Move over mobile: why banks should acquire a taste for chips
Mobile banking may seem like it is at the cutting-edge of technology, but the real value is in the chip, not the mobile device itself, as it is the chip that can enable banks to analyse their customers' lifestyles.
All of the conferences that I attend these days seem to talk about mobile; Google Wallets, mobile, Banksimple, mobile, Movenbank, mobile. I am regularly stressing that we must stop talking about mobile and start talking about point-of-life.
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First, stop talking about mobile. The fixation with mobile is because it has finally come of age, as has personal financial management (PFM). Now it has come of age, all of the banks and banks' service providers are leaping into these two markets head first and swimming deep in the water.
Give it five years and they will be swimming in the next water. And that water is not mobile and PFM, but connectivity and social financial management (SFM).
Cashing out your chip
Connectivity is the realisation that it is not mobile that we should be focused on, but the chip in the mobile that enables it to connect to the network. That chip is going to be in so many other devices in five years that a consumer’s mobile wallet will no longer be relevant. What will be relevant is how the chip connects to other chips in order to transact.
A consumer’s chip may be in their mobile telephone, but it may just as easily be in their wristwatch, earring or clothing. The consumer will choose how they wear their chip. It might even be embedded in a tooth. The chip may enable telephone calls and communications, access to wireless electronic services and more, but will also be a fundamental transactor of commerce.
Connectivity is the realisation that it is not mobile that we should be focused on, but the chip in the mobile
It will transact with chips in merchant stores; chips through quick response and near-field communication; chips in walls, pavements and doors; chips in cars, caravans and casinos; chips in anything and everything in fact.
Some predict that there will be 10 billion mobile-connected devices in 2020. I predict that there will be more than 100 billion wirelessly connected devices by this time. And with everything as a connected transaction engine, banks will be looking to leverage wireless connectivity at the point-of-life of their customers rather than thinking about mobile as a channel or device.
This leads to the second fundamental around the point-of-life and SFM.
Personal becomes plural
PFM is already out of date. PFM talks about personal as though it is private, and yet everything has shifted to social, as in sharing. Sharing financial information is not what consumers want, but they do want banks to be part of their lives rather than the bane of their lives.
What this really means is that banks must proactively leverage far more about their customers' data to intimately understand their lifestyle preferences and shopping habits to become more relevant. It means taking 'big data' and mining it deeply to gain 'big ideas' about customer needs and then proactively reaching out to the customer to gain 'big relationships'.
Examples are already out there, such as the new video for Google Wallet that demonstrates coupon offers and spending integrated with payments and transactions. What this is really showing is that Google will be analysing the data from the digital footprints of each individual to provide relevant offers at their point-of-life.
Using geolocation allows you to locate where the individual is physically present; using that location allows you to automate contextual offers proactively to the individual; using data allows you to make sure the offers are both relevant and not in breach of permissions and privacy; and using the combination of banking, retailing, searches and devices allows the operator to integrate spending and saving with shopping and living.
And that’s the point-of-life (not the meaning of life, that is another story).
It is the point of where I am living at that moment in time and being relevant to that point-of-life. That is what SFM will be all about, and that is what banks will be focused upon in the next wave of implementing technology: being relevant at the point-of-life through wireless contextual connected devices, rather than mobile and PFM.
Chris Skinner is an independent financial commentator and chairman of London-based The Financial Services Club
