mFoundry Blogs

Join mFoundry and Dwolla for a Webinar on Maximizing P2P

How big is the opportunity in P2P? So big that if you miss it, your customers—particularly younger, more mobile-savvy consumers—will go elsewhere.

Consider this: First Annapolis Consulting anticipates P2P payments to grow to an $80 to $120 billion market opportunity. A good percentage of that will come from your fastest growing demographics: GenXers (1965-1980) and GenYers (1980-1994).

Now also consider The Wall Street Journal’s lengthy mobile story on Tuesday, Feb. 12: “Nearly half of smartphone users who switched banks said that mobile banking was an important factor in their decision, up from 7% in 2010, according to an AlixPartners survey.”

Mobile P2P – The Next Big Thing

In fact, only 16 of the top 100 banks in the U.S. offer mobile P2P today, according to First Annapolis. But because of the proliferation of mobile devices and the rapid adoption of mobile banking, Javelin predicts the mobile channel is the next frontier for P2P payments and expects 60 million American households to be using P2P payments by 2014.

mFoundry understands this enormous opportunity. In October, mFoundry partnered with Dwolla to create a mobile P2P app that the offers low-cost money transfer services to financial institutions and their consumers. The state of Iowa also understands this opportunity and has entered a partnership with Dwolla to offer their residents a new way to pay their taxes. The solution makes perfect for both taxpayers and government: P2P is safe, secure, easy to implement and low cost.

Dwolla is a cash based payment network that allows its users to send and receive cash via their P2P payment platform. What sets Dwolla apart is its FiSync technology, which allows for real-time transfers at a fraction of the cost of its competitors. Any transactions over $10 is charged $0.25 and any transaction under $10 is free of charge.

“P2P has become a customer experience and retention play. It’s almost a must-have. This is the race we’re in. Customer expectations keep rising. [...] Not doing so is no longer an option, the cost of not doing something is greater than the cost of doing something.”

-Niti Badarinath, SVP and Head of Mobile Banking, U.S. Bank

Register for the Webinar

Learn more about Mobile P2P and how mFoundry’s Service Provider Network can help your financial institution engage consumers who live and think mobile.

On Wednesday, February 20 at 11 am PT./2 PM ET, join mFoundry’s Strategic Alliances Manager Walt Cox and Nicole Cook, Business Development Builder of Dwolla for webinar, Mobile Peer-to-Peer: The Next Big Revenue Opportunity. Nicole and Walt will discuss why mobile P2P is critical to staying relevant, growing revenue and creating customer satisfaction.

Register Here

***Space is limited to the first 100 attendees for this Webinar!

A few weeks ago, a prospective client told us that he needed gamification in his mobile solution.

I asked the prospect to be more specific. He answered that he wanted to “gamify” his mobile solution. That wasn’t very helpful—same word, different suffix.

For those of you who don’t know, gamification is defined as “the use of game mechanics and game design techniques in non-game contexts.” It’s currently all the rage in marketing circles, despite the fact that the premise has existed for years in frequent flyer programs, credit card rewards, and other point-based schemes. It just has a nifty name now.

The most visible example of gamification is the social network Foursquare. It allows people to “check-in” at various locations, collect merit badges along the way and, if you are a really lucky (rabid) person, you could become “mayor” of that particular establishment.

The gamification premise is that a company or brand can add gaming elements to their customer experience to increase engagement and, ultimately, sales. Typical gamification applications include:

• Achievements and Badges
• Leader Boards
• Progress Bars
• Currency
• Challenges

The whole concept has turned into an industry of sorts, with consultants extolling the virtues of using gamification techniques in small and mid-size businesses. Not surprisingly, marketers are faced by yet another digital concept that they may have to implement.

To Game – Or Not

While there are probably some very valuable reasons to consider gamification in a mobile application, it’s important to remember that it’s not a panacea for customer engagement.

A company like Foursquare pulled off gamification because the entire business was predicated upon the concept from the get-go. That’s not the case for most businesses, and that’s one of the biggest risks of blindly adopting gamification techniques.

More to the point, I bet most companies experimenting with gamification will turn out ham-fisted, clumsy executions that will leave consumers indifferent to the brand, or worse, resentful of wasted time.

The second big risk is that gamification is so out of context for most brands (e.g. Banking is fun! You paid your mortgage, so here’s a badge!), that it smacks more of manipulation than it does of real value creation.

I know the goal is to keep people engaged with your brand, but as Errant Signal eloquently put it, “Users staying minutes longer doesn’t mean that users were more engaged.”

Ironically, the poster child of gamification, Foursquare, upon facing sluggish growth, opted out of the gamified “check-in” technique and focused more on delivering a valuable, interactive city guide to more passive users. The result? Accelerating growth.

Yes, that’s right. If you deliver a useful, valuable product, you will see actual growth irrespective of any gamification techniques.

For banks and credit unions, we believe this is an important lesson here. Continue to focus on delivering real-time connectivity to, and interactivity with, your customer’s money. That will drive retention, engagement, and more value.

Gamification may have a role, but it’s no substitute for a good product and solid customer experience

The other day, out of sheer curiosity, I Googled the words, “Mobile Payments.” The search turned up “About 34,100,000 results”. Wow, I thought. Then I searched the same term in the Google News section. “About 69,700 results”. Hmmm. Interesting.

Then I typed Mobile Banking into the Web search box. “About 86,000,000″ results. Wow, that’s really a lot, like nearly three times the results for Mobile Payments. What about News? “About 664,000 results”. Yikes! That’s nearly 10 times the results for Mobile Payments!

So that got me thinking, “Maybe Mobile Banking really is bigger than Mobile Payments?”

I mean, I’ve been thinking that to myself for years, but I don’t really share that kind of heresy with anyone, since it’s kind of mobile sacrilege. After all, the venture world has funded far more mobile payments companies than mobile banking companies, and they can’t be wrong…..right?

But those Google numbers weren’t lying. They were right there in black and white: Mobile Banking has more web and news hits than Mobile Payments. And, using my own tortured, self-serving logic, I postulated that it just has to be true.

So I decided to dig a bit deeper, albeit with my jaded, non-objective bank-loving lens.

Where’s the Money?

Let’s start with the basics. Card issuers are for the most part, banks. That means they are getting paid whenever you use your debit, credit, or prepaid card. If you decide to buy lemonade from an enterprising 10-year-old with a Square account, then the bank makes money there too (not sure about Square, but the bank wins for sure!).

Now, let’s move that card into a murky new world of NFC and smartphones. Same transaction, new form factor. Any new revenue there for the bank? Nope, not that I see. There are, however, a couple of new players in the mix, like carriers, trusted-service-managers, handset manufacturers, et al. I’m pretty sure they’re not working for free, so the bank’s best-case scenario is parity with the past, and the very real possibility of diminished returns for banks.

Any net-new transactions from mobile? Probably not. If there are, they certainly aren’t going to move the needle in any meaningful way.

I suppose that someone could develop something new that completely disintermediates the issuer. That would be bad for the bank.

So, looking at mobile payments, there’s very little net-new revenue, and the likelihood of a reduced position in the market. Well, that’s not very good is it?

And don’t try the line, “We’ll make even more money off of offers.” That is what most of the mobile payments players are now pursuing since they figured out they can’t make any real money from mobile payments.

OK, so, in my myopic world, mobile payments ain’t grand for banks.

So what about mobile banking?

Well, that’s a different story.

The Next Big Cha-ching

We already know that Mobile Banking delivers the following benefits:

• Strengthens Customer Loyalty: Through new account openings, DDA direct deposit and balance increases, we’ve seen an average of an $8 per account annual lift from Mobile Banking.
• Improves Bottom Line Performance: Through decreases in IVR and live agent call volumes, as well as reductions in check writing, we’ve seen an average of $6 annual savings per account through channel efficiency and service gains.
• Drives Top-Line Growth: Through increases in the quantity and value of debit transactions, we’ve seen a $14 average annual revenue lift.

Add all these up and Mobile Banking is more than paying for itself.

But wait, there’s more…

As we ready the launch our new extensible Mobile Banking platform, named Fin.X, we are beginning the process of turbo-charging Mobile Banking.

Our new solution extends our platform to a curated network of third-party service providers who deliver new features better and faster than any bank or credit union could hope to do on its own.

This means more new features and services than any other platform, and more importantly, a far greater opportunity for financial institutions to earn more revenue from Mobile Banking. It also means more opportunity to innovate rapidly and to continually differentiate your institution.

With a starting network of more than 30 companies in its Service Provider Network, mFoundry will extend its platform in coming months to deliver services from the following categories:

Each of these categories delivers top-line revenue or cost savings. Exactly how much can institutions make? In total, there is currently at least $100 of incremental annual per-user revenue that can be earned by our clients.

Will every one of our clients take every feature? Probably not. But they will each take a few, and that will create more revenue opportunities for their financial institution.

The bottom line: The near-term opportunity for issuers will be far richer with Mobile Banking than with Mobile Payments. Of course it’s important to ensure that our clients can defend their card portfolio in mobile, which is why mFoundry supports, and will continue to support, all forms of Mobile Payment.

But, ultimately our clients need to drive more revenue today.

And for that job, the best tool is clearly Mobile Banking.

There’s a chance I may be a bit biased, so please don’t shoot the messenger.

Source: Engadget

A few clients asked recently about our POV on RIM, and whether it’s worth supporting a Blackberry application or not. Over the past year, we’ve had a variety of posts on the topic. The short answer is, “No.” It’s no longer worth supporting an app on the RIM platform.

Most of our clients sigh upon hearing this news, comment on the lunacy of RIM’s position, thank me, and then hang up their Android or iPhone smartphone. Interestingly, if you go back a few years, every one of these clients was on a RIM device. They saw firsthand the rapid demise of what was once the dominant smartphone device.

There is no shortage of opinion on what happened to RIM: poor leadership, weak knees, hubris, awful developer tools, limited devices, etc. But, the other day I was attending an industry event and a speaker commented on Clayton Christensen’s seminal work, The Innovator’s Dilemma.

If you haven’t read it, here’s the two-bit summary. Successful companies fail to innovate because the innovations can kill the existing, profitable business. A classic example of is Kodak missing the boat on digital cameras because film was their core business.

So the speaker at this event kept blathering on, and for some reason, RIM and Apple came to mind.

For RIM, they knew that touchscreen phones were going to show up at some point. In fact, according to various reports, RIM (and Nokia for that matter) had some prototypes with a touchscreen UI well in advance of the iPhone. But, RIM felt that a critical part of their secret sauce was the keyboard that they really pioneered and perfected. For them, adopting a less physical and tactile solution didn’t make sense; it would only dilute their offering.

It turns out that the vast majority of people are just fine with a touchscreen keyboard. Is it as good as the original RIM keyboards? Not by a long shot. But it’s good enough, particularly when weighed against all the other cool stuff you get when you recapture that screen real estate (launching maladjusted birds comes to mind).

Apple’s Genius

Then I thought about Apple and the iPhone. I realized that launching the iPhone was a big bet for Apple on many fronts. Remember that prior to the iPhone, it was the iPod that pretty much single-handedly brought Apple back to the forefront of computing and pushed the company onto the Windows platform with iTunes.

The iPod made Apple cool again. It poured money into their coffers, and it reawakened a whole Windows world to the elements of Apple’s beautiful, usable design.  They owned the music player market and nothing could touch them. New entrants from Microsoft, Dell – you name it – they were wreckage strewn along the road.

In fact, the only threat to Apple’s hegemony was an invisible one in the form of the mobile phone. And this is the most interesting and ballsy part of the Apple decision to make the iPhone: They had to be willing to kill the iPod, since the iPod software would be a key part of any iPhone interface.

Well, the rest is history. iPod sales slowed, stalled, and have begun their decline while iPhone sales increased to the point where just the iPhone franchise alone was worth more than Microsoft – Steve Ballmer infamously laughed at the touchscreen too by the way.

The iPhone effectively killed the iPod.

And then, with Android’s help, it killed the Blackberry.

Facebook had one of the most used mobile applications in the United States and the world. So why did they need to largely drop HTML5 for native application behavior on iOS, with Android likely not far behind? User Engagement.

If Facebook ever hopes to generate material revenues from their mobile application, they recognized that the “core” product must be native, while extended, less used interactions may still rely on web based technologies. Native apps still perform better despite increasing network speeds. Content and other data loads faster since the app has less dependence on downloading user interface presentation assets. The quality of interactions and user gestures are still superior with native apps than HTML5.

While HTML5 is an ‘acceptable’ solution, and it was certainly popular with Facebook users, it is still not as engaging as native. mFoundry has consistently seen this trend continue in financial services as well. mFoundry provides both native apps on iOS and Android, as well as an HTML5 site for any device with a webkit browser. Native application users sign-on more frequently, have longer sessions, and conduct more transactions than their HTML5 counterparts. Additionally, native applications have access to operating system functions, like camera, which is needed for tasks like remote deposit capture.