Cashing in on Mobile Payments with a Winning Strategy
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Cashing in on Mobile Payments with a Winning Strategy June 25, 2013
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Is your organization ready to execute on new thinking in payments? Does your infrastructure accelerate time-to-market for new services? The boom in smart phone sales and mobile usage is changing the way consumers pay for products and gain access to new banking services. Perficient will help you navigate these paradigm shifts and address the technologies reshaping the payments ecosystem that will drive your digital strategies. You'll learn about: A holistic view of the payments value chain - banking and retail A technical review of evolving payment architectures How you can provide innovative service utilities for greater consumer adoption Framework enablers to support rapidly growing transaction volumes Adapting your existing payment models to support the omni-channel experience
Transcript of Cashing in on Mobile Payments with a Winning Strategy
Cashing in on Mobile Payments with a Winning Strategy
June 25, 2013
Perficient Profile
A national management and technology consulting firm, with expert teams focused on helping our clients implement business-driven financial services solutions.
Fast Facts:• Founded 1997
• $380 MM+ in annualized revenues
• 24 locations in North America
• Offshore in Europe, China and India
• 2000+ employees
• 85% of revenue from recurring clients
• Served 450+ clients in past 12 months
Financial Services Offerings
Practice Snapshot Practice Leadership with over 20+
years of financial services experience
Expertise delivering solutions across multiple platforms
Serving 19 of the top 50 U.S. Retail Banks (4 of the top 5)
Serving 5 top Card and Prepaid companies
Industry thought leaders and speakers
Formal methodology & tool set to ensure success
Strategies and Differentiators Cross-functional business process
experience
Enterprise architecture expertise
Deep Payments & Integration experience
Understand the balance between business and IT
In-house Experience Design team (Perficient XD)
200+clients
Banks
Capital MarketsInsurance
About the Speaker
Jeff Fisher, Director, Operations & Client Advisory Services
Jeff Fisher has more than 20 years of experience in financial services leading strategy, development, design and implementation of enterprise initiatives. He has provided IT leadership over enterprise systems and processes at companies like Capital One, Federal Reserve and Visa. His areas of focus include payments, business process management, infrastructure services, regulatory compliance, risk management, and performance management.
Perspectives on thePayments Ecosystem
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Players in the Payments Ecosystem
Financial Institutions
Retail & Merchant Services
Card Companies & Networks
Consumer
Should all banks make the shift to mobile? Is mobile enough for banks to differentiate and be competitive?
Will rewards-based card offerings and ever increasing merchant processing costs change the current payments paradigm?
Will emerging product innovations from intermediaries and new merchant paradigms impact industry dominance?
The Consumer Perspective
Mobile technology has altered the way consumers behave and how organizations adapt their business models.
• Emerging Payment Intermediaries have capital to be innovative with no regulatory oversight
• P2P payments are riding the Credit and Debit rails
• Banks continue to be the “non-exciting” intermediaries to transfer funds – interbank/intra-bank transfers
• New digital currencies are emerging – intervention by government not yet known
Folding Consumer Payments Into the Ecosystem
• Profitable market segments have not yet fully adopted mobile
• Emerging Payment products are and need to be innovative & compelling to consumers
• Consumers with smart phones using “showrooming”
• Security still very important; though consumers are seeking value in retail side “rewards”
Behavioral Shifts in Consumer Demand
ISO
M
essa
ging
“Card Present”
Mobile Wallet
Rewards
Closed Loop
In-Store
Retailer’s Systems
eCommerce
Web
Se
rvic
es
Processor Services
Card Cos Networks
Payment Intermediary
Services
Payment Intermediary
ACH
Consumer’s Bank
Retailer’s Bank
CC Acct
Bk Acct
Payment Intermediary’s Bank
CC Acct
Bk Acct
Bill Pay, P2PRetail, P2P
· In-aisle “price shopping”
· GPS Driven Couponing
Retail Website/ Portal
OnLine Store
Money Load
Mobile
CC Acct
Bk Acct
CC Gateway
Credit, Debit & ATM Networks
Consumer
The Financial Services Perspective
• Costs for infrastructure and platform development
• Data to be monetized from transactions and online campaign marketing tools
• Reap savings in costs and services
• P2P capabilities are top of mind
Plan to Move to Mobile
• Mobile not an additive service – it’s a replacement
• User Experience must be easy, and intuitive with mobile utility
• Omni-channel challenge and opportunity
Ensuring Adoption & Usage
The Retail Perspective
Proprietary NW
“Card Present”
Mobile Wallet
In-Store
Corp Retailers Systems
Processor Services
Card Cos Networks
ACH Processor
Retailer’s Bank
CC AcctSweep/Deposit
Acct
ACH Services
Mobile App: In-
Aisle Shopping
In-Aisle
Proprietary Card SystemClosed Loop
Processor Acquirer Platform
Coupon, Inventory &
Checkout
“Card Present”
Mobile Wallet
In-Store
Terminal Batch Admin/BO
ConsoleIn-Store
Distributed System
Small Store
Card Data in PCI
Compliant DSS Zone
Large Retail Store
Retail Location
Retail Website/ Portal
Treasury Mgmt, Rewards, Payment Intermediary, Etc.
Gateway / SwitchServices
CC AcctDebit Acct, ACH
RDFI
Customer’s Bank
OnLine Store
Card Mgmt
Retail Website
OnLine Store
Card Mgmt
FRB ACH
CC Gateway
Payment Intermediary
Payment Intermediary’s Bank
CC AcctSweep/Deposit
Acct
Consumer
• Closed Loop Systems and pre-paid branded card programs emerging
• Credit card fees (authorization, discount, chargebacks), PCI Compliance, and other fees are too costly
• ACH being leveraged for pre-paid card funding
Retail Side of Ecosystem is Changing
Retailer Innovation Meets Mobile
• Building consumer affinity towards prepaid models
• Leading retailers turn showrooming into innovation opportunity
• Retail systems enhancements include mobile rewards and couponing capabilities
Who is driving mobile payments innovation?
Payments Ecosystem
Payments Ecosystem
The Consumer!
Validation of Consumer Adoption & Movement Towards Mobile Payments
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Consumer Access to Retail Services
“32% of smartphone users used ‘showrooming’ to make a purchase”
- Federal Reserve System
“U.S. Online Retail Sales to Rise to $370B by 2017”
“Projected to be 1.8B social networking users worldwide
in 2013”
“Tablet sales expected to surpass portable PCs in 2013,
total PCs by 2015”
“1B smartphones will be shipped worldwide in 2013”
Consumer Access to Banking Services
24% to locate ATM
21% for mobile RDC
53% transferred money
27% for bill pay
87% to do a balance inquiry
“Mobile banking users will exceed 1B in 2017”
Payment Volumes
Mobile Payments
Values in 2013
$235B
“Gartner cuts NFC payments forecast by 40%”
-TechCrunch
“US mobile wallet users spent $500M in 2012”
- Berg Insight
“$3.8T in purchases on General Purpose Cards”
- The Nilson Report
Source: Gartner
“Google to offer P2P via Gmail”
“Mobile coupons trigger 51% of consumers to shop in-store”
- RetailMeNot
“More than 770M GPS-enabled smartphones”
- Business Insider
• 10% of transaction as m-payments
• Loyalty program used 25% by 9M members
• $41M in payment volume per day
• On target to process $15B in 2013
• $20B in mobile commerce in 2013
• 10% of payments volume from mobile in 2012
Nonbank Challengers
Nonbank Challengers
575,000,000Store Accounts
?
Helping Move the Dial
More than 300+ Vendors
Guide of 350+ Vendors
175,000,000 Search Results
The Bottom Line
• Adoption of mobile will yield rich consumer “data” for the payments ecosystem to leverage
• Account aggregation and payment initiation for financial services clients – regardless of location
• Omni-channel customer experience in stores – retailers can steer purchasing
• Ability to build brand affinity – target marketing with mobile will be rich
• Convenience factor for the consumer – statistics validate growth trends in mobile to derive revenue for all parties
Value Propositions for Mobile Payments
How to Elevate YourSuccess with Payments
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Financial Services
Mobile Payment Strategies
Green Dot’s prepaid cards are available to consumers at more than 70,000 retail locations nationwide and online.
Challenge• Faced with significant growth &
deploying new mobile product s
Solution• CIO Advisory services to optimize IT
Services and build a next generation mobile infrastructure
Business Value• Increased agility to respond to rapid
changes in the industry and scale for future growth
• User Experience + Empowering the Customer = Mobile Payments Success
• Data-savvy Players: Customer Analytics = Game-changer for Banks in Payments Ecosystem
• Mobile infrastructure platform and strategic partnerships ensure Mobile Payments readiness
+
Financial Services
• Streamline transaction processing - Mobile apps that extend couponing with relevant offers (less is more)
• Monetize data for smarter banking – Fine-tune advertising and promotions to consumers
• “Under-banked” today will be “banked” tomorrow - Identify new payment products to better serve this segment
Top of Mind for Consumers¹:
• Improve Internet and Mobile Services
• Change Fee Structures
1 Ernst & Young Global Consumer Banking Survey 2012
Commercial Payments
Enabling Strategies for Wholesale Payments• Full array of B2B services - Portals with
role-based access control
• Provide a corporate admin capability to manage permissions, payment release workflow, and reporting
• Adopt a “payments hub” architecture that interfaces with ACH, Wires, and Securities services
• Leverage a predictive analytics fraud model for ACH and wire services
• Secure environment with seamless and cost effective back-office integration
“Provide a mechanism that offers corporate customers least cost alternative payment methods to use.”
Retail & Merchant Services
• Leverage technical partners for “virtual” POS terminal applications
• Support all payment types to include split-tenders
• Partner to monetize transaction data
• Reduce merchant obstacles & promote digital adoption
• Provide guidance on EMV standards and qualify transaction attributes well in advance
• Preclude unnecessary PCI fees assessed on merchants
Merchant Enablement Strategies
Emerging mobile commerce and payments innovator serving the U.S. Retail industry.
Challenge• Differentiate their mobile payments
product and attract new merchant members to drive consumer adoption
Solution• Delivered UX design for a mobile
wallet application on the iOS platform supporting all payment types.
Business Value• Decreased time to market for their pilot
mobile wallet
Card Companies & Networks
What’s Important to Them• Promoting brand recognition
• Highly competitive environment to grow volume in US market
• Continue to expand into underdeveloped markets
• Card company infrastructure and networks require maintenance along with enhancements – all at a cost
• Reduce fraudulent transactions
• Expand “platform as a service” offerings beyond portal-based prepaid platforms – make them competitive
• Evaluate alternative message streams containing PAN data originating at POS to reduce downstream PCI costs, impacts and fraud
• Promote service offerings to help banks monetize data
• Promote mobile adoption to all demographic segments
Enabling Ecosystem Strategies
Questions?
Other Resources
Our FinServ Blogblogs.perficient.com/FinancialServices
Mobile Payments WhitepaperPerficient.com/mp
Download Our “Bank Transformation Guide”Perficient.com/finservguide
Session Moderator
Follow On Twitter @Perficient_FS
Come Visit Us at Booth #532
Thank you for your timeand attention today.
Please visit us at Perficient.com
