Archive for the 'Bank 2.0' Category

13SepThe Breakthrough of Mobile Payment within the Bank 2.0 – Era

More than 10 years ago, when I was at CeBIT in Hanover, we had this great idea of “Mobile Payment”. The case: Pay via your mobile carrier’s bill. The problem: The carriers wanted to earn their fortune with mobile transactions. The consequence: “Mobile Payment” was too expensive and – in addition: Carriers wanted to limit the transactions to micropayment. The banks were still busy with implementing “mature” Online Banking solutions.

Now, in the era of smartphone apps and Near Field Communication (NFC), there are new rules of the game. NFC is expected to become the most widely used system for making payments with smartphones. Apps will allow customers to manage their financial ship everywhere and around the clock. This is the chance for new business models in this field. Nobody will be dependent on mobile carriers or banks. New players will supply this “market niche” with new financial services. Candidates like Google, VISA, Paypal, Apple, FaceCash and to date unknown new service providers (and maybe “facebook”?) will now take the lead.

But, what is the new business case? Just pay your shopping in the supermarket with your Apple, Microsoft, Blackberry or Android phone? Perhaps that’s the case and just leave your physical wallet at home, take your smartphone. But – “by the way” – you will get credits and deductibles from your retailer. You will be noticed to special offers and new products. And you will scan the products barcode of your milk carton with your phone app as soon as milk is running short – this will be the reminder for your next shopping in the supermarket. There are really lots of business cases for Mobile Payment and new service providers in the Bank 2.0 – era.

There are new conditions: Payments will be moved to the new built frontend layer (and app layer respectively) which is controlled by the “app marketplace provider” Google, Apple, Microsoft and RIM, but not by banks or carrier. Primarily “underbanked” customers*, but also profitable customers will be abondoning the old ways of payments to go for the utility of a combined mobile phone and payment device.

“The bank becomes the back-end manager of risk and the product manufacturer, with the lowest margin of the whole value chain.” (Brett King, http://www.banking4tomorrow.com/2011/09/when-a-telco-becomes-a-better-bank/)

In addition to the technological and customer behavior caused impact of mobile payment, Brett King, the author of Bank 2.0, mentions another two arguments for the breakthrough of mobile payment (Brett King, http://www.banking4tomorrow.com/2011/09/will-the-us-be-the-last-to-go-cashless/):

  • “Tighter money laundering requirements”
  • “Cost of physical handling versus electronic transactions”

Like Enterprise 2.0 (and Web 2.0 respectively), what is about content and context (see [Domb11]), Bank 2.0 and Mobile Payments respectively are about transactions and context (see also http://www.banking4tomorrow.com/2011/06/google-wallet-is-not-about-payments/).

A good overview of Mobile Payment players is given by G+ (see G+, https://www.gplus.com/_Media/GLG_Goodbye_Wallets2-L_1841.png, this is a link to G+ and not a picture from the author of this article). One contender still missing in this big picture is Apple – but maybe we must wait only a few days (or months?)… Another list of the companies in this field could be seen on FaceCash (see http://www.facecash.com/versus).

References:

*) Less profitable customers at the lower end of the scale for retail banking. This term is described by Brett King in the article ”When a Telco becomes a better bank” (see above).
in Bank 2.0 and New Finance. 0 Comments

08SepTwo Key Trends in ‘New Finance’

Financial Services and Banking respectively are affected by two major trends. Causes for these trends are internal and external influences:  External influences are for example new technological developments and Web 2.0 / Enterprise 2.0 while internal influences are such as cost pressure on Information Technology departments and organizational restructuring.

  • Trend 1 – Enterprise Architecture Management (EAM) key for cost savings and flexibility
    Due to planned cost savings, large financial organizations are trying to understand how their Enterprise Architecture works. This is key to start IT consolidation, release IT budget (especially RTB  - “Run the Bank” a.k.a. “Run the Business” costs) and increase flexibility, but this intent is also a great challenge. Usually, Business/IT models and the corresponding IT landscapes have grown over time. Therefore, in most organizations there is no real Business/IT Alignment and we find a complex IT landscape with duplicate functionalities in almost all areas – frequently accompanied by a silo-structure: The principle “one business request => one IT application” has shaped the existing Business/IT structure and the corresponding inflexible “IT elephant”.
  • Trend 2 – New Financial Services (also referred to as “Finance 2.0″, “Bank 2.0″ and “New Banking” *)
    Due to new developments such as Enterprise 2.0 and Web 2.0, new business models are emerging  within traditional finance and banking areas.  Two examples:
    1) The Web 2.0 era results in “parallel financial worlds” and Peer-2-Peer (P2P) models, circumventing traditional and established organizations.  People are using second markets to manage their trading activities (such as https://www.secondmarket.com/) or are using new providers to manage their personal finance (like http://www.mint.com).
    2) Future mobile technologies will enable everybody to pay via mobile phone, circumventing banks and mobile carriers. Developments such as Near Field Communication (NFC) allow making payments without using money within your wallet or credit cards. In fact, we are waiting since more than ten years for the breakthrough of mobile payment. To date, mobile carriers and banks prevented “ready for market” – solutions. As of now, there are new technologies and new financial service providers (see ex. 1) making easy mobile payments possible – without bank or carrier support.
Why do I see these two trends? That’s a simple question.
  • Trend 1 – The growing competitive pressure forces financial services organizations to increase flexibility and reduce complexity. Key is the existing organizational and IT strategy and their corresponding alignment. To date, there was not any need to go into this field, since finance was not subject of depression. After burst of the two big bubbles, the dot.com and the US housing bubbles, pressure increased and areas such as investment banking are not profitable enough any more.
  • Trend 2 – Financial services and banks are still in the area of “Web 1.0″. To date, there is no adaption of new technologies and opportunities are not perceived. This is the chance for the new financial service providers to fill this gap and to leverage new forms of financial services – easy and in real-time.
In addition, both trends are compatible. While consolidation within financial services organizations starts, budget will be released to invest in new ways to manage financial services. But keep in mind: The later the established organizations will start consolidation and moving to the new finance model, the later the new services can be made available… New financial services providers such as Google (see http://www.google.com/wallet/) will use their lead to divest established organizations their customers.

In the next days I will go into the Bank 2.0 / Mobile Payment – example…

References:

  • Google Inc.: “Google Wallet – make your phone your wallet” – URL: http://www.google.com/wallet/
  • Intuit Inc.: “Free Personal Finance Software, Budget Software, Online Money Management and Budget Planner | Mint.com” – URL: http://www.mint.com
  • SecondMarket Holdings Inc.: “SecondMarket – Secondary Market for Alternative Investments, Private Company Stock” – URL: https://www.secondmarket.com/

*) Since these terms are used in different context and have partly different meanings, a clearer differentiation is necessary. The definition and differentiation of these terms goes beyond this article. A good introduction to the term “Bank 2.0″ gives Brett King, author of “Bank 2.0″, see http://www.banking4tomorrow.com/ – The term “New Banking” is described in the blog of Dirk Elsner, http://www.blicklog.com/ .

in Bank 2.0, E2.0, EAM and New Finance. 0 Comments

18FebMobile Banking 2.0 – A Perspective

“Of the next billion people who come online, the vast majority of them are going to do so for the first time through a mobile device.” – Jimmy Wales in SAP Spectrum, [Manr10, p. 17]

Where does this road lead?

“If you had asked most bankers five years ago when they thought that mobile banking would become mainstream, they would likely have told you “not in my lifetime”. Yet, in the last five years, that is exactly what has happened and now banks everywhere are talking about mobile banking.” [King10, p. 228]

Even though banks everywhere are talking about mobile banking tools, Mobile E-Banking is still in its infancy, especially in Switzerland (see [Frey11, p. 24] and below). Even innovations or prime examples such as mint.com (see [Intu11]) or Swissquote (see [Swiss11]) cannot hide this fact. Is it fear of reputational damage, e.g. fear of hitting the headlines in Social Networks (see [Frey11, p. 24]) that slows development down?

At the same time, the number of always connected mobile users is growing steadily. Most of the used new devices (millions of iPads, Galaxy Tabs, iPhones, Nexus, etc.) allow an intuitive user guidance – easy-to-use Apps are available. Provider and retailer sell mobile devices with data flatrates. Consequentially, the SMS Banking (~ “Mobile Banking 1.0″) area is over –

Nevertheless, fact is that bank customers want to have access to “Bank 2.0″ wherever they are. In the evening, you rather grab your smartphone or tab that’s always online than turn your PC or Mac on. And who would like to make the detour to go to the bank branch?

“Bankers need to start treating mobile as a serious competitive advantage.” [King10, p. 228]

King, an acknowledged strategic advisor to the financial services sector and author of “Bank 2.0″, is absolutely right. In fact, a couple of companies are already working on solutions and aim at leveraging the competitive advantage of a soon introduction of new “Mobile Banking 2.0″ applications (and “Apps” respectively). Thus, the above-mentioned companies like mint.com, IBM and Swissquote are just examples.

However, while in some countries at least mobile money transfer and basic mobile banking features are “day-to-day business” some countries are more reluctant to introduce new technical tools. The latter particularly applies for Switzerland, one of the main financial places worldwide. Technical support is in Switzerland quite often reduced to mere SMS (~ “Mobile Banking 1.0″) services – without making use of the now market-ready options of new mobile technologies. And the potentials go even beyond “classic” Retail Banking.

Based on my own experience as a bank advisor, I must however say that Swiss banks exercise caution and monitor developments that might affect security, business risk etc. very closely particularly due to the (compared to other jurisdictions) very strict banking secrecy and data protection rule that Swiss law provides. This explains, at least to a certain extent, the reluctance of Swiss banks towards mobile money transactions and the introduction of new “Mobile Banking 2.0″ technologies in general.

In turn, it is exactly the tension between the opportunities that new technology provides and the challenges that makes Switzerland a very interesting place for bank advisors. Beyond, intuitive applications on new devices will give an impulse for “a real” Mobile Banking 2.0 (see [Alt+10, p. 44]).

Readers of this post who are interested in this subject can find some “incitations” in the reference list. If you need more information on the topic, please do not hesitate to contact me…

Reference list:

  • [Alt+10] Alt, Prof. Dr. Rainer; Möwes, Till; Puschmann, Dr. Thomas: “Neue Wege zum Kunden – Innovationen in der Kunde-Bank-Interaktion.” In: “Wirtschaftsinformatik und Management”, URL: http://goo.gl/815lO, last verified on February 18, 2011.
    Wiesbaden: Gabler Verlag | Springer Fachmedien Wiesbaden GmbH, 2010, WUM 4.2010, pp. 40-47
  • [Frey11] Frey, Matthias: “Die Bank als Plattform.” In: IBM – Think! URL: http://www-05.ibm.com/at/think/data_info.html, last verified on February 18, 2011.
    IBM Österreich Internationale Büromaschinen Gesellschaft m.b.H., 2011, pp. 24-25
  • [Intu11] Intuit, Inc.: “Free Personal Finance Software, Budget Software, Online Money Management and Budget Planner | Mint.com.” URL: http://www.mint.com/, last verified on February 18, 2011.
    Intuit, Inc., 2011
  • [King10] King, Brett: “Bank 2.0: How Customer Behavior and Technology Will Change the Future of Financial Services_”
    Singapore: Brett King and Marshall Cavendish (International) Asia Pre Ltd., 2010
  • [Manr10] Manross, Perry: “How Wikipedia Is Serving The Next Wave Of Internet Users.” In: SAP Spectrum, 4/2010, URL: http://en.sap-spectrum.com/wp-content/uploads/2010/11/SAP_SPECTRUM_2010-no-04_E_j_wales_wikipedia.pdf, last verified on February 18, 2011.
    SAP AG, 2010, pp. 16-18
  • [Swiss11] Swissquote Bank Ltd.: “Mobile – Technology – TRADING – Swissquote Bank ltd.” URL: http://www.swissquote.ch/sqweb/epb/technology/mobile.jsp, last verified on February 18, 2011.
    Swissquote Bank Ltd., 2011

Related articles:

  • Schwiebert, Marc; Körber, Olaf; Thälker, Carsten: “Neuland im Bankvertrieb – Wie mobile Endgeräte die Kundenkommunikation verändern.” In: “Wirtschaftsinformatik und Management.” URL: http://goo.gl/twA0p, last verified on February 18, 2011.
    Wiesbaden: Gabler Verlag | Springer Fachmedien Wiesbaden GmbH, 2011, WUM 1.2011, pp. 24-29
in Bank 2.0 and E2.0. Closed