Cashing in on Mobile Payments with a Winning Strategy
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The document discusses the evolving landscape of mobile payments, focusing on the roles of financial institutions, retailers, and consumers in the payments ecosystem. It highlights the importance of mobile technology in consumer behavior, the need for banks to innovate, and the competitive pressures faced by card companies and merchants. Key insights emphasize that mobile payments not only serve as a replacement for traditional services but also open up new opportunities for revenue generation and consumer engagement.
Cashing in on Mobile Payments with a Winning Strategy
- 1. Cashing in on Mobile Payments with a Winning Strategy June 25, 2013
- 2. Perficient Profile A national management and technology consulting firm, with expert teams focused on helping our clients implement business- driven financial services solutions. Fast Facts: • Founded 1997 • $380 MM+ in annualized revenues • 24 locations in North America • Offshore in Europe, China and India • 2000+ employees • 85% of revenue from recurring clients • Served 450+ clients in past 12 months
- 3. Financial Services Offerings Practice Snapshot Practice Leadership with over 20+ years of financial services experience Expertise delivering solutions across multiple platforms Serving 19 of the top 50 U.S. Retail Banks (4 of the top 5) Serving 5 top Card and Prepaid companies Industry thought leaders and speakers Formal methodology & tool set to ensure success Strategies and Differentiators Cross-functional business process experience Enterprise architecture expertise Deep Payments & Integration experience Understand the balance between business and IT In-house Experience Design team (Perficient XD) 200+ clients
- 4. About the Speaker Jeff Fisher, Director, Operations & Client Advisory Services Jeff Fisher has more than 20 years of experience in financial services leading strategy, development, design and implementation of enterprise initiatives. He has provided IT leadership over enterprise systems and processes at companies like Capital One, Federal Reserve and Visa. His areas of focus include payments, business process management, infrastructure services, regulatory compliance, risk management, and performance management.
- 5. Perspectives on the Payments Ecosystem 3
- 6. Players in the Payments Ecosystem Financial Institutions Retail & Merchant Services Card Companies & Networks Consumer Should all banks make the shift to mobile? Is mobile enough for banks to differentiate and be competitive? Will rewards-based card offerings and ever increasing merchant processing costs change the current payments paradigm? Will emerging product innovations from intermediaries and new merchant paradigms impact industry dominance?
- 7. The Consumer Perspective Mobile technology has altered the way consumers behave and how organizations adapt their business models. • Emerging Payment Intermediaries have capital to be innovative with no regulatory oversight • P2P payments are riding the Credit and Debit rails • Banks continue to be the “non-exciting” intermediaries to transfer funds – interbank/intra- bank transfers • New digital currencies are emerging – intervention by government not yet known Folding Consumer Payments Into the Ecosystem • Profitable market segments have not yet fully adopted mobile • Emerging Payment products are and need to be innovative & compelling to consumers • Consumers with smart phones using “showrooming” • Security still very important; though consumers are seeking value in retail side “rewards” Behavioral Shifts in Consumer Demand ISO Messaging “Card Present” Mobile Wallet Rewards Closed Loop In-Store Retailer’s Systems eCommerce Web Services Processor Services Card Cos Networks Payment Intermediary Services Payment Intermediary ACH Consumer’s Bank Retailer’s Bank CC Acct Bk Acct Payment Intermediary’s Bank CC Acct Bk Acct Bill Pay, P2PRetail, P2P In-aisle “price shopping” GPS Driven Couponing Retail Website/ Portal OnLine Store Money Load Mobile CC Acct Bk Acct CC Gateway Credit, Debit & ATM Networks Consumer
- 8. The Financial Services Perspective • Costs for infrastructure and platform development • Data to be monetized from transactions and online campaign marketing tools • Reap savings in costs and services • P2P capabilities are top of mind Plan to Move to Mobile • Mobile not an additive service – it’s a replacement • User Experience must be easy, and intuitive with mobile utility • Omni-channel challenge and opportunity Ensuring Adoption & Usage
- 9. The Retail Perspective Proprietary NW “Card Present” Mobile Wallet In-Store Corp Retailers Systems Processor Services Card Cos Networks ACH Processor Retailer’s Bank CC Acct Sweep/Deposit Acct ACH Services Mobile App: In- Aisle Shopping In-Aisle Proprietary Card System Closed Loop Processor Acquirer Platform Coupon, Inventory & Checkout “Card Present” Mobile Wallet In-Store Terminal Batch Admin/BO Console In-Store Distributed System Small Store Card Data in PCI Compliant DSS Zone Large Retail Store Retail Location Retail Website/ Portal Treasury Mgmt, Rewards, Payment Intermediary, Etc. Gateway / Switch Services CC Acct Debit Acct, ACH RDFI Customer’s Bank OnLine Store Card Mgmt Retail Website OnLine Store Card Mgmt FRB ACH CC Gateway Payment Intermediary Payment Intermediary’s Bank CC Acct Sweep/Deposit Acct Consumer • Closed Loop Systems and pre- paid branded card programs emerging • Credit card fees (authorization, discount, charge backs), PCI Compliance, and other fees are too costly • ACH being leveraged for pre- paid card funding Retail Side of Ecosystem is Changing Retailer Innovation Meets Mobile • Building consumer affinity towards prepaid models • Leading retailers turn showrooming into innovation opportunity • Retail systems enhancements include mobile rewards and couponing capabilities
- 12. Validation of Consumer Adoption & Movement Towards Mobile Payments 3
- 13. Consumer Access to Retail Services “32% of smartphone users used ‘showrooming’ to make a purchase” - Federal Reserve System “U.S. Online Retail Sales to Rise to $370B by 2017” “Projected to be 1.8B social networking users worldwide in 2013” “Tablet sales expected to surpass portable PCs in 2013, total PCs by 2015” “1B smartphones will be shipped worldwide in 2013”
- 14. Consumer Access to Banking Services 24% to locate ATM 21% for mobile RDC 53% transferred money 27% for bill pay 87% to do a balance inquiry “Mobile banking users will exceed 1B in 2017”
- 15. Payment Volumes “Gartner cuts NFC payments forecast by 40%” -TechCrunch “US mobile wallet users spent $500M in 2012” - Berg Insight “$3.8T in purchases on General Purpose Cards” - The Nilson Report “Google to offer P2P via Gmail” “Mobile coupons trigger 51% of consumers to shop in-store” - RetailMeNot “More than 770M GPS- enabled smartphones” - Business Insider
- 16. • 10% of transaction as m-payments • Loyalty program used 25% by 9M members • $41M in payment volume per day • On target to process $15B in 2013 • $20B in mobile commerce in 2013 • 10% of payments volume from mobile in 2012 Nonbank Challengers
- 18. Helping Move the Dial More than 300+ Vendors Guide of 350+ Vendors 175,000,000 Search Results
- 19. The Bottom Line • Adoption of mobile will yield rich consumer “data” for the payments ecosystem to leverage • Account aggregation and payment initiation for financial services clients – regardless of location • Omni-channel customer experience in stores – retailers can steer purchasing • Ability to build brand affinity – target marketing with mobile will be rich • Convenience factor for the consumer – statistics validate growth trends in mobile to derive revenue for all parties Value Propositions for Mobile Payments
- 20. How to Elevate Your Success with Payments 3
- 21. Financial Services Mobile Payment Strategies Green Dot’s prepaid cards are available to consumers at more than 70,000 retail locations nationwide and online. Challenge • Faced with significant growth & deploying new mobile product s Solution • CIO Advisory services to optimize IT Services and build a next generation mobile infrastructure Business Value • Increased agility to respond to rapid changes in the industry and scale for future growth • User Experience + Empowering the Customer = Mobile Payments Success • Data-savvy Players: Customer Analytics = Game-changer for Banks in Payments Ecosystem • Mobile infrastructure platform and strategic partnerships ensure Mobile Payments readiness +
- 22. Financial Services • Streamline transaction processing - Mobile apps that extend couponing with relevant offers (less is more) • Monetize data for smarter banking – Fine-tune advertising and promotions to consumers • “Under-banked” today will be “banked” tomorrow - Identify new payment products to better serve this segment Top of Mind for Consumers¹: • Improve Internet and Mobile Services • Change Fee Structures 1 Ernst & Young Global Consumer Banking Survey 2012
- 23. Commercial Payments Enabling Strategies for Wholesale Payments • Full array of B2B services - Portals with role-based access control • Provide a corporate admin capability to manage permissions, payment release workflow, and reporting • Adopt a “payments hub” architecture that interfaces with ACH, Wires, and Securities services • Leverage a predictive analytics fraud model for ACH and wire services • Secure environment with seamless and cost effective back-office integration “Provide a mechanism that offers corporate customers least cost alternative payment methods to use.”
- 24. Retail & Merchant Services • Leverage technical partners for “virtual” POS terminal applications • Support all payment types to include split-tenders • Partner to monetize transaction data • Reduce merchant obstacles & promote digital adoption • Provide guidance on EMV standards and qualify transaction attributes well in advance • Preclude unnecessary PCI fees assessed on merchants Merchant Enablement Strategies Emerging mobile commerce and payments innovator serving the U.S. Retail industry. Challenge • Differentiate their mobile payments product and attract new merchant members to drive consumer adoption Solution • Delivered UX design for a mobile wallet application on the iOS platform supporting all payment types. Business Value • Decreased time to market for their pilot mobile wallet
- 25. Card Companies & Networks What’s Important to Them • Promoting brand recognition • Highly competitive environment to grow volume in US market • Continue to expand into underdeveloped markets • Card company infrastructure and networks require maintenance along with enhancements – all at a cost • Reduce fraudulent transactions • Expand “platform as a service” offerings beyond portal-based prepaid platforms – make them competitive • Evaluate alternative message streams containing PAN data originating at POS to reduce downstream PCI costs, impacts and fraud • Promote service offerings to help banks monetize data • Promote mobile adoption to all demographic segments Enabling Ecosystem Strategies
- 26. Questions?
- 27. Other Resources Session Moderator Follow On Twitter @Perficient_FS Come Visit Us at Booth #532
- 28. Thank you for your time and attention today. Please visit us at Perficient.com