Archives for April 2010

If My Phone Was My Wallet: Reflections from NACHA Payments 2010

It’s hard to imagine a business trip without a Smartphone. This week at NACHA Payments 2010, an embarrassing event caused me to consider the practical risks of overreliance on mobile devices. Mobile payments were a hot topic in Seattle this week. Multiple sessions argued the coincidence of factors that will bring about the ascent of mobile payments in North America. Few need convincing that mobile devices are increasingly becoming the primary point of contact for a growing segment of the population. Most nod in agreement that mobile devices would be a great mechanism for P2P convenience payments for example – but wholesale replacement of plastic? Is this really a good idea? While assertions about the superior security and convenience of mobile payments abounded at the conference, I didn’t hear much discussion about a rather obvious risk. What happens if one’s phone stops working? Perhaps I’m a bit of a curmudgeon about this trend, but I’m reluctant to place even more dependence on mobile devices than we already have. Consider airline electronic check-in for example. Like many, I find it convenient to check-in from the office and print boarding passes ahead of time in return for faster navigation once at the airport. But, I’m not yet ready to trust my next business trip to an eBoarding pass for its incremental convenience. Once again, what happens if your phone stops working and the boarding gate is about to close? The first evening at Payments 2010, I was scheduled to meet a colleague at a reception event. The room was large and crowded and I was unable to find him. Sending him a quick text seemed like a reasonable next step. This posed a modest problem for me, however because I had just graciously accepted a glass of fine Washington State Merlot and there was no convenient place to set it down in order to operate my device. (My fine motor skills aren’t advanced enough to operate the HTC device without using a stylus. It therefore takes both hands for me to send a text message.) Unwilling to risk the fine wine, I simply tried to hold both the wine and my HTC for the quick text. Be forewarned – it’s not a bright idea. My device ended up in the glass and most of the merlot onto my previously white shirt. Three days later, my phone still hasn’t recovered. All this has been both an embarrassment and inconvenience. Heck, I stopped wearing watches long ago since phones keep decent time. Mine used to. But, if my phone was my wallet, I might be sleepless – and stranded in Seattle.

Lessons From the “NFC Promised Land” (Japan): Some Quick Thoughts

I just recently completed a trip to Japan (yet another), this time with the explicit objective of examining the Japanese mobile proximity payments. I had the great fortune to meet with some of the biggest companies in the Japanese market, including banks, mobile carriers and payment brands. Despite what will be a hectic travel schedule during the next 4 weeks, I hope to have a report out by end-May — it will certainly focus on the “lessons” other countries have to learn from the Japanese “real-world” (i.e., not conceptual or perpetual pilot) experience. In the meantime, here are some “sneak peeks” at the important areas that the report will cover, all based on what is currently taking place in Japan:
  • The role of promotions and point programs
  • Contactless as a “gateway” for non-bank disintermediation
  • The importance of alliances & partnerships
  • Pace of consumer, merchant adoption
  • The future of NFC as a standard in Japan
I can tell you that this last trip to Japan really did expose me to the “promised land” of mobile proximity payments. However, things are not as simple as they may seem, and not all Japanese experiences are necessarily relevant to the N. America, Europe and other markets. Stay tuned for the report…

A Major Blip in Blippy’s Security

If only it were just a blip. Mashable just reported that a simple Google search reveals Blippy users’ credit card numbers. As much as I love the social web, I could never wrap my head around the concept of folks providing their credit card number in order to share info on what they are purchasing. While this may be fun and “cool,” it is a great example of what not to do. This is obviously a major error on Blippy’s part, but I also blame users who so easily give up confidential info. If this type of practice continues, card companies are going to stop reimbursing customers. It’s one thing if a merchant or a processor is a victim of fraud. It’s another issue if a startup does something inexcusable, even if it is unintentional. Interestingly, just yesterday Techcrunch announced a new round of funding for Blippy, bringing their valuation to a whopping $46.2 million.

Image courtesy of Mashable

Update 2:06pm EDT. Blippy issues a reply. Celent believes that this issue is far more serious than Blippy is making it out to be. Pointing fingers at Google’s cache and claiming that consumers are protected is not the right approach. I am sure Blippy will improve their security efforts, but this is nonetheless an incorrect approach to take with the public.

Celent Innovation & Insight Day – Social Media Panelists Announced!

Celent Innovation and Insight Day is just around the corner. I gave you as sneak preview of some of our panelists a short while ago. We just recently announced the full roster for our social media panel: rhonda Rhonda Crawford Vice President Digital Media & Innovation USAA steven Steven L. Kruskamp Jr. E-Commerce Marketing Manager, Officer 1st Mariner Bank brad Bradley Leimer Vice President Online Services Group Mechanics Bank jaime Jaime Punishill Senior Vice President, Digital Channel Strategy & Social Media Citibank Please join us in NYC on May 13th for this event. You can register by clicking here.

Credit Crising Coming?

I was recently in Santiago, Chile and have a very unscientific view of the credit crisis in the US. I see the same thing happening in Chile. Banks are on every street corner in Santiago. The list of banks is impressively long and the branch density is astounding.
  • Banco de Chile
  • Banco de Desarrollo
  • Banco de Credito Inversiones (BCI)
  • Banco Internacional
  • Banco BICO
  • Banco Edwards (Citi)
  • Scotia Bank
  • Citi
  • Banco Falabella (retailer owned bank)
  • Banco Paris (retailer owned bank)
  • Itau
  • Santander (formerly Banco de Santiago)
  • BBVA
On one stretch of street not in a commercial area, but not the center banking area I saw four (4) bank branches in a row on a single street. I don’t see this level of bank branch density even in Manhattan. Every single one of these branches was pushing consumer loans. It is true that the demand for loans has increased due to the recent earthquake, but has the ability to repay those loans also increased? It is unwise to ignore the 3 (or 4) C’s of credit, as I outline in the Celent report The Banking Crisis: A Back to Basics Lesson December 2008.
  • Capacity (to pay)
  • Character (or Credit history)
  • Collateral
With so many banks pushing so much credit, I can only suspect that these three C’s are being ignored in Chile.

Top priorities on a Transaction Banking COO’s agenda

Based on my research, Chief Operating Officers (COO) of Transaction Banks are focusing on: > Integrating cash and trade management functions. > Aligning business units on same performance targets (i.e., same P&L) to ensure integration of functions. > Educating sales reps to understand their clients’ business processes. > Consolidating IT systems to extract data and build through analytics “intelligent” (i.e., predictive) information. > Being prepared to offer some solutions as “cost of doing business” (e.g., applications for electronic invoicing) to keep customer loyalty. > Adopt technical standards (e.g., ISO20022; Swift messaging) to reduce complexity. > Integrating clients’ back-end systems (ERP) with bank’s applications (e.g., payments) to secure STP.

Citi is First Financial Institution to Have a “Verified” Twitter Account

A while back I blogged about the security risks associated with social networks (see One of the risks of social sites like Twitter is the ability for a fraudster to pretend they are Bank XYZ in order to steal customer information and credentials. While there are many factors required to curb potential fraud, an easy one would be for a bank to have a “Verified” Twitter account. Verified accounts are certified by Twitter to be the real deal, thereby permitting the public to know that they are interacting with the actual individual/company. Twitter has been quick to hand out verified accounts to celebrities and politicians. Interestingly, everyone else including banks and other financial institutions have been left behind. In late October 2009, The Financial Brand even started a petition to verify Twitter accounts of financial firms. At long last Twitter has decided to verify the account of a financial institution. To my knowledge, Citi (@askciti) is the first bank to receive this designation, one that is a must have in the treacherous online world. It’s only a matter of time before other banks receive verified accounts, and I encourage banks who have yet to apply to do so immediately.


Jaime Punishill spearheads Citi’s social media efforts. He will be part of a panel that I am moderating at Celent Innovation & Insight Day on May 13th. The importance of security and social media will be part of our discussion. I invite you all to come out to the event and learn more.

Mobile Payments At Celent’s Innovation & Insight Day

Following up on Jacob Jegher’s post below, I would like to elaborate on content of the mobile payments panel at Celent Innovation & Insight Day on May 13 in NYC. As Jacob mentioned, we will be joined by panelists from PayPal and Citi. Wells Fargo will also be joining the panel, so some of the biggest names in U.S. financial services will be sharing their thoughts about the future direction of mobile payments. As the panel moderator, it is my intent to make the discussion as informative for the audience as possible, by asking questions that are on everyone’s mind, and evoking/clarifying differing opinions. Put another way, this will not be an informercial — potential questions include the following:
  • What is each panelist organization’s definition of mobile payments?
  • What mobile payments initiatives are being pursued by panelist organziations today? What criteria were used to prioritize development of mobile payments approaches?
  • If panelists had to pick a mobile payments “winning horse”, what would it be? Which are unlikely to succeed? Why?
  • Is mobile payment just a commodity, mobile infomation the value-add? If so, how does this impact mobile payments players’ strategies?
  • The 800-pound gorilla question… NFC, really? How will (incremental) money be made? Who will make it?
  • Do “pre-NFC” proximity payment technologies (stickers, micro SD, bar codes) matter?
  • Do banks need to worry about non-FI disintermediation? If so, from where? Mobile carriers? Large retailers (e.g., Target, Starbucks, Wal-Mart)? Alternative payments players (remember, PayPal will be on the panel…). How could banks work with such non-FIs?
If any of our readers have panel topics/suggestions, feel fee to send them along — this panel is for you. If the topics/questions are appropriate and especially thoughtful, I’d be happy to incorporate them in the panel discussion. Otherwise, see you on May 13!

Celent Innovation & Insight Day – May 13, 2010. Panelist Sneak Peek!

Celent Banking Innovation and Insight Day is around the corner! The response so far to this event has been tremendous and we are expecting a full house. Come join us in New York to gain a fresh perspective on subjects including top tech trends, social media, risk management, core banking, mobile payments, and more. I am pleased to announce that we have secured a number of high profile panelists for this event. I will provide a sneak peek for the moment, remaining panelists will be announced shortly: Demystifying Social Media: A Call to Action for Banks and Credit Unions: Rhonda CrawfordVice President Digital Media & Innovation at USAAJaime Punishill – Senior Vice President, Digital Channel Strategy & Social Media at Citibank Show Me The Mobile Money: What Mobile Payments Mean (and Don’t Mean) to Banks: Dan Schatt – General Manager, Financial Innovations at Paypal, an eBay Company – Tomasz Smilowicz – Global Head of Mobile Solutions at Citi Global Transaction Services Full event agenda can be found here.

OD now DOA?

I just received a statement stuffer from one of my banks providing me “Important information for consumers about your checking account.” This is about the changes to Reg E. Consumers must opt-in to overdraft protection for one time debit card purchases and ATM transactions. This is a game changer in the world of retail banking and might spell the end of free checking. According to the FDIC, about 40% of all overdraft transactions are generated by such debit card transactions. If 50% of a retail bank’s revenue is overdraft revenue, the bank just lost 20% of its revenue. What to do? The first thing is communicate this message to your customers and find those who value the overdraft protection and will want to opt in. Banks must also understand their customers a bit better to figure out which are unprofitable today and which will be unprofitable under the new Reg E. Bundling products can help cross subsidize the current account which is typically the anchor account of the relationship. Consumers are used to paying fees for mortgages, credit cards, reward programs, etc. Can you create fee bundles for these products that make the checking account profitable? Can you negotiate across lines of business at your bank? The debit card was a game changer for the demand deposit account in a good way, lowering costs and increasing revenue via interchange. It may now become a game changer again, with few consumers opting in and revenue dropping, forcing banks to rethink the free checking business model. The big problem is that once customers have had something for free, they are unlikely to pay in the future.