Assumptions are the mother of all F@#$ ups.

In recent weeks there has been an over whelming amount of cases arising where large multi-national banks appear to be making assumptions on consumer preferences in the ever changing financial services market., which in today’s modern world of Social Network result in the rapid spread of consumer opinion.

ANZ to kill non-iPhone mobile banking:
www.zdnet.com.au/anz-to-kill-non-iphone-mobile-banking-339302548.htm
ANZ, the first bank to bring Mobile Banking to Australia and the bank that gave birth to Cambodia’s WING Money, decided with little consumer engagement to kill all mobile banking except iPhone Banking.

HSBC, BofA, ANZ struggle with Social Media
www.finextra.com/community/fullblog.aspx?id=4024
Brett King, author or Bank 2.0 and serial blogger experience multi-national banking hell as he attempted to pay Singaporean Dollars onto his Hong Kong Credit Card at a HSBC Premier branch in Singapore.

So hard to change Ez-Reload top-up value:
http://business.asiaone.com/Business/News/My+Money/Story/A1Story20100512-215828.html
Wu Min Xiu, a journalist in Singapore was re-issued his expirying Credit Card with EZ-Link, only to be faced with a month long process to have his card re-configured to the old cards re-charge preferences for his EZ-Link facility.

Mobile financial services growing quickly but banks missing opportunities
www.mobilecommercedaily.com/mobile-financial-services-growing-quickly-but-banks-missing-opportunities/
As Telco’s and Third Party Service providers rapidly push into the Mobile Banking/Payments space, they quick eat up market share, particularly where they appeal to the younger generations that feel their needs aren’t being met by banks.

From my opinion these are material examples of a trend that I have noticed in the banking market where banks assume to know their consumers behaviour and preferences. But in reality it appears the decision makers are far from customer facing.

With the development of payments and agency banking regulations across the globe, third parties including Telco’s have seized the opportunities to offer consumer payments services such a Mobile Money & Payments offerings. Recent statistics show that MTN MobileMoney is on track to becoming one of Africa’s largest Financial Services providers, Octopus Cash Cards continue to penetrate the cash markets of Hong Kong, taking deposits away from the retail banks, more and more payments services are offered by non-banks. Will this trend continue? A world banks are so disconnected from the realities of their a fast moving tech savvy markets that third party service providers change the framework retail banking and payments to faster more innovative offerings that can adapt at high velocity and fulfill seasonal, fad and niche consumer choices in the market, then move onto the next evolutionary change with ease and speed. Will the bank take a back step to manage the risk and regulatory asides to deposits, while payments services are offered in the market as iPhone apps, NFC services and Cash Cards.

My thought, in 5 years times your deposits/accounts will sit with a bank for regulatory protection, but you’ll transact and do payments via third party technology based services.

The Mobile Wallet for developed economies, learning from the developing world.

Over the past 10 years Mobile Money initiatives have popped up all over the globe. But there has been one distinct trend: Developing economies implement mobile wallets, while developed economies implement additive mobile banking, but why?

In developing economies such as the Philippines, Kenya, Cambodia, Uganda and Pakistan the mobile wallet has been seen as a way to offer bank accounts to previously unserviced market. The wallet is used in a similar manner to the Cash/Current account used in developed economies, a way to store your everyday transactional cash. Only in the developed markets, we have adopted Cards as the means for utilizing our money.

There have been a number of studies by the various banks that suggest that a card transaction costs the bank roughly 4 to 5 US cents per transaction, while a mobile transaction can be as low as 2 cents due to the reduce infrastructure required for a mobile transaction.

Having said that, there are also a number of cash replacement offerings in the market such as Oyster, Octopus, EZ-Link and NETS Flash Pay which implement pre-paid stored value card predominately for public transportation. But these pre paid cards aren’t really linked to the rest of the financial system. You can’t pay to them without a reader, you can push a payment from the value on the card and you lose the stored value if you lose the card. So why is it a WING Money or MTN Mobile Money customer gets greater utility from their cash account than consumers in developed economies? Why doesn’t a bank or payments company realize the opportunity to enhance the utility of a cash replacement offering?

Hence my suggestion that developed markets should learn from the experience of developing nations in building cash like offerings that plug into the rest of the financial eco-system, something like a mobile wallet that is used through a mobile device. An account that behaves like an MTN Mobile Money wallet than can be used to pay for public transport, food, exchange money between individuals, pay merchants and buy services, but remain stored in the formal financial eco-system so that the utility of the value store is greatly enhanced.

This I feel is the future of mobile banking in developed markets.

Launching ACMFI

This week I made my first trip to Lagos in Nigeria for the launch of the African Center for Mobile Financial Inclusion. Along with my fellow directors from the UK, India, Canada and Nigeria, we converged on AITEC’s Banking and Mobile Money Conference at the newly renovated Eko Hotel for two days from frantic enthusiasm.

Faced with a panel of local suppliers, bankers, technologists and regulators, we set about creating the vision of ACMFI. Collaboration and Convergence to drive the adoption of mobile technology as a means for financial inclusion in Africa.

Africa is no stranger to mobile financial services, as the birth place of services such as M-Pesa, MTN Mobile Money, CelPay and Zap. Today with dozens of countries with low financial services accessibility and high mobile penetration, the African continent as proven time and time again that it is positioned perfectly for the sustainable adoption of Mobile Financial Services. But why have nations like Nigeria lagged behind their neighbours? A country with nearly 170 million people roughly 40% mobile penetration and very low bank account numbers. To date Nigeria has followed the cautious road using regulation to hold back providers before the Central Bank has time to get comfortable with this new way of performing financial transactions.

Hence we are left in a position that I have heard Hannes van Rensburg call ‘The Perfect Storm’. A market ripe and ready, just awaiting ‘approval’.

Thus creating the ideal setting for the launch of ACMFI, a body ideally positioned to share global experiences with the people of Africa and Nigeria to ensure a collaborative approach to launching services.

So what is ACMFI? ACMFI is the creation of center that will undertake research, policy and regulatory reforms, data sharing point, accelerate adoption and use of mobile technology as a means for financial services in Africa.

The vision was launched by ACMFI Secretary General, Emmanuel Okoegwale to a packed audience and what followed was more than we could have ever wished for. Dozens of various players in the market wanted to know more and wanted to know how they can get involved.

For the remainder of the event, AMCFI Chairman Prof. Prof.S.Subramanian, Director of Corporate Affairs Santanu Sengputa and myself met with each potential supporter to take them through the details of the vision and how it will work. By the end of the second day we had meet with approx 70 potential members ranging from regulators, technology suppliers, bankers, and service providers. Each with their own perspective and interest on the area of Mobile Financial Services. It was amazing to watch them come to life as they spoke of their area of passion.

We leave Lagos having met our two goals, firstly to formally launch the center and second to gain a list of potential member organizations. Africa and more specifically West Africa now has a center whose primary purpose is to drive collaboration and I am personally delighted to take up my role as the Director of Strategy and Partnerships.

www.acmfi.org

The foursquare Experiment, are social financial services possible?

In early April a little known new application caught my eye, foursquare. What caught my eye wasn’t the jazzy interface, or the badges. Instead I was curious as to why Yahoo were willing to pay US 100 dollars to acquire the business. So I have been experimenting with the user experience in search of the business' value and how such an application could be a integrated part of a financial services.

Stay tuned in for the complete notes in early May, and feel free to contact me with any specific questions or comments on foursquare.

Good News Story: Financial Inclusion from a different perspective

Recently I traveled to Karachi to see firsthand the success of easypaisa and MCB Mobile and was delighted with a customer story.

I was told the story of a Pakistani gentleman that was activated on MCB Mobile at the start of year. As per usual, he was activated by the call canter. The customer was pitched the MCB Mobile product and he liked the idea and agreed to register. Little did the sales team know at this point he is blind.

On a general customer service call he asked for some basic questions. The service team assisted him queries in the standard fashion. However, a few minutes into the call he said that he would need some further help as he was visually impaired. The service representative took the customer took it aboard to ensure a happy customer and guided him through the entire service. The service call lasted for approx 45 minutes.

The customer now uses MCB Mobile service through accessibility voice command software on his mobile which verbalizes the menu and all details helping him use a mobile phone. MCB’s first concern was the privacy of the customer’s PIN numbers. But further investigation found that his accessibility software is intelligent enough to verbalize the PIN as asterisks and not as the numbers thereby ensuring that the PIN is not heard by anyone in close proximity to the customer.

The customer is using the service regularly and has conducted roughly 50 transactions to date.

Its story like this that bring a smile to my face, as great customer service mixed with an innovative approach to technology creates a delightful customer experience for everyone.

Keep up the great work Pakistan :)

Success in Mobile Money, common factors.

As a consultant and through my work at Fundamo over the past few years, I have had the privilege to visit and study dozens of Mobile Money/Payments business around the world and one of the questions I always get asked is “What makes a successful Mobile Money/Payments business?” Which is a very broad question, but luckily I now have a fairly refined answer.
From my observations of the market there are two VERY key success factors that have driven success in multiple countries:

1. Understand your Market:

Far too many business get into the Mobile Money/Payments space thinking it’s purely a technology play. Banks are currently the worst at doing this. When it comes to understanding a market, one doesn’t have to look into a crystal ball. There are some simple tools that marketers have used for years. Take for example the six P’s of marketing. Which a slightly different spin, the six P’s can help a business gain a deep understand of a markets behaviors, priorities and demand gaps.
The Six P’s of Marketing.
People:

• Understand the demographics of the People.
• Research & Identify Market Traits. Identify the Community Units & Segments
• Sample Test Penetration Activities
• Find engaged local partners and seek to understand: People

Product:

• Use the market identification & entry models
• Maintain the Product, tailor the Distribution & Positioning

Price:

• Find the ‘sweet’ stop for price
• Price has to be competitive against alternatives, including cash based services

Place (distribution)

• The best entry points are the community’s source of funds.
• The largest source of funds is labor markets. Also, the employer of the largest p2p opportunity
• Follow Natural Cash Flows and re-apply. Everyone has the potential to use p2p. Majority already do. You just need to understand where the money already flows. Understand the movement of money within a community and its affiliated communities.
• Salary Payments ‘win-win’ for employer and employee. But how do you get salary money to remain in the system?

Promotion

• Education, Trust & Awareness are key
• Visit & Listen to the communities
• A foreigner learning local language builds a bridge of trust and creditability
• Incentivize entire value chain & reward loyalty

Positioning

• Look for pain-points in current cash services
• Appeal to the dreams and aspirations of the market, but maintain a perception of attainability
• Work with the community on pilots and proposition testing

2. Task Force:
One of the most energizing attributes of successful businesses in this space is an incentivized sales team. A team that engages the communities acquires and trains new customers, acts as a face-to-face customer service, works with the community to encourage long-term adoption, but most of all this team are rewarded for success.

• Wizzit’s Wizz Kids wear their shirts with pride as they spend time in the field signing up new customers and training them to use the service.
• WING’s Pilots spend large amounts of time signing up friends, families and fellow students in Cambodia.
• MTN Uganda’s Road Warriors travel across the country under the watchful eye of Dr. Love in pursuit of their daily targets.
• John Owen’s team at MABS are on a continual mission to drive financial services to rural communities on G-Cash in the Philippines.

In summary, the old idea of “built it and they will come” just won’t work. You need to understand and engage the people, refine your offering as you learn and have a dedicated team that drives customer acquisitions and adoption. Otherwise you’ll be left wondering why no one is signing up, or using the services.

Asian Banker Summit

I had the pleasure of attending the Asian Bankers Summit at the brilliant new Convention Centre at Resorts World on Singapore picturesque Sentosa Island over the past few days. The summit saw the pulling together of various banking streams. Me being the technologist, I joined the Technology Stream. There were key themes that oriented around Innovation and Social Networks which attracted some bright minds to the panel to lead discussions. But despite these brilliant minds it appears that Banks haven't woken up to the innovation craze of the past few years.

Everyone acknowledge the merit of things such as Mobile Banking, Bank 2.0, SOA, Social Networking, etc. but like traditionally risk adverse banks, there were dozens of excuses as to why things can't be done: compliance, security concerns, brand risk, change management and the list goes on. Even to the point where during the summit, ANZ announced that they will be turning off their Mobile Banking service. This from the bank that brought us WING Money in Cambodia, a primary mobile bank for the under and unbanked markets of South East Asia. Have they completely missed the data on the uptake of mobile devices as a means to communicate, including internet services?

Interesting regional statistics tell us that on average, between 27-36% of NEW Internet Users in Indonesia, Malaysia, India, Thailand and the Philippines use mobile devices when "popping" their internet cherry. And this figure continues to grow year on year. More and more users across the region are plugged into Facebook, LinkedIn, and Twitter and recently we’ve seen the launch and growth of foursquare. While there is no immediate revenue opportunity for Financial Intuitions, there comes a rich learning experience on a customer segment that thinks very differently to the traditional banker: Gen Y. Data shown at the conference by Don Bognar of Oracle Financial Services shows that by 2017, Gen Y will be the largest consumer segment in the market. This is a market is constantly connected to networks, always on the move, adopts innovation at twice the rate of past generations and takes product/service recommendations from the Internet and Social Networks. Basically, if they network recommends HSBC for a Credit Card, they’ll go to HSBC without shopping around and without concern for price, brand or benefits. No amount of direct marketing will ever overcome this.

It not all bad news, as many Financial Institutions have made attempts at engaging this segment, NAB(previously National Australia Bank) launched their UBank Direct Banking operations that boasts the ability to open a new account within five minutes without ever having to visit a branch. They use networks such as Facebook and Twitter to attract Gen Y and even carry out customer service on Twitter (@UBank). Whether this experiment works or not is irrelevant, why?

1. They are doing something and learning from it. Organisations ALWAYS learn more by doing rather than planning and researching. This will be key for NAB when it comes to understanding Gen Y and they move closer to the Banking Market sweet spot of 35-44 years of age.

2. It’s a separate Brand. Banks have love known about the advantage to experiment with new services under a new brand. ANZ did this with WING in Cambodia. It creates an opportunity for the Bank to also experiment with new branding concepts for new customer segments. Does Gen Y relate to the big red star of NAB? Or the lime and dark green branding of UBank, who has a website that looks straight out of the Apple design team.

Another interesting session was led by Brett King (@brettKing) as he told his vision for BANK 2.0, the Service Oriented Architectural approach to Customer Centric engineering for Innovative Markets. As a fellow Banking Innovator I can see his wisdom, but it is the time for radical visions in banking after their just spent the past ten years delivering compliance projects only to be hit with the Global Financial Crisis and massive investment cuts. Brett’s theory points towards building platforms that encourage rapid change and innovative products, but are the products all that different? The basic principles of bank accounts haven’t changed in decades; the only part that has ‘evolved’ is the service creation and delivery. Admittedly we have seen the rise of new cross-subsided accounts and offset products, but the big changes have been the launch of ATMs, Point-Of-Sales devices, Internet Banking and more recently Mobile Banking including the adoption of self-service business processes, all of which had their challenges as full automation is a challenge when you can’t let go of your architectural mentality that see you desperately holding onto your Hogan, Systematics or Midanz platforms.

So what did I take out of the summit?
1. Asian Bankers are waiting to be told what to do next
2. There are some really smart thought leaders out there, that are struggling with traction for their visions
3. Completely surprised Mobile as a business isn’t a main discussion point.

I’ll leave you with a prediction. As Gen Y becomes the main market segment, banks will struggle to keep up, six to nine month product lead times won’t cut it. A new industry will evolve on the customer facing side of the Financial Intuitions to create innovative and rapidly changing Service Creation Products to manage financial product choice, application, transactions and ongoing support. Something similar to what the Telcos are doing in Mobile Banking, they understand the market, but lack the financial regulatory & risk experience, so they partner with bank/s and stick with their core understanding of Sales, Marketing & Distribution. Have a look at the MTN / Standard Bank or Telenor / Tameer Bank partnerships.

Happy Banking Gen Y