By Tarik Husain,
business development director,
The markets might vary across regions, but all customers want more and richer mobile services that are useful and easy to use.
Many people think mCommerce will happen at some point in the future, but mCommerce is happening right now. It is in its infancy everywhere, and each country has a different market experience based on people’s needs. In Japan and Korea, people use their phones for everything from ticket and vending machine purchases to mobile banking. Migrant workers in Bangladesh might need basic banking and bill payment, while suburbanites in Australia would be more apt to sign up for point-of-sale (POS) purchase capability. Although service offerings in Thailand differ from those in the Philippines, and those in Europe and the US are different again, mobile technology is open enough to adapt and customise services without making any major changes in architecture.
For example, Australia has an established banking environment and many people have chequeing and savings accounts; the goal of mobile banking in Australia is to provide a rich customer experience in a cost-effective format. Banks want to get away from the call centre, which is an expensive way to interact with customers. Twenty years ago, the Internet was the next - and less expensive - step. Today, the mobile channel is the next big thing in banking. Mobile phones are an effective customer relationship management (CRM) tool, and more importantly, banks have realised that the mobile channel is a viable way for customers to manage accounts, pay bills and get general information - and for the banks to send offers and updates.
Technology has simplified these transactions, making it easy to deliver rich content to mobile customers. With smartphones, for example, customers simply press a button when they want to take an action; before smartphones, customers had to interact with providers using text-based messages. The new interfaces are improving customer satisfaction.
Banking for everyone
In Thailand and the Philippines, many people do not have bank accounts. Historically, banks have not provided services for customers who earn $40 a month, because they could not do it cost effectively. However, even people with low incomes need to save money to make larger purchases, such as spending $200 for a cow.
The mobile phone has revolutionised banking with the idea of the ‘mobile wallet’. If the consumer has a phone, the bank does not have to supply a plastic card. All that is needed is a bank account number and a place to store the money. This simple arrangement makes banking available to anyone, because the massive market pays for the infrastructure. In these countries, market demand - not a government or organisation - has moved mCommerce forward.
In one isolated place in the Philippines, for example, the closest ATM is 1½ hours away by boat. Many workers from this area move to cities and send funds back to their families. However, cash sent through the mail was frequently stolen. Obviously, this area desperately needed the ability to bank by phone - and the service was offered. Now money can be transferred directly to the store where families shop, and no funds are lost.
In the retail channel, it is the same paradigm. Large retailers in Australia might have POS systems for either cards or cash. But the guy selling snacks out of a stall on the street does not have a POS machine. Now, a small vendor can have a virtual POS machine on his phone and accept payments. mCommerce is bringing success to smaller merchants.
Keeping the customer in mind
In Australia, all banks have looked at mobile channels. They aim to reinvigorate services and identify opportunities with a goal of providing a more customer-centric view of what services to offer and how to improve the user experience. For example, with bill payment, what works is a compelling call to action. When customers receive the notice of a bill, they might also get a message asking, “Do you want to pay now?” The best solution is to provide a button that says yes, rather than requiring the customer to go to the application.
mCommerce success has been measured partly by the convenience factor - using a mobile phone to make a payment is faster and simpler. Today, most people carry around a mixture of cash, credit cards, debit cards, reward cards and IDs in their physical wallets. But imagine leaving the house with a mobile phone that has a stored value account - essentially cash. With just the phone, it is possible to drive and park (and pay from the stored value), go to dinner (which is linked to an account), buy a television on the way home (which is charged to a debit card) and have all these purchases linked to an airline rewards program. And the mobile phone handles everything. The mobile service is both more convenient for consumers and less expensive for providers, who can issue a virtual card and do not have to maintain a physical, plastic card.
Many operators have launched services, but not all have been successful - the uptake has not been nearly what was expected. Many obstacles still must be overcome. Operators must establish a pseudo-bank look and feel, which takes them out of their depth. Some banks have also launched services without sufficient research - maybe they launched bill payment for people on the go, but in reality people did not pay bills on the train. In some cases perhaps the technology was limited in the way it looked, so it did not encourage customers to use the service. In addition, operators and banks need to form an ecosystem. A group of operators should come together and build a system that gives them a common look and feel, such as Visa has done with credit cards.
Success also depends on getting people to trust the mobile channel. Many potential users do not think their money is safe. They fear that if they lose the phone, they will lose their money. But they will not. The phone is like losing a plastic card - if you lose it, the money is still in the bank. It is an understandable reluctance as it is asking people to trust their mobile operator rather than the banks with their money.
The bottom line is satisfying customers - and sometimes, making the customer happier can shift traditional relationships. For example, a cereal manufacturer normally does not have a direct relationship with the customer, but with the retailer. However, if a manufacturer invites feedback from customers, it can establish a one-to-one relationship with them. A manufacturer can then leverage that relationship to market directly to their purchasers when they launch new products or change nutritional contents. And the loop is closed if, for example, the manufacturer gives the retailer specific discounts or offers based on location-based queries the manufacturer received from customers.
The market is in the wild west of mobile implementation now, and learning is constant. One lesson: it is the same iPhone everywhere. It is common across every country. It can be applied everywhere; only the business aspect needs to be different. The SMS basic functions from years ago are still applicable, but now banks and operators can add more applications. The market is in evolution rather than reinvention.
Opportunities are everywhere, and every aspect of mCommerce is growing - from payments to transfers to mobile CRM opportunities. As consumers and institutions demand more, the mobile channel will deliver more feature-rich applications and a much fuller experience.
Tarik Husain is the business development director for Sybase 365’s Mobile Commerce division, where his responsibilities include managing global strategic partnerships and formulating strategies for Sybase 365’s global mobile banking, mobile payments and mobile remittance business. Before starting at Sybase 365, Husain held senior positions at the Bank of England, Lasalle Banks, OCBC Bank and Hewlett Packard. He provides industry commentary to internal and external publications and is a regular presenter at banking conferences. Originally from the United Kingdom, Husain has lived and worked in the United States, Australia and Singapore.