We are continuing to see mobile devices, like Square and Intuit’s GoPayment, displace traditional credit card terminals. While initially targeted at smaller merchants, they are now moving upstream.
The mobile wallet (using smartphone applications for payment) looks to be the next frontier for smartphones as a means of payment by the consumer. Starbucks, for instance, allows customers to pay for their purchases using Square Wallet — the same company that offers the Square card reader. There are also efforts under way by some companies to allow consumers to use their smartphones at a cash register as a substitute for a credit or debit card.
Jerry Siebenmark of the Wichita Eagle/McClatchy News Group wrote about these trends recently (with some nice quotes from us).
Although the ultimate winning technology is unclear (EMV? NFC?) it is clear that people are using mobile phones to make payments and transmit them in some way. For banks that make money from merchant processing, Square and other card readers threaten to take business away from them, or dilute the number of players in that space. Longer term, it also changes how consumers use bank branches – it is one more service that lessens businesses’ and consumers’ need to use a bank facility.
I am very pleased that two well-known bankers/strategists: Ric Carey, formerly with Umpqua Bank, and Tom Zayko, formerly with Citigroup, have joined Peak Performance Consulting Group as Directors.
As EVP and Head of Retail Banking for Umpqua Bank, Ric managed Umpqua’s internationally acknowledged best-in-class community banking program. Additionally, he has particular expertise in Small Business Banking.
Tom is an expert at identifying growth opportunities and creating high performing marketing and sales strategies. His work includes developing specific competitive and growth strategies based on individual market potential. In addition, he was responsible for creating a unique survey program that gathers customer feedback in real-time.
Ric and Tom bring tremendous expertise to our clients, having led their banks in strategies that achieved revenue growth with superior profitability and improved distribution effectiveness. With long careers in banking, they understand the challenges the industry faces today, and they know how to deliver bottom-line results. In addition, they expand our geographic coverage: with Ric on the West Coast and Tom focused on the Mid-Atlantic and New England area, we are better able to serve our growing client base.
But, as they say on TV, “wait, there’s more!” Go here for the full release from BusinessWire.
Missed the BAI Retail Delivery Conference & Expo, or attended and trying to make sense of the over 200 vendors? Here’s my personal “Top 5″ do-not-miss list
Panoramic view of exhibit hall – use mouse to move left or right.
Walking through the exhibit hall at BAI Retail Delivery you’d never know it had its origins as an ATM conference. This year only 11 of the roughly 210 exhibitors were in the ATM space while over 60 were promoting mobile payments. How times have changed!
What else were the vendors promoting? “Customer experience” was the hot buzzword this year, closely followed by “gamification” (I’m still trying to figure out what that means).
So how do you boil this all down? Here’s my personal Top 5 “must see” list.
ATMs have evolved from simple cash machines to really represent what their acronym stands for: Automated Teller Machines. For an interesting review of some of the key trends (and some additional perspective from us), see: After over 4 decades, ATMs are still vital to the banking industry.
But with improved technology and changing customer habits (decreased use of cash, fewer branch visits) many banks are re-evaluating how ATMs fit into their overall distribution strategy. In recent weeks, Bank of America announced it was reducing its’ off-site ATM footprint, removing them from many grocery stores and shopping malls, while at the same time PNC is increasing the number of off-site ATMs. Chase is experimenting with greater self-service in their retail branches, utilizing ATM-type technology to reduce the cost of branch operations. Meanwhile, USAA and Coastal Federal are continuing their expansion of enhanced function ATMs, combining them with supplemental technology, to provide a complete customer service experience that includes document scanners, document and check printers, and video conferencing access to remote sales and service experts.
How should banks and credit unions integrate ATMs into their strategy? They are still a vital distribution point, but financial institutions need to use a sharp pencil to determine the best strategy.
PayPal pioneered person-to-person (P2P) payments, and banks are finally entering the game in a serious manner. Recently, Bank of America, JPMorgan Chase and Wells Fargo formed a joint venture to create clearXchange, a direct competitor to PayPal. Customers of the three banks will be able to move funds from their checking accounts using an email address or mobile number, instead of having to provide checking account and routing numbers. The clearXchange service will roll out nationally and there are plans over time to expand it to include other financial institutions.
Jerry Siebenmark of the McClatchy Newspaper Group wrote an interesting article on this effort, which included some of our insight. A few key points:
- Customers want it – what could be easier than sending funds by email or phone message?
- Technology is not a barrier
- Adoption is high. ClearXchange claims about 50% of on-line customers adopt the service immediately after it is offered.
- We know how to manage risk.
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Banks have higher trust level than non-banks, and should achieve higher acceptance rate.
Do you have a strategy for P2P payments that includes technology, risk, pricing, customer communication, customer service and impact on deposit operations?
As customers accelerate their migration from traditional payment forms, are you thinking forward about the impact on your branch network (do you still need the same number, managed in the same way?)
Are you re-thinking your sales and customer acquisition process, as fewer customers come to your branches?
What happens when non customers use your ATMs? Do you try to convert them into bank customers?
Here’s what came up on my screen when I used a Wells Fargo ATM while travelling in California.
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