Community

@AbhishekC: TY for your comment. You couldn't be more wrong about my personal preference: Like I pointed out in another blog post, Cash in Hand Is Worth More Than Card In Bush, "Ever since I got my first credit card in the mid 1980s, I've preferred cards over cash for several reasons (think rewards for one!)." However, you could be very right about the overall market: According to this latest Celent article, "cash is by far the most dominant, as at 50% share, it’s obviously the same size as all the other payment types …combined. So cash isn’t dead, and not even mildly under the weather!"

I've no vested interest in banks other the quality of their CX. While they're years ahead of TELCOs on that count, banks can still do a lot more to put their house in order and improve their CX. All that requires a lot of time and energy. I don't want them to waste their efforts on sensitizing themselves to non-existent threats from TELCOs, who, over the years, have clearly proved themselves incapable of competing with banks on financial services.

I totally forgot about a third challenge: How will the FI react to consumer handing over their "funding account" (NetBanking / card) credentials to a PDA to enable seamless payment? I know that Mint and other PFMs have persuaded millions of people in the USA to share their creds with them but that's only against an express commitment of "read-only" access. Whereas in your proposed architecture, PDA would need transaction access to TDA. Even assuming the FI doesn't disallow this, I wonder what would happen if there was a fraud. Would the FI continue to eat the fraud loss as at present or try to wash its hands off, saying consumer handed over transaction access to third party, so how can it be held responsible.

I just got this tweet:

DamigosV  @s_ketharaman@aussiedhaliwal Incredibly in regional Australia, it may take 2 weeks for Cabcharge funds to reach the driver!

https://twitter.com/DamigosV/status/572840321664610304

I think the adverse impact of multiple mobile apps on UX is overstated. It perhaps harkens back to imposing the desktop app paradigm to mobile apps, which is wrong because: 

1. It's extremely easy to install a mobile app compared to a desktop app. 
2. The homescreen of an Android smartphone typically has a Google Search bar. Like on a desktop, this presents search results from the WWW. However, unlike on a desktop, it can also be used to quickly reach a specific app on an Android smartphone. (In the absence of a similar feature, I concede that it could be quite painful to find a specific app on iPhone). 

That said, your architecture vision is interesting.

However, standard APIs don't seem to work to facilitate the required information exchange between a said page / section of Presence Domain App (PDA) and a said page / section of  Trust Domain App (TDA). Sophisticated "deep linking" technology will be called for. Not sure why, but I've never come across deep linking implemented in practice even inside a single app, let alone between two different apps owned by two different publishers. I'd expressed my frustration caused by the lack of this feature in a certain offer app in the following tweet: https://twitter.com/GTM360/status/560444974568067072

Even after overcoming the above challenge, data protection laws may not permit information interchange between PDA and TDA from two different legal entities, even if the user allows it.

Overcoming these two challenges will be key to successful realization of your architecture vision.

"Blink of an eye"? "Deep slumber" is more like it. I first heard this "TELCOs will disintermediate banks" rhetoric in 2009, when Boku, Zong and other Gen Y Mobile Payments (GYMPs) entered the retail payments fray. Six years have passed. What has happened? None of them has gone past their initial target market of virtual goods. For their own survival, they've given up their sole reliance on their MNO billing model and have started using the same banking rails that they'd originally set out to disintermediate. In other words, far from disintermediating banks, these companies have become even more reliant on banks now. Given their unenviable track record over 6 years, why should we expect anything great from the TELCO industry over the next 1-2 years?   

Mobile payments has been at the tipping point for each of the last 10 years, so crystalball gazing in this space has lost meaning.

I'm surprised to see TELCOs linked to mobile payments in the same week that the biggest TELCO-sponsored mobile wallet, ISIS / Softcard, has shut down. The only couple of mobile payments that have achieved some degree of success are Starbucks and Apple Pay. Both of them use banking rails. Whether mobile payments goes mainstream or not, TELCOs' track record tells me they won't be able to disintermediate banks. 

I won't be wondering why. We have cards and payment terminals because the entire infrastructure required to handle the transaction is centered around the retailer / acquirer bank, with the TELCO playing a mere plumbing role, at which most of them are good. Take away the cards and terminals, the success of transaction will depend upon the MNO's ability to put through a round trip message in near real time, with a queue waiting behind the customer. From my experience at various store locations, that's simply not going to happen for the forseeable future, given any MNO's inability to navigate through congestion, blindzones and other dynamic variables.

3G doesn't work at many malls where I live in Pune. While MNOs are the obvious suspects, I don't credit them with such pinpointed degree of incompetence. Therefore, I must assume that showrooming has become such a big issue that brick-and-mortar retail has started jamming mobile signal. Thankfully, my KeyRing app doesn't need data, so I can still use it instead of carrying a stack of plastic loyalty cards. However, I can no longer access my inbox while I'm in a mall. I never did like e-receipts. Now I've got one more reason to insist on paper receipts. While some stores have started offering free WiFi, I avoid it because the technology allows massive amount of spying by stores into information stored on my smartphone.

Fully agree. As for the threat from tech companies, I tend to believe that banks don't have much to fear from them either. 

Banks Have Nothing To Fear From Neobanks

The relative success of Apple Pay among mobile payment providers proves that tech companies can go a long way by keeping banks square and center of their offerings than by trying to disintermediate them.

I think the industry needs to evangelize that mobile apps are nowhere as cumbersome as desktop apps: I find it very quick and easy to install a mobile app and uninstall it later if I don't like it - even quicker and easier than reading their app store reviews. Besides, if we survived several plastic cards in our wallets for 50 years, I guess we'll survive several mobile apps in our smartphones for at least 5 years, until the next best thing comes along. Personally, there's compelling reason to replace plastic with mobile wallet more for loyalty and other non-payment cards. And, as I'd highlighted in my post Mobile Wallet Has Few Takers - Even At Starbucks, that's the real hurdle to mainstream adoption of mobile payments. Interestingly, ISIS, the mobile wallet that I'd taken a dig at in the opening paragraph of this post, has shut down!