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Posts Tagged ‘Google’

Mmmm…Gingerbread

November 17, 2010 1 comment

Mobile payments are about to get a serious toe-hold in the US.  In case you haven’t heard, Google is about to release the newest version of Android, Gingerbread, which will support NFC.  Once Apple releases their next iPhone in 2011, you can expect adoption to increase exponentially.

So what does this mean to banks and credit unions?  Most won’t be affected for a while.  But the big boys like Bank of America, Wells Fargo, Citibank and JP Morgan will really start to feel the pain sooner rather than later.  Mobile payments will allow users to connect their credit and debit cards to their phone.  But that’s only if Google and Apple decide to play nice.  They could set themselves up like PayPal, which means that everything would flow through ACH.  If that happens, you can kiss interchange fees goodbye.  The bigger banks would feel this first because their customers are among the early adopters.

Now, you can stick your head in the sand and hope that adoption doesn’t happen for another 10 years, or you can start planning your strategy today.  One thing I’d look at is charging a fee for any ACH withdrawal.  The second is getting familiar with iOS and Android.  Because if you aren’t planning to adapt, others are.

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First ODP, Next Interchange

October 19, 2010 1 comment

Brett King, of Bank 2.0 fame, has a post over on Finextra titled The iPhone 5 Debit Card – coming soon.  In the article he discusses the potential impact of Apple’s iPhone 5.0 that will most likely be released next fall.  One highly anticipated feature is contactless payments, which is something I wrote about here.

Brett poses a question of “how will banks compete against Apple, Google, Microsoft and the carriers in the credit card space?”  Apple already has customers that setup their credit cards to use for iTunes.  You can bet that Google and Microsoft will do the same.  Google is better positioned than Microsoft, with their Google Checkout.  But I think Brett missed one important area.

For most banks and credit unions, credit cards aren’t a huge revenue source.  I’m willing to bet that those interchange fees they get from debit transactions has way more income.  I happen to use PayPal for a lot of online transactions.  One thing I recently noticed was, my PayPal account currently has $0 in it.  However, PayPal is able to directly transfer from my checking account to pay for any transactions.  This means that PayPal gets a percentage, but my bank gets nothing.  As far as my bank is concerned, it’s just an ACH transfer.

So, when mobile payments finally take off, it won’t necessarily be banks and credit unions that benefit.  With electronic transactions being the dominate form factor for payments, losing the credit card market isn’t what should keep executives up at night.  It’s losing the debit card transaction market.

Location, Location, Location

Lately there’s been a lot of buzz in the mainstream about location games from companies like foursquare, brightkite, GoWalla and Booyah’s MyTown. Facebook is also getting into the space with their new Locations feature and Google has Google Latititude. The question is, how can banks and credit unions get in on the game? TDECU and North Shore Bank are two financial institutions that give rewards to the mayors of their branches. But does this really fit into a FI’s strategy, as most have driven customers to online, self service channels? The Financial Brand gives a great breakdown of why may not the best approach.

We’ve also been kicking around some ideas of incorporating location games into promotions. Giving a reward to only the mayors of our branches didn’t seem a good idea long term. We too see that our branch traffic is down and most people only check-in there to earn a badge. Earning badges that are specific to our bank was another idea, but customers would still only be trying to earn a badge.

While updating my locations on Foursquare the other day, the light bulb came on. Why not use the Promotions and To Do features of Foursquare? For example, get a gift certificate if you come in and sit with a FSR/CSR to make a personal financial plan. Or you can make a To Do of signing up for your new mobile banking or PFM service. The trick is to help your customers do more than just check-in for a badge. By giving them a task, you both can come away with something positive.