The wrap from BCX: Mobile banking and payments, AI, and the future of it all

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Transcript

Intro & News

Welcome to episode 11 of the Mobile Payments Today podcast. There was one interesting news item that came out last week and that was the fact that Stripe is introducing a mobile point of sale device. 

It's aproduct that enables online businesses and platforms to accept in person payments with Stripe and that was according to the press release and there are three components of the Stripe Terminal. One of them is a set of SDK's and API's for creating a fully custom checkout experience using web or mobile apps. The second part is obviously the carburetor, some stripes hardware partners, BB POS or Verifone which are precertified, the Stripes global processing platform ready for that quick chip emv and contactless payments. Obviously, contactless payments, we're talking about contactless cards or any of the major pays and that is all set out of the box and the last component of Stripe Terminal is software for managing and monitoring connected devices across multiple locations or connected accounts right from the stripe dashboard. And I don't think anyone is surprised. Strike did this and that was the indication I got from reading some of the more in depth coverage about this. 

Stripe has carved out a nice corner for itself in ecommerce, so why not try to capture some brick and mortar spend and it seems like some of the merchants that they're going to be targeting with this more niche areas and what are the areas? I thought it was interesting what are the initial partners is the eyeglass shop that only has more of an ecommerce and their name is Warby Parker, more made itself a name through ecommerce in terms of classes and now they have little shops here and there. So that seems to be the type of merchants that Stripe is going to be going after. But I think the more interesting aspect of this right now is that Stripe is finding itself in direct competition with the likes of Square. And if you're a small to medium size business you have, you have a lot of options right now as far as accepting traditional and digital payments in store. 

You have Stripe, now you have Square, you still have PayPal, which actually does have a device that you really hear about it anymore. And I think going forward, and this has been the case when Square started to really push out from just payment acceptance, is what's going to differentiate these offerings down the line are the ancillary services from each of these companies. Now again, like I said before, it seems as though Stripe and Square are going after different types of merchants and it seems like Square wants to get bigger merchants now involved. There's going to be some competition there between the two nonetheless. So keep that in mind as we go forward. That's going to be an interesting trend to watch in 2019, I believe. So that's going to do it for the news this week. Stick around for my Bank Customer Experience impressions and I'll be right back after this quick break. 

Bank Customer Experience Summit Recap

So like I mentioned last week and in the intro I wanted to recap our latest Bank Customer Experience Summit and relay some of the key points from my time in Chicago last week and believe it or not, this was our sixth one of these overall. The first three were under a different name, the ATM and Mobile Innovation Summit, but four years ago we decided to take that summit in a completely new direction and we decided to focus on the customer experience as it relates to banking. This was our third summit on there, our current name and myself and AMC Marketplace editor, Suzanne Cluckey, start putting together the agenda in December and January. So I'm intimately familiar with the panels because I actually created some of them and Suzanne creates for the breakout panels and then we go about identifying people to come be a keynote and things of that nature. 

So what I was thinking about how I want to recap this particular summit, I wondered whether I would have this more written out or just have a general outline and shoot from the hip. I've done both for this podcast, believe it or not. So what I decided to do here was have a general outline and basically shoot from the hip, so fair warning that I might be all over the place right now. So the first thing I wanted to address was just competition and how the competition is not coming from the bank down the street anymore and that it's actually coming from other digital companies. And what we're seeing is that when consumers have these digital experiences with an Uber, with a Spotify, with a Starbucks and even attend there, I'll get to that in a minute. They expect to have these types of interactions anywhere they go and that includes banking. 

And one of the things that I thought was really interesting and there are a few things that I thought were interesting about this particular topic was that our keynote speaker, and I'm not even going to attempt to try to say his name again. He said how this millennial generation, and I'm borderline millennial at 39 turning 40 and for months born in 79. So I can, I think I can speak to this, but we're at a point where a lot of us and even other generations as well, we expect things to happen at the speed of Google. Basically what that means is we type in a search, hit the enter button, and we expect things to happen that quickly. And that's really true. That's becoming the norm really for a lot of people. And when you look at the generations now, millennials as particularly Gen z, this is the kind of customer experience that they expect and you think about just the things that you can do from your smartphone sitting on your couch, whether it's shopping, whether it's ordering food, whether it's watching content at an instant. 

It's all there right now. And then these are the type of experience that people expect. So what's happening now is these banks are looking at what these other companies are doing as far as the digital experience is concerned and basically molding their digital experiences based on an uber or spotify and our starbucks. And the reason why I think the whole tinder thing is funny because if you would've told me a couple of years ago that a bank was determining their digital experiences on Uber, on Tinder, I should say Alberta thought you were crazy, but there's something about that instinct gratification on Tinder unfortunately, that people are addicted to. And again, if you kind of take that mindset of addiction as bad as that sounds and apply it to a mobile banking app per se, where that person has to check that mobile banking app every single day because they want to keep on. 

They want to keep tabs on what's going on as far as that our count is concerned. I can see that gamification often comes up when it comes to that. And to some people, Tinder is like a game. So if you're enticing people to check their mobile banking app every single day, maybe twice a day, I can see how you can make that link between tinder and mobile banking. So this is something we're going to see again, I believe going forward, especially as you look at things like Amazon trying to get into banking, trying to get into financial services and if you ask some people they're already there. So again it's gonna be interesting to see how competition has changed here in terms of how banks look at other services. So the other thing to look at here is just a AI and what exactly is that going to do for banks and for the customer experience. 

I remember maybe a couple of years ago when the thought of ai started to creep into the conversation at a lot of conferences that are out there, particularly when you look at money 20 slash 20. I don't think people really understood what ai was supposed to be and what it was supposed to do as far as banking was concerned. And if you follow certain people on twitter that still might be the case. But I think less and less we're seeing that because I think people understand what's going on more and more. And I wanted to make sure that we did have an AI session on the docket for this year and when we were first putting it together, to be honest with you, I didn't really know how it was going to go. We'll kind of use cases we were looking at. But as we go along and more research has come out or trying to see where I should say we're starting to see how this is all gonna, play out down the road and points two and three kind of play into each other here and I'll go with the ai particularly right now and looking at some of the simple things that it does just in terms of the conversations that you see in chatbots and if you look at something like Erica from Bank of America, that is really the first full scale thing that we've seen in the US for how there's this assistant that's in a mobile banking app and you can talk to it. 

You can type to it and you're trying to figure out simple things like bank account balances and one is a bill due and things of that nature. Now the next step in that, and this was something I was talking to somebody, and I can't remember the person's name off the top of my head, but if we look up the article about Erica that I did a Mobile Payments Today, you'll find when I'm talking about at what point do we get to a situation where I can ask Erica, okay, I want to load my debit card into apple payer into Samsung Pay, but before that I want you to tell me why it's a good idea for me to do this. Why should I be involved with mobile payments? I think that's probably going to be the next iteration of what we see from AI, that there's this deep integration to where we get to these conversational pieces that we can basically have with a machine. 

We're not there yet and I know things like Amazon, Alexa and Siri and other things that are out there. Google Home are slowly improving, but I remember a panel we had about chatbots out our mobile cx summit last year and how some of these things are still clumsy, even Subway has even seen and they were on the panel about how people are interacting with the ChatBot and even asking about whether as they're giving their order. So it's kind of weird. It's kind of weird human behavior that we don't really account for and that's going to be the key going forward. Especially when you look at 'What is AI going to do for the customer experience?' How are the systems going to know, hey, this person's has pretty good credit. We think we've seen them going to Home Depot a lot or Lowe's a lot and how can we take that information and tell them, hey, are you looking for a mortgage? 

Are you looking for anything else of that nature? And I think that plays into the next point and the talk about data and the data that these banks are going to get from AI data is really the cash cow I think of AI. That was the perception that I had as I was listening to some of these talks at pcx last week. And one interesting thing that came up during the ai panel, it was either that panel or another panel. Sometimes this stuff all blends together, but it seems like right now what's happening is banks have all this data, okay, they're accumulating all these, this data from different systems and different capabilities, transaction data, whatnot, whatever. And what's happening right now is that at least according to what I heard at the conference, again, this is coming from bank executives, that there are two things that are happening right now. 

One, the banks don't do anything with the data. They're getting all this data and they're not taking advantage of that. And I can tell you in a minute how about to mistake too. They're not doing enough with the data. They don't know what to do with it on a full, a comprehensive level. So it's either they're not using it at all or they are using it, but they're not using it to their full potential. And the problem, I think where that is, is that if you're not using that data to its full potential. What kind of loyalty offers are coming from your bank or what kind of mortgage or credit card or offers are coming from your bank? The problem is that if it's not coming from the bank itself, it's going to come from other sources. 

Those other fintech sources, and I'll give you a perfect example myself. I've actually taken out one of those loans from a lending club, had a situation a few years ago where I needed some money because I was moving and we need to buy some furniture. So the only reason why I was able to get one of those loans that I was aware of those loans is because fun fact, when you pay down your debt and your credit score rises, I don't know what that triggers in terms of offers or whatnot. It's kind of scary. But guess what? Somebody knows about that. And that's when the offers start pouring in from outside sources that are your bank. So I did not even think twice about going with somebody like at lending club because at that point that her already, I had already known about them. 

I just thought the process through the bank was just too complicated. It might not have been, but when you look at a lending club, uh, how quickly they get things done and how easily that's done online. Well why go through my bank when I can go through this other, this other portals? So that's what I think where the problem is, where if your bank cannot recognize your credit history or your transaction history or things of that nature, they're definitely missing out. And the same thing happens at retail. You go to a retailer, you're going to a CVS, you're going to a Walgreens and they know what you're buying because you're entering in your loyalty card number before each transaction. So they can come to you with somewhat targeted offers. I mean, CVS doesn't really do the best job of that, but they do a decent job of it. 

So they come into you with relevant stuff that's not really happening with my bank at least. So that's a situation where the data as the gets more intelligent, I hate to say it that way, but it's true as the ai gets more intelligent and as the data gets better and as people get more serious about using the data, I think that bank can become a hub of sorts just in terms of loyalty, just in terms of other financial services and things of that nature. So we're, we're getting there and it seems like banks are more serious about that than ever before, but we still have a little bit of a ways to go there. And one of the last things I wanted to touch upon here am I wrap up was just the idea of faster payments. We had a panel about that and it's something that's still relatively new in the US just to talk about it and how the clearinghouse has these plants to get faster and things of that nature. 

I've got to be honest, I'm still a little bit unclear about exactly what's going on there, but one thing that I did learn at the summit was that Japan was the first country to have faster payments and they started doing it in the early to mid Seventies. Think about that. The early to mid seventies, I'm almost 40. I was born in '79 and by the time I was born, Japan had already had faster payments for a few years and it's just amazing and kind of blows my mind how that was going on back then were we in the US don't have that yet. It's 2018 and we don't have that yet. We are one of the few countries, major countries just in terms of economic development and things of that nature that does not have a faster payment system and it boggles my mind that we're not at that point yet, but the Federal Reserve is working on that and there seems to be some confusion over what's going to happen next there and that was discussed during this particular panel. 

Now as far as how that stuff is going to affect the customer at the end of the day, we're already seeing it. We're already seeing it with Xcel, how it's account to account and it happens basically instantly so we're already seeing that, but we're seeing some things, some initiatives from the clearinghouse and others and I think what the Fed is basically what people are waiting for the Fed to do is okay, what's the system that we're going to use to do to do faster payments and apparently they took a bunch of bids from these companies that are involved there about basically what system that we're going to use going forward and it seems like the one from the clearinghouse is the one that we're probably going to use. I don't know if you should quote me on that completely, but it was a little. It was a little unclear from the panel exactly which direction we're going to go in, but it's gonna happen. 

It's going to happen by 2020. So again it will be interesting to see how that all plays out. One more thing that I think I should bring up from the actual summit itself, and it was something that one of the keynote speakers said Phil Lininger from USAA and he actually said it during our rapid fire round table session where we basically had three executives and myself and Suzanne went back and forth asking questions just to get their opinion on certain topics and what are the things that Phil brought up was this idea of the subscription service and we're seeing this more and more whether it comes to smart phones or content where you know you're paying a monthly fee for, for something or you're paying a monthly lease, a number amount I should say for your smartphone. I thought it was really interesting that he brought that up because I'm not sure how you translate that into the banking industry. 

I have an idea on mortgages. You make that a little bit more fun per se or other services. But one thing to maybe keep in mind is mobile banking. And there's been a lot of discussion in recent years about whether you charge for mobile banking because it's free, it's a free service right now, and I think what's more likely to happen in the future is that you have a free mobile banking service and you have one that is paid to wear if you're paying for your mobile banking service, you get some additional perks, but not so much that there's a complete huge advantage to paying versus not paying for mobile banking. What that looks like at the end of the day, what those features look like. At the end of the day. It could be something as simple as advanced personal financial management tools. It could be offers, it could be exclusive credit card offers and low interest rates. 

It could be some advantages when it comes to testing out certain features or mobile, uh, mobile payments of some sort. So I think there's a potential to possibly get a revenue stream for mobile banking. And I don't think banks really are making any money for mobile banking. I could be wrong. I doubt it. I really doubt it actually. But there could be a chance in the future to have a premium service like a Netflix, like a spotify where you're paying, I don't know, five bucks extra a month to access more features through your mobile banking application. It can't be so much at. There's a huge difference between free and paid, but it should be enough to entice the customer to slap down that five bucks a month and it's going to come out of their checking account anyway. I mean why the hell not just something simple. 

And I was going to jump in when Phil said that because right now Microsoft and I've, I'm thinking about all these things where they were at applies to now. Basically Microsoft right now if you go to the Microsoft store, you can basically finance, lease a new xbox, one x counseled for I think 20, $34 a month. And it's interesting because in this day of digital you actually have to go into the store to make that happen. So maybe this is a situation where, okay, in order for you to sign up for this and an enhanced mobile banking, you have to come into the branch first and maybe that's an opportunity for the banks to upsell their customers or do like a financial check in or just to check in in general where hey, you seem to be willing to come in to pay for the service. Um, why don't we just sit down a bit and you tell us if we're doing anything wrong or you need help with anything or how better can we service you? So I think that's definitely one thing to keep in mind. Again, there are far smarter people out there who can figure this stuff out and I'm sure at the end of the day they will. And if they're not thinking about it right now, I would be shocked to learn that that's not the case.