thrive study also found that, among mobile wallet users (however many of them there are), just one-third used a mobile wallet at least on a weekly basis, and just 7% used it daily.

So, regardless of how many mobile wallet users there really are (and I would argue there really aren’t very many)–and regardless of what is and isn’t “integral” to the wallet–digital wallets have hardly become an integral part of consumers’ daily lives. Why not?


Data points of one are dangerous, but when I ask my wife–a baby boomer who manages the family’s finances–about her interest in mobile wallets, her response is: “What’s a mobile wallet? What I really need is something to keep track of all the damned gift card and prepaid cards we have. I hate carrying those things around, and when I do, I have no idea how much money is on them.”

Mike Dudas’ critique of Amazon’s mobile wallet — “there’s zero payment functionality” — represents a data point of one, as well.

Neither Mike’s nor my wife’s opinions of mobile wallets are right or wrong. They simply point to the varied needs of (potentially) different segments of consumers. The question is: Which segment is bigger, and will drive the market for digital wallets?


My take: Making the payment is not the part of the customer experience that consumers want a digital wallet (whatever that might be) to improve. The mobile moments of opportunity–to improve the customer experience, to add new levels of convenience to the customer experience, to help consumers make better/smarter decisions about how they manage and spend their money–occur before and after the payment.

That is, the mobile moments of opportunity come during consumers’ decision-making process, and in the tracking and analysis of their spending post-payment.

20140723 M2O2In the course of the shopping or purchasing experience, before the actual payment transaction, consumers want to know:

1) Is this the right product for me? That’s why 40% of smartphone owners scan labels and UPC codes in the store while shopping (source: Aite Group).

2) Is this the best price I can get? That’s why about a third of smartphones store coupons on their mobile device (source: Aite Group).

3) How can/should I pay for this? Would putting this on my Amex credit card be better than paying for it with my debit card or some other credit card I have? Do I have rewards points I can apply to the purchase?

After the payment transaction, consumers want to know:

1) How much did I spend on a particular category of product so far this month? Haha, just kidding. Nobody really cares about that. OK, seriously, just kidding about kidding. The history of PFM adoption would suggest that not a lot of people care about this question. I would argue, however, that the low adoption is more a function of the shortcomings of online PFM than a function of low interest on the part of consumers. As mobile PFM evolves, we’ll see more interest in this question.

2) Where are all those receipts for all those products I purchased? That’s why about a quarter of smartphone owners scan paper receipts into their smartphone (source: Aite Group). (I always feel bad for those consumers who do that who shop at CVS–it must take them an hour to scan the receipt from just one visit).


A wallet is nothing more than a receptacle to hold things. In modern society, a wallet has evolved to hold things we make payments with. Most people, however, keep other things–photos, drivers license, pictures of their kids–in their wallets, as well. So a wallet doesn’t have to be just for enabling payments.

Shouldn’t that logic apply to digital wallets, as well?

To overgeneralize, there are three factors that influence consumers behavioral changes: Faster, cheaper, better.

Using a mobile wallet to simply make a payment might be faster, but I doubt many consumers see a big difference. And cheaper and better don’t factor in. 

Cheaper and better come from functionality that surround the payment.


Bottom line: In the long run, the concept of a digital wallet won’t last. The smartphone is the mobile wallet. The smartphone is the receptacle that holds all the functionality–pictures, personal identification, payment mechanisms–that today’s (non-digital, I probably shouldn’t call them non-mobile, because they are mobile) wallets provide.

The mobile moments of opportunity come from providing capabilities that go beyond simply digitizing the existing set of capabilities.


Banks/Credit Unions: The Anti-Firefly?

Here are some things I’ve learned from recent consumer research I’ve conducted (nothing earth-shattering, but at least there’s data to back up the assertions):

  • Gen Yers have an impulse purchase problem. Six in 10 “young Gen Yers” (21-26 yo), and have of”old Gen Yers” (27-34 yo) say they don’t save more money than they do because they make too many impulse purchases. Just a quarter of Boomers say impulse purchases are a problem. It’s not inherent to members of the generation–it’s something that all young people go through. Boomers had that problem when we in our 20s. We grew out of it, fingers crossed, Gen Yers will, too.
  • Gen Yers want help managing their financial lives. My own data shows that Gen Yers are more engaged in the management of their financial lives, and more likely than older consumers to turn to their banks and credit unions for guidance and assistance in managing their financial lives. To further hammer you over the head with this point, I’ll also cite Novantas’ research (included in a Financial Brand article from Rob Rubin) which showed that “nearly half of all Gen Y consumers looking to switch banks want their next institution to offer online PFM tools.”
  • Consumers think that banks and credit unions can do a better job of providing mobile shopping capabilities than providers like Apple and Google. When asked who would do a good job of providing mobile shopping capabilities, consumers (not too surprisingly) thought their bank or credit union would do a better job on data security and privacy than Amazon, Apple, or Google. They thought Amazon would do the best job of providing relevant offers and providing the best advice, but still thought FIs would do a better job than Apple or Google.


So what? Well, as Venture Beat writes:

“[T]he Amazon Fire Phone is a fascinating machine for connecting you with stuff to buy. It’s probably also the biggest single invasion of your privacy for commercial purposes ever. Firefly is a seriously impressive combination of hardware, software, and massive cloud chops that delivers an Apple-like simplicity to identify objects like books, movies, games, and more, just by pointing your Fire Phone’s camera at them and tapping the Firefly button. By storing all the photos you’ll ever take with Firefly, along with GPS location data, ambient audio, and more metadata than you can shake a stick at in Amazon Web Services, Amazon will get unprecedented insight into who you are, what you own, where you go, what you do, who’s important in your life, what you like, and, probably, what you might be most likely to buy.”

In other words, if you have an impulse purchase problem, the Amazon Fire Phone is not the phone for you.

In more other words, if you need help managing your financial life, don’t think that Amazon–through it’s amazing ability to gather, store, analyze, and deploy data–is going to help you anytime soon.


The Fire Phone presents a threat and two opportunities to banks.

The first opportunity is the easiest: Sit back and do nothing. The Fire Phone will get people to spend more money, and if they use a bank’s debit or credit card for those purchases, cha-ching! More interchange! Hell, the extra spending behavior might drive people to spend more than they have, and run balances on their credit card and have to pay out more in interest and late fees. Cha-ching again!

But after some time, the CFPB will notice this and take steps to reduce the amount of money flowing to the banks. The fact that consumers’ bad spending behavior is not the banks’ fault is of no concern to the CFPB.

So maybe this first opportunity isn’t that great of an opportunity after all.


The threat here isn’t immediate, but is certainly more dire.

If the Fire Phone achieves any meaningful level of market penetration, it might be very easy for Amazon to go their smartphone customers and say “Hey, do you want free checking? No, really–we really mean free checking!”–and then get many of those customers to deposit their paychecks directly into the First National Bank of Amazon. Amazon doesn’t need to generate monthly fees on those accounts–they’ll be making a ton off the purchases. And access to the paycheck information becomes just one feather in Amazon’s data cap.

So wait, you say, why is Amazon a threat, but not Google or Apple?

Because Apple’s Achilles heel is its inability to manage and use data (it’s a technology company, not a Big Data company).

And Google, although much better in its use of data, has advertising in its DNA. It’s not an eCommerce company. Actually, forget the “e” — it’s not a commerce company, with strong capabilities in processing large amounts of transactions. Ever call Google for customer support? Right.

Amazon is a commerce company. Amazon is a platform. Amazon could challenge the banks. Apple? Google? No. A telco? Ha! Never. Those telcos are the most incompetent companies on the planet.


This brings us to the second opportunity I mentioned that I think banks and credit unions have: To become the Anti-Firefly. To help consumers not spend more money. To provide incentives (gamification?) to save more. To provide alerts before purchases. To provide advice on which payment methods to use when making a purchase.

The problem here–and believe me, I understand this very well–is the business model problem. Today, banks make money when people spend more. Credit unions do, too, by the way. An overwhelming majority of credit union executives I recently surveyed said that credit and debit card interchange is a very important part of their revenue growth plans for 2014.


But I think there’s a path to get there: Creating a new product structure by which a customer pays for the PFM tools that help them manage their finances–and where those fees are not in addition to other monthly or account fees.

It would also mean that existing customers would not have access to PFM tools. This might seem like heresy, but let’s look reality in the face for a change, shall we?

Nobody uses the PFM tools integrated into the online banking platform.

OK, that was a bit of an overstatement. But the reality is that it’s nowhere near a majority of even the online banking customer population. So would it really be that much of a hardship to take something that they don’t use away from them?

Of course, these PFM capabilities had better work on the mobile device, and do analysis in real-time. Some are already there, or close.


When it comes to threats to the traditional banking system, I don’t think any other firm poses the level of threat that Amazon does. Good marketers understand, think about, and do something about positioning their firm in the marketplace.

Banks and credit unions need to position themselves against Amazon as a player in the payments space, and as a potential player in the banking arena. Positioning themselves as the “Anti-Firefly”–the protector of consumer privacy security, the provider of objective advice and guidance that’s in the consumer’s best interest (not the retailers’ and merchants’)–could be the winning ticket.

Mobile App Stores From Banks: Fact Or Fantasy?

A well-known research firm recently published a report that claimed:

“Within two years, 25% of the top 50 global banks may launch app stores to enhance customer service and make innovative banking applications easier for customers to find. As banks continue to develop apps for different segments of the customer base, app stores, complete with user reviews, will help customers find and use apps that are appropriate for them.”

And within two years, they might not (if this isn’t the clearest clue as to which research firm we’re talking about here, I don’t know what else to tell you).

So, two years from now, 12 out of the “how many freaking banks are there in the world?” will have an apps store. Oops, I mean “might” have an apps store. Credit Agricole already has one, so, one down, 11 to go.

But the concept may not be limited to just the top 50 global banks. The author of the report was quoted as saying:

“As more banks take on this concept there will be a snowball effect, putting competitive pressure on banks that do not have app stores.”

My take: There are a lot of merits to having a bank-run apps store, but there are some barriers to making this a widespread practice.


For the record, I love the idea of a bank-run apps store.

Go to the iTunes store, look up finance apps, and you’ll find something like 27 screens worth of apps–that begin with the letter “A.” I don’t have the patience to figure out how many screens worth of apps there are for all 26 letters of the alphabet.

How can consumers figure out which apps are best? The user ratings? Ha! Even the biggest idiot on the planet knows not to trust those reviews. Which apps have been developed by legitimate developers who will protect the users’ data privacy? Good luck figuring that out. Do any of these finance apps integrate with the banks’ mobile banking platforms or apps? No idea.

As consumers’ use of finance-related apps grows, there is a real need for a trusted source–like a bank–to be the conduit to these apps.

On the other side of the coin, legitimate apps developers need help, too. One research firm (not the one mentioned above) found in a study that apps developers biggest challenge was gaining awareness among consumers. Who better than a bank (or credit union) with hundreds of thousands, or even millions, of customers to provide a channel to reach the masses.


There are, however, a couple of forces in the universe that will act against the widespread deployment of bank-run apps stores.

One of those forces is money. It costs money to provide an apps store, ensure developer participation, drive consumer use of it,  and all the other things that have to be done to run an apps store.

What exactly is a bank getting in return for this investment?

If you try to tell me that it will “deepen” the relationship, and drive “greater levels of customer retention” I, in turn, will try to hit you upside the head in an effort to knock some sense into you.

If you try to tell me that the apps store will produce millions of dollars in revenue as consumers pay for those apps, then I, in turn, will fall on the floor laughing uncontrollably. Because here in the US, there aren’t too many consumers that pay for finance-related apps. Not yet, at least.

Source: Opera Mediaworks

As the chart above shows, in Q4 2013, while business, finance, and investing apps received a respectable percentage of overall impressions, the revenue generated from apps in this category is pretty small (and I believe that data represents global activity, so it’s quite possible–if not likely–that the revenue generated from these apps came from outside the US)


It would seem far-fetched to most bankers to think that US consumers would pay for financial-related mobile apps when few people have that much interest in managing their financial lives, and those that do get those tools for free from their banks and credit unions.

But I guess it seemed far-fetched to everybody except Howard Shultz back in the 60s or 70s (or whenever it was) to think that people would pay $3.50 for a cup of coffee, and a bad one at that.

As far-fetched as it seems today, it is possible that one day consumers would brag about the mobile apps they use to manage their finances and pay for apps. They might not use them for more than a couple of weeks or months at a time, but if those apps do their jobs and add value, then people won’t mind paying a dollar, or even a couple of dollars to use them.

If you have a hard time seeing this as a possibility, I completely understand. You go right on wasting your $5 on those empty calories in that caffe mochalatteatto, while bitching about the $5 you pay a month to your bank to store, safeguard, pay, and manage your money.


But Schultz had to start SBUX and build the industry. He had to create and shape demand for expensively bad coffee.

Simply launching a mobile apps store and thinking customers will flock to it, and….what? Suddenly interact more, buy more, expand the relationship?  Thinking that will happen is foolish. It’s going to take a helluva lot of resources–and even more importantly, focus–on the part of banks to create a mobile apps store and make it successful.

Good luck with that.

At the recent Next Bank USA conference, I asked Bain Capital’s Matt Harris a question, but prefaced it with a comment regarding something he said about how banks should be turning their mobile banking platforms into mobile wallets. I remarked on why that wasn’t happening, and Matt agreed and asked me why banks weren’t doing what we agree they should be doing. I blew the answer. I said “because they have their heads in the sand?” Wrong. It’s because they don’t see the ROI or revenue opportunity.

It’s the same with mobile apps stores. Few FIs that launch one will put the resources and focus into it–and for long enough–to see any meaningful revenue from it. It’s too early.


If you’re reading this, you’ve probably been in the financial services industry long enough to know what happens when an FI tries something new that doesn’t immediately pan it: The industry concludes it was a bad idea and moves on.

But is a “failure” always because it’s a bad idea? Couldn’t it have failed because the firm that launched it botched the execution? Or couldn’t it have failed because the timing (perhaps because of economic and demographic trends) just wasn’t right (which is my theory on what happened to PerkStreet)?


There is another reason why I’m not buying that other research firm’s “snowball” premise.

In a recent survey of financial services executives that conducted by Aite Group and The Financial Brand, bank execs were asked what their FI’s approach to mobile app development is. Three in 10 said they have no strategy, two in 10 said they will build multiple apps, and half said they’re building a single, integrated app.

To me, this is proof that a majority of banks are stuck in the old Web development paradigm, of building one big honking point of interface for customers, and missing that consumers’ behaviors and preferences are changing to using and having discrete, standalone apps that perform very specific functions.


Bottom line: So, are bank-run mobile apps stores fact or fantasy? YES.

Are Banks Really Digital Laggards?

Two recent tweets caught my attention:

@Chris_Skinner: It’s not Branch versus Digital, but digitizing all channels including branch

@gschmeltzer There is no head of digital at Amazon or Zappos – they ARE digital. Banks need to be, too.

Both spot-on tweets. Ginger’s tweet, though, got me wondering:

Exactly how digital (or not) are banks?

A company called Urban Airship released the results of a study that might help provide some answers to my question. It surveyed 500 “mobile leaders” across a number of industries, having them perform a self-assessment of their firms’ digital capabilities according to a maturity model UA has developed.

UA’s findings suggest that, relative to other industries, financial services companies might not be as backwards as some folks want to make them out to be.


UA categorized respondents into eight industry categories (including an “other” segment). From a financial services perspective, the two most relevant industries to look at for comparison purposes are Media, Entertainment, & Sports (MES), and Retail, Food, & Travel (RFT). There’s no question that the sample size of financial services companies is on the low side (n=30). But UA claims American Express and Capital One among participants, so financial services participants may be representative of larger FIs.

Here’s what Urban Airship found:

1. FIs aren’t lagging on mobile deployment. According to UA’s findings, nine of 10 FIs have deployed mobile apps, in contrast to eight in 10 MES companies and a little more than half RFT firms. Almost a quarter of the FIs surveyed offer mobile wallets, almost twice the percentage of firms in the other segments. One mobile tech where FIs aren’t ahead is push notifications, which is curious because the nature of financial services leads to a strong need for proactive notifications (what are MES firms pushing? sports scores?).

20140314 UA12. FIs are on-par organizationally. Just 13% of the FIs surveyed have no organizational resources dedicated to the mobile channel, a similar percentage of MES companies, and half the percentage RFT firms. At the other end of the spectrum, the 44% of FIs having a team dedicated to mobile product development is slightly behind the percentage of MES firms with a similar team, and ahead of the 31% of RFT firms with a mobile product team.

20140314 UA23. Few FIs are in the reactive stage. Perhaps the most interesting part of the study is the categorization of respondents into maturity stages based on their answers to the 13-question assessment. There is a 5th stage–the relationship stage–but none of the firms in the MES, RFT, or financial services industries qualified for this stage. And while not-even-a-handfill of FIs qualified for the strategic stage, the percentage that did were hardly different from the percentage of MES and RFT companies at this level. Just 13% of FIs surveyed were at the bottom of the stack, though, in the Reactive stage, half the percentage of RFT companies at this level.

20140314 UA3My take: Truth be told, I don’t like any methodology I didn’t come up with. It’s hard for me to see how you can tell a company is using mobile technologies at a tactical, or strategic, or relationship level (how is that different or better than “strategic”?) by asking 13 questions.

But the organizational approaches to mobile, and the mobile tools deployed by the respondents to UA’s study suggest that FIs aren’t necessarily laggards when it comes to mobile (and maybe more broadly, digital) technologies.

Two-thirds of the credit union executives I recently surveyed said that their organization has “significantly improved” its digital marketing capabilities over the past three years. So calls to “be more digital” aren’t falling on deaf ears.

But what the UA study really suggests is that FIs–as an industry–aren’t really lagging other consumer-focused industries. Instead, there are certain firms–Starbucks comes to mind–that stand out as digital leaders, and that most of the companies in their own industries are lagging the leaders.

Do all FIs need the digital capabilities of the digital leader in their industry, or even other consumer-related industries? The answer–which you might not like–is no.

There’s a well-known cartoon with two guys in the woods being chased by a bear (I think it’s a bear) and one guy stops to put on his sneakers. The other guy says “what you doing?!@# you can’t out-run a bear!” To which the guy with the sneakers says “I don’t have to out-run the bear. I have to out-run you.”

It’s a similar construct with banks. Banks don’t have to provide the mobile capabilities of Starbucks. They have to be as good, or a little better, than the next bank (the one, or ones, they compete with).


And so that takes us to what’s so screwy about the world of banking right now.

Who, exactly, are the digital leaders within banking that the other banks have to keep up with, or stay one step ahead of?

For me, the answer is Simple and Moven.

Despite the successes both firms are enjoying, neither has the scope and scale to be the standard-bearer from the consumer perspective, like Starbucks is in its industry. So the standard-bearing actually falls to the mega-banks like Bank of America and Chase, who do have the scope and scale to set the standard.

So here’s the screwy thing: One research study recently reported that Gen Yers basically hate the big banks. Put them at the bottom of the list of most-liked brands. Yet–as apparently Tom Brown reported at a conference this week (I wasn’t there, picking up on this from Twitter)–Gen Yers who do switch banks are switching to large banks because of those FIs’ mobile technology capabilities.

(Side note: Another study reported that 1/3 of Gen Yers would switch banks in “the next 90 days.” Since we’re probably already 90 days out from when the survey was conducted, and we know that 1/3 of Gen Yers have not switched banks, you can come to your own conclusion of the validity of this finding.)

Bottom line: Are banks digital laggards? No. Wait, yes. Oh, I don’t know. Skinner–as usual–got it right. It doesn’t matter, because it’s the wrong question.

Simple: In Name Only

Congrats to the Simple team on their sale to BBVA.

But truth be told, I never was a big fan of what they were doing. Maybe that’s too strong a statement. It’s not that I wasn’t a “fan,” it’s that I didn’t buy into all the hype, all the talk about the NeoBank being “disruptive.” Selling out to a big bank for $117 million doesn’t exactly strike me as qualifying as a banking industry disruptor.


Coming on the heels of Facebook’s $19 (or 17) billion acquisition of WhatsApp, the Simple acquisition immediately drew comparisons of what the acquisition cost per customer was to the acquiring company.

Understandable, but completely misguided.

Cost per customer is a totally useless metric without taking into consideration: 1) Current revenue per customer; and 2) Future potential revenue per customer.

WhatsApp’s main revenue source is an annual subscription fee of $1 (after one free year of use). I’m not even sure if Simple charges a monthly fee to its customers, or if it relies on interchange fees for revenue.

In any case, Facebook has its own ideas for how they will further monetize the WhatsApp user base, and I have no idea what those ideas are, nor do I care.


BBVA, on the other hand, was not simply paying ~$1200 per customer to acquire Simple’s customers. JJ Hornblass, on the BankInnovation site, speculates that:

“This is as much about the Simple team as it is about the Simple business. The need for talent that can think creatively about banking is starting to accelerate, for banks like BBVA and Capital One Financial Corp.”

My take: Sorry, JJ, but I disagree. BBVA paid for a brand that it would need years to build itself.

If BBVA wanted “talent  that can think creatively about banking” it could have hired kids right out of college. If actual banking industry experience (or knowledge) was a prerequisite, it could have acquired Moven for less than $117 million.

But that wouldn’t get BBVA the Simple brand.

As much as I don’t think of Simple as a disruptor, I do have to give it credit for striking a nerve with the segment of consumers it reached. Consumers really do want a simpler, more transparent banking industry.

I’m not so sure that Simple is truly that much more simpler, but if you tell consumers often enough that your toilet paper is softer than the other toilet paper brands out there, some people will actually start to believe you. Regardless of  whether or not you’re softer.

For BBVA to take the talent they could hire off the street and recreate the Simple brand, it would take them at least a few years, and probably $100 million. Maybe even per year.


Then there is the matter of the customers that BBVA acquires with the Simple purchase. Who are those customers? My bet is that they’re young, highly educated, and if not high-earners today, have the potential to be. In other words, consumers who represent future revenue potential from a lending perspective.

Facebook paid $45 per WhatsApp customer to get $1 in annual revenue, and who knows what future revenue. BBVA paid ~$1200 per Simple customer for a somewhat-established brand, and an identifiable (albeit difficult to realize) future revenue stream.


I’m hardly surprised by this acquisition. Back in October 2011, I predicted that a big bank would acquire Moven because they would realize that Moven is: “1) The ‘starter’ account they should have created for entry-level customers, and 2) A platform and business model upon which they can migrate their stale and tired business model.”

Right idea, wrong NeoBank.

I don’t know what BBVA’s plan for Simple is. I hope they keep the brand. As I’ve stated, I think that’s what they’re paying for.

Then again, that’s what I thought when Intuit acquired Mint a few years back. Thought they would get rid of the Financeworks brand, and replace it with Mint. Yeah, well, that didn’t happen (but maybe it should have).


Way back when, Simple said “We’re not a bank.” It also told people that it was a “simpler bank that is easy to use, that treats you with respect.” So it wasn’t too clear about what it was and wasn’t. Personally, I could never figure it out. No matter. They made nice money for a few years’ worth of work. For that, I congratulate them.

Mobile Payment Numbers Are Useless

An article on, titled Mobile payments increased 19.5% on Cyber Monday, reported that: 

“IBM said online sales during the day increased by 19% compared to 2012. However, retailers catering for mobile shoppers benefitted the most, seeing mobile traffic hitting 30 per cent of total site visits, a rise of more than 58% from last year. Since Thanksgiving, tablets have proved to be more popular for purchases, while mobile phones are preferred for browsing. Tablets accounted for 9.8% of purchases, compared with 5.7% from smartphones, IBM said. Consumers spent more cash when buying on tablets, with average order values hitting $128.30 per order, compared with $110.95 for smartphones, the company said.”

Well, I’m confused. Did online sales grow by 19.5% or did mobile sales grow 19.5% from last year?

If it’s the latter, then I’m really not impressed. The percentage of consumers who own a smartphone increased from about 38% in 2012 to roughly 60% in 2013. If mobile Cyber Monday sales only increased by 20%, that’s not particularly impressive. 

And I’m sure it was just a linguistic convention used by the author of the article, but exactly how did consumers use cash when making purchases from their tablets?


The bigger issue here is what constitutes a mobile payment. Does sitting at home, with a tablet on your lap, using a browser to surf the Web, and buying something constitute a mobile payment?

For that matter, if you’re at home, and you use your smartphone to access a firm’s website, and you buy something, should that count as a mobile purchase?

My take: Device shouldn’t be the only factor determining what constitutes a mobile payment. Location matters.  


To me, a mobile payment is when I’m sitting on the MBTA train in Reading, MA , ready to head into Boston, and I access the MBTA app and buy my ticket before the conductor gets to me.

Or when I access the Uber app from some bar in Atlanta to come pick me up and take me back to my hotel. 

Or when I wave my smartphone in front of some device at Starbucks to pay for the lousy coffee they serve there. 

Those are mobile payments (IMHO). 


My own argument — that location matters — could come back to haunt me.

If I imply that you have to be out-of-home in order for a payment to be considered a mobile payment, then wouldn’t my making a purchase using a PC, accessing wifi, while sitting at the airport, count as a mobile payment?

I guess not, because it’s the wrong device. 

Now, what if I was using my iPad, instead of a PC, would that count?


Bottom line: As long as the numbers being reported include home-based, web-based purchases, I remain skeptical that mobile payment statistics really capture the shift in behavior.

Big Idea: Activity- Based Marketing

Most traditional forms of marketing — TV, radio, print, direct mail — are outbound forms of marketing. I call it push-and-pray marketing: Marketers push out a bunch messages, and pray for a good response rate.

More recently, a different form of marketing has become popular: Inbound marketing. This type of marketing waits for a customer or prospect to make contact with the company, and then applies marketing efforts to that interaction.

But there’s another type of marketing that’s beginning to gain traction. As far as I can tell, there’s no commonly accepted name for it, so for our purposes, i’ll call it Activity-Based Marketing:

Marketing within the context of an activity being performed by a customer or prospect.

Yesterday’s announcement by restaurant chain Chili’s regarding tabletop computer screens is a great example of activity-based marketing: The activity is the process of ordering food.

At its most basic level, asking “would you like fries with that?” is a form of activity-based marketing. You might think of it simply as up-sell or cross-sell — and I would agree — but it doesn’t quite seem like marketing because no principles of marketing (targeting, segmentation, promotion) are applied.

But they could be applied.

That’s the potential of these tabletop computer screens. Not that they just simplify the ordering process. But that they push (i.e., merchandise) certain entrees, track your visits and tell you what you ordered last time, connect you with other diners to see what they like, etc. This technology shouldn’t just streamline the ordering activity — it should transform it.


A narrow-minded banker might think “we already have things like this — ATMs and video tellers.”

Wrong. Those deal with service transactions and interactions. These aren’t the “activities” I’m talking about. I’m talking about activities like car-buying, house-shopping, and ticket-purchasing, or even shopping for more mundane items like shoes (that was a joke, guys — the ladies <at least the ones in my family>, hardly consider shoes to be “mundane”).

There are a number of great examples of financial institutions doing activity-based marketing:

1. USAA. USAA’s Auto Circle app changes the car buying process by providing car shoppers with an app that lets them search for the type of car they want, track those cars for future reference and comparison, get a loan for the car when they’re ready to buy it, and insure it as well. Transformation of the car-buying activity or process.

mobile apps

2. Commonwealth Bank. This Australian bank’s app uses augmented reality technology to let a user “take a picture” of a home or building, determine the location, access the realtor database, and display the price and details of the home if it’s for sale. This app enables Commonwealth to identify potential mortgage customers long before they were able to do so in the past.

I don’t know if Commonwealth is doing this or not, but the app could give other marketers — those interested in reaching new movers (who typically spend thousands of dollars in the six months after moving) — an opportunity to reach prospects even before they move, enabling Commonwealth to generate advertising revenue.

mobile apps

3. Caixa Bank. Caixa Bank in Spain has developed an app that let consumers buy tickets (movies, sports, etc.) using their mobile device. Transforms the ticket-buying activity.

mobile apps

There are other activity-based marketing apps that I can envision, but won’t belabor the point here.


One of the common threads in the examples above is the creation of a new point of interaction for banks.

Historically, banks’ point of interaction with customers or prospects is the point of purchase — when the consumer is ready to buy the house and now needs to find a loan, or when the consumer is sitting down with the car dealer negotiating price.

For a host of other types of purchases, banks’ point of interaction is when the consumers swipes their debit or credit card, or — even worse — after the transaction itself, when the check clears.

Activity-based marketing changes the point of interaction for banks, moving that point much closer to the identification of the need or want for the product or service.

20131030 POI

Moving that point of interaction gives banks more opportunity to influence the choice of providers. But it does so in a way that provides huge value to the consumer by transforming the overall activity.

Wanna know why Google is worth gazillions? Because its point of interaction is so close to the consumer’s identification of the need or want for a product.


Brett King was spot-on when he wrote, in a post title When Payments Disappear, and Value Emerges:

“Arguing over whether a payment is truly mobile or something else is a lost argument. When a payment ultimately works, no one is going to care how it happened. As long as it happened seamlessly with minimum fuss, and maximum context or value. When the payment disappears, it doesn’t matter how you paid, it matters what the payment did for you.”

The challenge for banks is: How do you get value to emerge? The answer is activity-based marketing.


What this also demonstrates, however, is the narrow-mindedness of too many bankers. Namely, those worried about what channel the order is taken in. 

So what if the mortgage application is taken online or in the branch? It doesn’t matter — as long as your FI gets the application.

And how are you going to ensure that your FI gets the application? By getting involved in the shopping process as early as possible. 

Activity-based marketing is going to be big.