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The Future
of Payments
Bringing consumers
on board
©TNS 2013
on board
1
Irene IerardiTNS Lead of Consumer Finance Practice
The Bank of the futureNovember 14th 2013Venice Italy
The roadmap
Payments today:an ecosystem in evolution1
Taking a closer look at consumers’ trends2
How TNS responds: a UK case study3
Activating insight to bring consumers on board
Looking to the future:pay your way5
4
TNS can take you
©TNS 2013 2
TNS can take you through the detail to unlock growth
1Payments today: an ecosystem in evolution
©TNS 2013
an ecosystem in evolution
Payment technology hits the newspapers and magazines headlines
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A range of providers have harnessed technology to create a range of payment solutions
Apps
Smartphones
Laptops
Tablet
Mobiles
Devices
Card
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PAY
5
PAY
Telcos
Technology
Retailers
Banks
Software
Providers
And created a veritable soup of payment brands
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PAY
6
Resulting in consumers using a wide range of payment types each month
Cash
Debit cardSmartphone app
Contactless
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Credit card
Online payment
Online banking
Phone banking
Online to retailer
Retail loyalty card
Cheque
2Taking a closer look at consumers’ trends
©TNS 2013
consumers’ trends
Purchasing and payment behaviours are changing due to emerging trends
1. Technology Digital technologies, mobile, emerging retail models marrying virtual and physical environments
2. The shift in consumer
Reassurance, value for money, convenience,
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PAY
PA
9
consumer expectations
money, convenience, simplicity, time saving
3. Socio economic change
Socio-economic change: Senior, Millennial, Migrants
Technology is pervasive
The world of retail is in transition as digital technology disrupts shoppers’ expectations regarding how they interact with the world around them, a world in which computing is embedded in everything, pervasive, persistent and sensitive to the presence of people and objects
Strategic themes
� Consumers are empowered – to be part of their conversation requires playing by their rules
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playing by their rules
� Technology has disaggregated the shopping process and this will continue
� Customers will research and buy products online as much as they can
� Everywhere commerce
� New devices are changing behaviours: mobile and the financial world
Digital facts and figures
European Internet users (% population*) European Facebook subscribers (% population**)
63%518.512.109
31%250.934.000
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European E-ShoppersEuropean smartphone ownership
Source: *Internetworldstats, June 30, 2012; **Internetworldstats, December 31, 2012;*** TNS Digital Life 2013; **** Ecommerce Europe , 2012
45% (% population***)
52% % internet users among
mobile owners
31% (% population****)
€311,6bn (turnover****)
85%
InternetPenetration
40% 80%
62%Go online daily
Are brand
% of Internet users that:
% of Internet users that:
China France
The digital empowered consumerAre you on Facebook? Twitter? Pinterest?
©TNS 2013
23%
29%
88%
33%
74%
91%
Are brand fans on SN
Write about brands online
Research brands online
12
Source: Digital Life 2012
Consumers are empowered – to be part of their conversation requires playing by their rules
34
68
46
55
33
66
37
60
France BrazilPoland South AfricaPosting comments online is an effective way to influence companies
I expect companies to contact me if I write something about them
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13
Source: Digital Life 2012; I8a; Comment writing attitudes Base: Online comment writers (all categories); 561, 597, 930, 73
42
34
39
46
20
33
35
37something about them
I find it a scary thought that companies would track what I write about them
Empowered consumer impacts on Corporate ReputationBrands PR exploits competitors’ mistake
©TNS 2013 14
Trust and transparency are key words: social media is hugely influential, more so than a brand’s own voice
Disagree
10
11
63
68
Agree
“What other people say about brands can be trusted more than what brands say themselves”
France
Poland
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11
23
16
68
40
62
Brazil
South Africa
Source: Digital Life 2012; I11; Comment reading attitudes Base: Online comment readers (all categories); 1167, 896, 1423, 184
Everywhere commerce
Incorporating the virtual
In Germany, Adidas has been piloting an Adiverse Virtual Footwear Wall It lets customers browse a 3-D
The interaction between the physical and the digital world opens up new business models that were impossible to imagine a generation ago, creating bold possibilities for reimagining retail and Payments
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It lets customers browse a 3-D footwear catalog in which they can zoom and rotate
When a customer finds a pair of trainers he or she likes, a sales assistant checks stock levels (on a tablet computer, of course) and lets people pay without having to go to a cash register
http://www.youtube.com/watch?v=NKbsfOAVu3Y
Even money becomes virtual
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Mobile bankingChecking bank accounts and using online payment mechanisms through specific apps or dedicated websites on your mobile phone
22%
New devices are changing behaviours: mobile and the financial world
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of mobile users globally have performed banking activities on their phones
22%
Mobile banking has gained traction in many markets, and strong interest will fuel greater adoption across the world
Acceptance of mobile banking
38
56
54
47
46
22
38
29
32
31
Global
Developed Asia
SSA
North America
China
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Source: Mobile Life 2013; E1a. Usage of mobile banking | E2. Interest in mobile banking
Base: Mobile users – Global 35286 | North America 2322| Europe 11095 | Developed Asia 4987 | India 2454 | China 3094 | Emerging Asia 3048 | Lat Am 2096 | MENA 1860 | SSA 4330
46
43
43
27
25
11
31
25
23
15
7
4
China
Europe
Lat Am
MENA
Emerging Asia
India
Using Interested
In Developed markets, mobile banking needs to prove its value by offering consumers services centered around convenience that enhance their experience
Top 5 mobile banking features
Mobile banking overview – Developed markets
16
15
10
7
4
12
11
11
10
9
Reading account details
Bank or credit card notifications
Transferring money to/from …
Transferring money between …
Receiving payments for goods …
Current usage
Interest
Services like mobile cheque deposit drive convenience by allowing consumers to upload photos of the cheque via mobile instead of having to travel to a bank
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Top 5 drivers of mobile banking Top 5 barriers to mobile banking
56
54
42
32
23
It is quick
Can do it at any …
No queues
No filling out of forms
More control over …
43
28
25
22
21
It is not secure
Current banking …
Not private or …
Don't trust mobile …
Mobiles can be lost …
Source: Mobile Life 2013; E1a. Mobile financial services used | E2 Mobile financial services want to use | E4d. Drivers of mobile banking | E4e. Barriers to mobile banking
Base: All mobile users – Developed 17250 | Those who use or are interested in mobile banking – Developed 9067 | Those who do not use and are not interested in mobile banking – Developed 8183
Developed Countries: Australia, Canada, Czech Republic, Finland, France, Germany, Hong Kong, Italy, Japan, Korea, Malaysia, Netherlands, New Zealand, Norway, Portugal, Russia, Singapore, Slovakia, Spain, Sweden, Taiwan, UAE, UK, USA
In emerging Tier 2 markets, the large un-banked population and lack of advanced mobile capabilities pose a challenge – banks must focus on feature phone-based technology that allows for easy money transfer
Top 5 mobile banking features
Mobile banking overview – Emerging Tier 2 markets
3
2
4
2
2
7
8
5
6
5
Transferring money to/from …
Transferring money between …
Bank or credit card notifications
Reading account details
Receiving wages/salary
Current usage
Interest
National Payments Corporation of India’s Interbank Mobile Payment Service offers SMS and USSD-based banking services with a standard interface across any mobile phone, allowing members of 56 national banks to complete transfers easily via mobile
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Top 5 drivers of mobile banking Top 5 barriers to mobile banking
57
36
32
32
28
It is quick
It is secure
There are no queues
It is private and …
No filling out of forms
28
23
20
17
17
Don't know how to use
It is not secure
Don't have this …
Prefer to speak to …
It is expensive
Source: Mobile Life 2013; E1a. Mobile financial services used | E2 Mobile financial services want to use | E4d. Drivers of mobile banking | E4e. Barriers to mobile banking
Base: All mobile users – Emerging Tier 1 10330 | Those who use or are interested in mobile banking – Emerging Tier 1 3667 | Those who do not use and are not interested in mobile banking – Emerging Tier 1 6663
Emerging Tier 2 countries: Cameroon, Ghana, India, Kenya, Nigeria, Philippines, Senegal, Thailand, Vietnam
Mobile walletPaying for products and services via SMS, a mobile phone app, or by touching your mobile phone to a sensor
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of mobile users globally have used their mobile phones as a mobile wallet
15%
Consumers’ needs: at TNS, we speak about 3 currencies
Money
Time
When you employ and activate technology, ask yourself: does it help my customers save money, time or angst?
The financial crisis gave permission to people to look for value.Shoppers are better informed—partly as a result of digital and social media—about deals and about whether they represent good value
Need of reducing the emotional and mental clutter
©TNS 2013
Time
Angst
23
Need of reducing the emotional and mental clutter in life so to make space for the important things
Consumers are looking to simplify, and brand touch points (shop, online, mobile, tablet) have to guarantee a seamless experience
Simplify. Please.
Adding lots of fashionable technological complexity can be fun for a while but would have shorter longevity.
Simplicity and naturalness will be the long term survivors in
©TNS 2013
be the long term survivors inpayments, as in everything else.
That implies intuitiveness trust, and security too,
Socio-economic change: the “Grey Age” getting real
01By 2050 2 billion “seniors” globally–over 60 years
02
03Europe 2025 65 or over more than 20%
Europe today:
65 or more years old: 17.5 %
Population pyramid EU-27, 2011 (bordered) and
EU-27 - Median age: 1990 - 2010 - Eurostat
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05
04
Older women more likely to be single
Population pyramid EU-27, 2011 (bordered) and2060 (solid colour) by gender – Source: Eurostat
Rapid increase in no. of over-80sin the EU-27’s population: is projected to almost triple between 2011 and 2060
Millenials have grown up as "digital natives“: this will probably lead to greater demand for payments to be instantaneous or “real-time and 24/7”
LIMITLESS CONNECTIVITY:
The ability to operate in a multimodal, trans-media world is a baseline for Millennials
REAL-TIME INTERACTION:
©TNS 2013 26
Millenials=born between 1979 and 1997; ages 16-34 in 2013
Millennials live on-the-go, and their mobile devices ensure they are always connected and living in real time
LIVING LIFE THROUGH TECHNOLOGY:
For Millennials, digital isn’t just about bringing the offline online, it is about creating new spaces and behaviors to create, play, share and consume
Migration has started to pick up again
Migration has started to pick up again, driven largely by people moving within the European Union, after three years of continuous decline during the crisis (OECD, International Migration Outlook 2013)
Remittance flows to developing countries are expected to reach $414 billion in 2013 (up 6.3 percent over 2012), and $540 billion by 2016 (The World Bank,
Migration and Development Brief, October 2013)
Continuing to help immigrants to
©TNS 2013 27
Continuing to help immigrants to integrate will ensure they can play their part in driving growth
The new “Payment Services Consumer”: An active Stakeholder who contributes to choose his own payment way
A new Stakeholder, who acts as a pro-sumer, who decides which payments best meet his needs and who is aware of
©TNS 2013 28
his needs and who is aware of the inclusive service the Electronic Payment System supplies
3How TNS responds: a UK case study
TNS can take you through the detail to unlock growth
©TNS 2013
case study
The UK case study
Requirements How current
Identify opportunities for payment methods to better serve consumers
©TNS 2013 30
Requirements on payment occasions
Consumers ideal needs
How current payment methods meet those needs
Sample size: 1,706 Fieldwork: May 2013
Less is more...
But the consumer wants more from less
31
Consumers have a variety of sometimes conflicting needs
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There are a number of trade-offs consumers need to make when choosing a payment type
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Personalised & intelligent
26Service & in-control
Budget planning
14
Consumers have three needs which account for 41% of their spend; three further needs in financial planning and personalisation define a huge opportunity
o
No-hassle, quick & easy10
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19
34
n
Fraud-protection & benefits
16
Recognised & accepted
15
Personalised and intelligent needs can be seen and are being met in many categories
Mass Production Mass Customisation Personalisation
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Personalised and intelligent needs for payment methods
Mass Production Mass Customisation Personalisation
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?
The six ideal needs are complementary and fit with different parts of the market landscape Currently no payment methods meet ‘personalised & intelligent’ need
CashDebit cards
Credit card w/o benefits
Credit card with benefits
Online bank account
Online 3rd party
Tech enabled payments
No-hassle, quick and easy 10%
Recognised and accepted 15%
©TNS 2013 37
Personalised and intelligent 26%
Fraud-protection and benefits 16%
Budget planning 14%
Service and in-control 19%
Less is more...
but the consumer wants more from less
There are many opportunities to meet
needs better
No payment method meets consumers
biggest need
©TNS 2013 38
4Activating insight to bring consumers
©TNS 2013
to bring consumers on board
There are two significant drivers of consumer attitudes and behaviours
+
+-
Technologically engaged
Financially Financially
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+-
-
Technologically disengaged
Financially involved
Financially uninvolved
In relation to payments, there are five segments of similar sizes
+
+-
Technologically engaged
Financially Financially
Tech savvy best deal seeker
Tech loving with limited budget
©TNS 2013 41
+-
-
Technologically disengaged
Financially involved
Financially uninvolved
Wealthy traditionalistRisk averse
conservativeFinancially disengaged
� Influencers and Future Shapers
� Live in their phones
� Networkers in physical/online
� Brands are important to them
Tech savvy best deal seeker
23%
proportion of spend
©TNS 2013 42
� Time poor families
� Never have enough money
� Max out on credit cards
� Active balance transferers
Tech loving with limited budget
17%
proportion of spend
©TNS 2013
� Embrace new technology
� Open to new payment types
43
� Older C2DE bias
� Cash and debit card users
� Life’s too short to worry about money
� Apathetic and functional shoppers
Financially disengaged
18%
proportion of spend
©TNS 2013
functional shoppers
� Not curious
� Hard to influence or impress
44
� Oldest group C2DE bias
� Cash and debit card users
� Suspicious of ‘the new’/wait for others to try
Risk averse conservatives
19%
proportion of spend
©TNS 2013
� Concerned with payment and online privacy
� Very light users of new technology
45
� Older (45+) ABC1 bias
� Credit card users (not revolvers)
� Financially secure and savvy
� Low interest in technology
Wealthy traditionalists
23%
proportion of spend
©TNS 2013
technology
� Security concerns but not obsessive
46
And the opportunities align with the different segments
Tech loving but financial short
Tech savvy best deal seeker
Wealthy traditionalist
Risk averse conservative
Financially disengaged
No-hassle, quick and easy
©TNS 2013 47
Recognised and accepted
Fraud-protection and benefits
Personalised and intelligent
Budget planning
Service and in-control
Less is more...
but the consumer wants more from less
There are many opportunities to
meet needs better
No payment method meets
consumers biggest need
Opportunities exist within
each consumer segment
©TNS 2013 48
5Looking to the future:pay your way
©TNS 2013
pay your way
Personalised & Intelligent: Insight into action
Example of how learning can be used to start process of developing growth ideas
Need gap Example idea
pai.com
Consumer insight
I want an integrated shopping
and payment experience. With
Target consumer
Service and control
Personalised
©TNS 2013 50
experience. With today’s technology it’s ridiculous that
I have to go through a series of disjointed steps.
Personalisedand intelligent
©TNS 2013 51
What’s in it for the consumer?
Needs met:
A personalised service
Payment is a seamless part of purchasing experience
©TNS 2013 52
of purchasing experience
Rewards (!)
What’s in it for the retailer?
Overcome barriers to purchase
©TNS 2013
to purchase
Drives traffic
53
©TNS 2013
What’s in it for the financial institutions?
Cashless purchase earning revenue
Prevents fraud
Consumers happier with payment process
54
©TNS 2013 55
What’s in it for manufacturer?
Incremental sales opportunity
Overcomes gaps in distribution
Drives brand loyalty
Understand customer behaviour
©TNS 2013 56
What’s in it for the tech providers?
Deepens reliance on technology
Drives data usage
Showcases and utilises intelligent features
Less is more...
but the consumer
wants more from less
There are many opportunities to
meet needs better
No payment method meets
consumers biggest need
Opportunities exist within
each consumer segment
Happier consumers
and opportunities
for all stakeholders
from less
57
