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Alternative Payment Disrupters – What You Need to Know to Compete
in a Changing World
Mobile has changed the world
Mobile is changing pictures
Mobile is changing books
Mobile is changing maps
Mobile has changed banking
… and it will change payments
The need to make payments remains the same…
55
28
62
0
10
20
30
40
50
60
70
80
90
100
ecommerce
Bills
POS
P2P
100 % of transactions
... But many payments will shift to mobile
Point of sale A2A/P2P Bill Pay
How long before NFC arrives? Will cloud based payments come first? What is the future of mobile POS? Who owns the wallet? What is the role of the Financial Institution? What is at stake? What can I do next?
Mobile POS payment gets a lot of media attention
Lots of smoke; where’s the fire?
NFC 3-5 years away from being at scale
NFC availability
EMV Terminalization
Consumer Apps
5545
3520
40
50
100
2012 2013 2011
NFC Penetration % US consumers
2014 2015 2016
5035
201052
0
50
100
EMV Terminalization % US consumers
2016 2015 2014 2013 2012 2011
Cloud payments don’t yet offer compelling value to consumer
Financial Institutions can wait for the technology to mature
However, its not just about interchange ...
Its as much about consumer engagement
While we wait for mobile POS - the war for consumer engagement is now
Most disruptors are targeting consumer engagement
Targeting customer engagement
Targeting both engagement & interchange $$
??
Manage Bills
Cash to pay a friend
Discount card
Loyalty card
Payment card
Drivers license
Transit card
“I will carry my wallet as long as… the DMV wants me to!”
Consumers expect ‘more’ from the mobile wallet…
10%
21%
30%
45%
55%
57%
65%
0% 20% 40% 60% 80%
Social Purcahse…
Share Wish List
Find Merchants
Ratings & Reviews
Real Time Offers
Manage Receipts
Pymt Instrument…
Carlisle & Gallagher Consulting Study – April 2012
Mobile wallet will need to add value to consumers
Manage finances
Save time
Save money Be secure
Potential owners of the wallet
Your Financial Institution
We are at a fork in the road
The future of mobile POS payments is not clear yet…
Financial institutions provide payment rails for
other players’ wallets
Financial institutions integrate features
selectively & offer a wallet
Increase engagement today; to protect $$$ tomorrow
…possible beginnings of a mobile wallet
The mobile wallet is an evolution
Mobile Banking
Person to person
Rewards
PFM
NFC/ POS payments
Mobile Bill Pay
Build consumer engagement so you are positioned for success in the wallet wars
Mobile Bill Pay is here and its now
• Consumers expect channel parity & continuity
• Add a payee on the PC
• Make a payment on mobile
• Get confirmation on tablet
High visibility & short term impact
Increased bill pay usage with launch of mobile channel
70
5585
60
1520 25
0
10
20
30
40
50
60
70
80
90
100100 100
Inactive Low users
20
% of BP users
30 20
Medium users
100 100
Heavy users
BP usage increased
BP usage decreased BP usage remained same
Source: Intuit Financial Services study of mobile banking users, Aug 2012
Consumers use P2P transactions to split bills & expenses
50%
0%10%20%30%40%50%60%70%80%90%
100%100
20%
30%
% of transactions
Greater than $500 Between $100-$500 less than $100
P2P is by definition a mobile transaction
5
25
0
10
20
30
40
50
60
70
80
90
100
Mobile
Online
100
P2P
75
A2A
100 % of transactions
95
Source: CashEdge
Customer engagement can be driven through rewards
So, what should a financial institution do?
Invest in mobile to drive customer engagement – build the foundation for the mobile wallet
• REWARDS • Full BP services • Person-to-person payments • Remote deposit capture • Alerts
Monitor NFC and EMV adoption and usage and act on payments when the time is right.
