Archives for December 2009

Expert Group on e-invoicing: a flop?

The European Commission has set up an expert group (EG) on e-invoicing with the task to establish a European Electronic Invoicing Framework by 2009. Last November the group published its final report, and I am already hearing comments that argue on the merit (and, consequently, on the substance) of the document. Apparently a number of political issues have “polluted” the work of the group, leading to counterintuitive decisions objected by some group members themselves (read ‘Annex 2-Dissenting minority opinion’ in the report). While waiting for the results of the call for consultation, where “Contributions are particularly sought from SMEs, large enterprises, service providers, standardisation bodies and public authorities“, it is my feeling that we will hardly read the harsh comments I collected just in the past few days from corporate and vendor representatives: • The EG had a shallow 3% corporate representation. It was all banks, politicians, and vendors. • The final report conclusions penalize innovators and give time to laggards to catch up. There is a creeping suspect of “hidden agendas” and potential conflicts of interest. • The results did not match the objective to “contribute to the removal of current barriers to the take-up and establishment of intra-community (crossborder) e-Invoicing solutions” (source: Mandate Of The Expert Group On E-Invoicing). That is, the proposed e-invoice content standard, the UN/CEFACT Cross-Industry Invoice (CII), is way to be a de-facto international standard. Most optimistic predictions see its maturity not before than 2012. • Why not use UBL as an interim content standard? It does work and it is used, for instance, in the PEPPOL project, another EU initiative to facilitate EU-wide interoperable public eProcurement, where electronic invoicing plays a prominent role. • There is no mention of actionable items that can be implemented immediately. Especially SMEs are left with no guidance on what they could do while all the recommendations in the report are implemented. Bottom line: The lack of clarity and the suspects of conflicts of interest will force corporates to slow down/ stop investing in e-invoicing projects. From their side, corporations must take a more proactive role and refuse the temptation to let others “do the work”. SEPA has proven that failure is behind the corner when some stakeholders do not participate since the beginning to initiatives that impact their financial supply chain (i.e., payments in the case of SEPA; invoices in the case of the Expert Group). I’d love to read your opinion and feedback.

Taking Another Look At Japan

Over the past few years, much media and industry attention has been placed on the use of mobile NFC payments in Japan. Typically, Japan is portrayed as a mobile NFC “nirvana”, a shining example of how the rest of the world will eventually adopt NFC. This portrayal is backed by some big numbers: 33 million NTT DoCoMo subscribers with the osaifu keitai (mobile wallet) service, the majority holding a Suica (public transport-based) payment card, and to a lesser degree, the DCMX e-credit card. Other mobile carriers also offer osaifu keitai, mostly for Suica use. Over the past few years, I too have watched Japan with great interest regarding mobile NFC. I travel to Japan quite often (4 to 5 times a year), and while I’m there, I make it a point to notice how many people are using mobile NFC at train/subway turnstiles, or at convenience stores. Through these amateurish visual surveys, I’ve come to a conclusion: very few Japanese are using mobile NFC payments. Mind you, my personal survey findings are that the overwhelming majority of Japanese commuters are using plastic card-based NFC. However, I’m just don’t see Japanese commuters and shoppers using mobile NFC. And although my survey methods are anything but scientific, I can tell you that my findings are consistent every time I make a trip to Tokyo. During my latest trip (last week), conversations with industry insiders provided anecdotal info which seem to confirm my findings — mobile NFC isn’t taking off, and some players may actually be losing money from it. DoCoMo may have 33 million osaifu keitai subscribers, but the number of actual active users is a mere fraction of the total. So mobile NFC players outside Japan have reason to take heart — they’re not alone in waiting for the market to take off. As in Japan, the challenge will continue to be to find ways to encourage consumers’ use of mobile NFC, as a way to generate sales “lift”. Simply replacing an existing payment form factor (e.g., mag-stripe or NFC plastic cards) with a mobile form factor for the same payment types and amounts will place a damper on mobile NFC growth. Japan, the supposed mobile NFC nirvana state, deserves our attention more than ever.

Mobile RDC: Getting to Yes

Following on a February 2009 announcement with MFoundary, Mitek announced in December it had formed a strategic partnership with ClairMail to integrate its Mobile Deposit capability with ClairMail’s mobile banking platform. In so doing, the companies are making it faster and easier for US FIs with existing mobile banking solutions to offer mobile deposit (a.k.a. Mobile RDC). Celent applauds this effort. A preemptive move, pre-integration with mobile banking platforms corresponding to a significant percentage of mobile banking solutions only makes sense. But doing so won’t erase adoption barriers. Celent conducted research in August 2009 among 174 US financial institutions – just prior to USAA’s announcement of its Deposit@Mobile product. In the survey conducted primarily among product managers and senior executives in RDC deploying financial institutions, Celent found that risk and/or compliance concerns are holding banks bank by nearly a 2:1 margin versus any other adoption barrier. All the pre-integration in the world won’t address the lingering systemic risk paranoia around RDC. Barriers to Mobile RDC Aren't About Technology But risk can be justified in the face of adequate reward. That’s part of the current problem with mobile RDC. The #2 adoption barrier according to Celent research is low perceived demand for mobile RDC. When banks see adequate demand for the service, the perceived risk associated with solution delivery will be more easily assumed. So what’s behind the low perceived demand? Banks mention in interviews that consumers aren’t exactly melting the phone lines with requests for mobile RDC. Of course not – no one knows about mobile RDC yet! Too many banks confuse demand for a product or service with concept strength. Concept strength measures the viability of a product or service based on its ability to meet unmet consumer needs. Demand is a function of many variables including concept strength, awareness and pricing. In Celent’s research, mobile RDC appears to be an exceedingly strong concept among consumers; a “killer app” in fact. Demand will come rapidly, once more banks offer the service – generating awareness in the process. Anticipating strong future demand for mobile RDC, wise banks will be preparing.

Cloud Computing and Interoperable Components

Dr. Vishal Sikka, the CTO of SAP, talks about timeless software which has four major thrusts, two of which are:
  • Cloud-based consumption of computing
  • Interoperable components: lessons learned from SOA
The challenge of the two isn’t building the cloud and building the services, but integrating the services of the service provider and service consumer. In other industries, such as oil and gas, SAP has sufficient critical mass to be a defacto standard. In banking this simply isn’t the case. There are few commonly agreed upon data structures, messaging standards, etc. SWIFT and IFX are exceptions to prove the rule. Banks don’t have plug and play interoperable components. That makes cloud based services more of a challenge. I think SAP understands the challenge and therefore spun out its business process for banking into the non-profit BIAN. From The target of BIAN is to enable faster strategic and operational changes of the banking business by providing systematically defined banking functional IT services based on a broad consensus in the banking industry. Other technology vendors have signed up such as SunGard, Callataÿ and Wouters, Temenos, and Microsoft. Banks such as Deutsche Postbank, ING, and Credit Suisse have also joined. BIAN has a long road ahead to becoming a defacto standard, but with a few (more than one or two) years, could become one, not universally, but widely, adopted. That would be a huge accomplishment for BIAN. Best of luck.

Mobile B2X: The Next Wave of Mobile Payments in Developing Markets

In my coverage of the mobile payments space, I am continually amazed at how quickly the developing world is taking this technology and running with it. The “oldest” mobile payments systems in developing world countries have only been in place for about 2.5 ~ 3 years, and are experiencing phenonmenal growth. GSMA expects 120 new mobile payment program implementations in 2009, and Safaricom in Africa is now at the point where roughly half of its subscribers use its M-PESA mobile payments service. A new example of mobile payment innovation in these markets is what I call “Mobile B2X” — companies’ and other organizations’ use of the mobile channel to pay other companies or individuals. What I am uncovering is that there are three main use cases for Mobile B2X services:
  • Payments made by retailers to wholesalers for receipt of consumer goods
  • Salary, commission and pension disbursements made by companies (and govts) to individuals
  • Social benefit distributions from companies (and governments) to individuals
Given these use cases, the market potential for Mobile B2X is massive. This approach is just emerging, but market data points indicate that we may be on the verge of something big. Coca-Cola distributors in Africa were already collecting 30% of their invoices via mobile technology in 2007. There are reports of employers converting their entire employee base over to mobile salary disbursements in one fell swoop. NGOs have realized that distributing funds via the mobile channel reduces costs and helps local economies at the same time. Mobile P2P payments serve as a great foundation for Mobile B2X, but are not enough. New technology has to be developed to fulfill the business requirements of ecosystem players. Perhaps more importantly, infrastructure issues such as mobile network operator (MNO) agent cash-in/cash-out liquidity and payment system inter-operability need to be addressed. Stay tuned, I expect to publish this report later this month…


I was at the SunGard analyst conference and heard their CEO Chris Conde talking about Software as a Service (SaaS). What he said told me that SunGard is serious about SaaS not just as a vendor but as a customer. He said that if a vendor offered SaaS to SunGard he would prefer that SunGard use this even if there is greater vendor risk and poorer features and functionality. He believes that the SaaS vendor will likely catch up on the latter, and clearly thinks so highly of SaaS that he believes the former is not such a big issue. Celent has written about this subject and the other hot buzz word cloud in the Celent report Cloud Computing, SaaS, and Technology Outsourcing for Banks You can also hear the author of this report, Jeff Goldberg speak on this issue tomorrow December 3. SaaS has been available to banks for decades. We call it a service bureau. It isn’t the next big thing, but an already huge thing in banking. I am not yet a believer in cloud computing for banks due to security issues, but SaaS is clearly a winner.

12.07.09: Celent Research Webinar: Trends in Anti-Money Laundering 2009

Celent senior analyst Neil Katkov

This event is free to Celent clients and the media. Non-clients can attend for a fee of USD $249. Celent will contact non-clients after they register for credit card information.

Please click here for more information.

Buy a TV at TD Bank?

TD Canada Trust recently launched an interesting web site called Shop MyAXS. It is an online shopping site that can be accessed only by TD Visa cardholders. In order to purchase an item, the user must enter their TD Visa account number and create a username and password. The site claims to offer savings of up to 50% off brand names to eligible shoppers. TD appears to have signed up for a loyalty program with a firm called MyAXS. MyAXS offers the online shopping portal and passes along the discounts to members.


I find it curious that a bank would like to extend itself into the retail business. Granted consumer cards are used for retail purchases, but positioning the bank as a place to shop online is a completely different matter. The big question here is can TD encourage consumers to switch to a TD Visa by offering them shopping discounts? Even if customers do sign up for a TD Visa card, offering them a single deal or a handful of deals is not enough to encourage customers to alter their affiliations. Can it be used as a carrot? For sure. However, the features and rates of TD Bank’s cards would have to be extremely compelling in order for customers to switch. In fact, I would argue that TD is more likely to attract one-off deal shoppers than a loyal contingent of converts. It is also a nice feature/perk for existing cardholders.

TD also promotes the MyAXS offering on its own web site, buried in a section called “Related Services.”: