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Steve,

A nice way to round out the debate, which is what I intended to create. I think that what we will see is momentum to change payments practices first through NFC/Phone integration, just as we have with debit cards. Cash will take a long time to shift, but we'll continue to see transactional and P2P habits change over time in the retail and personal/individual payments landscape. They key, of course, is simplicity. It is pretty simple to pull out your wallet, take cash and pay. We need to make phone payments faster than that benchmark for real improvement.

The bigger challenge, sort of related, is the issue of B2B payments transactions. Right now you have Check/Cheque, TT or Internet Banking. We need more options cross-border and interbank solutions that don't involve complicated paperwork, and lengthy float periods.

Thanks again - nice way to round out the discussion.

BK

Keith,

I'm sorry, maybe you just aren't aware of the latest credible information on this from the likes of APACS

Read the following:

http://www.politics.co.uk/opinion-formers/press-releases/apacs-payments-industry-publishes-2008-spending-data-$1300210$366425.htm

According to APACS as of 2008 66% of retail payments were done by credit/debit card. This is not fiction...

Those are indisputable facts. I'm not talking B2B payments here, I'm talking payments where cash work. 

We already know cheques are effectively dead. Cash is an inefficient mechanism. With mobile payments and NFC, combined with customer behavior shift, cash can't not survive long-term. Sure, it will take 15-20 years to completely remove cash from the system, but all the components are there.

Brett

Stephen,

A simple illustration of the 'kutcher' effect. Take an average bank in 3 years time, that has 50% of it's customers on social media. That same bank, is still struggling with social media engagement, multi-channel engagement via web and mobile, etc.

Now take a cross-section of customers. Let's say we have 5-10,000 customers who are heavily engaged online in social media with an average of 500-5,000 followers. Let's say those customers start talking about how far behind their bank is in respect to innovation comparative to say BankSimple, ING direct, First Direct, etc.

What you have is a movement against the brand at this point. No amount of spend on brand advertising or traditional bank PR will work to stem the negative flow.

Now let's take an alternative approach. Let's say that we identify these same customers who have high follower impact and when they call into the call centre or come into a branch we give them personalized, VIP service. Suddenly they're tweeting about how fabulous the bank is. Next thing you know we have customers joining the bank because of what they hear about the great responsiveness and service capability of the brand.

This is what the future will be like with social media based on key influencer metrics.

Hope that helps...

BK

Stephen,

I'm sure you would agree that Social Media is a global phenomenon. Will it collapse and disappear? That's about as likely as the Internet disappearing at this stage given the momentum...

So I think your struggle is of what use is Social Media for you and for your institution, after all you're not on twitter, Facebook, etc and it doesn't seem to effect your performance day-to-day right?

Maybe, but business today is increasingly about efficiencies, reach and market.

Social media is a more efficient mechanism for researching customer sentiment and analyzing brand perception, than focus groups, mystery shopping, customer satisfaction surveys, etc - so why do we insist on still using those mechanisms - mainly because the management who sign-off on P&L have not invested in really understanding the medium. After all they don't use Twitter, Facebook, etc - so what's all the fuss.

This becomes a self-fulfiling prophecy to some extent - you don't use it, can't understand what all the fuss is and assert that it really hasn't changed anything. I'm sure there were those who said the same about these newfangled motorized horses in the early 1900s. Or said Man is just not meant to fly...

Stephen - I'm sorry to have to tell you this, but the world is changing...The only thing that is debatable is the rate of change.

BK

Liz - Absolutely agree.

Robert - Good YouTube clip...

You know when the Golden Arches implements new payments technology it is no longer 'next-generation' it is just mainstream...

Liz,

Actionable innovation is the key, not just ideas or strategy. The harsh reality is, however, there are a lot of great ideas that often "just don't make it" because of organizational inertia around the existing status quo. Breaking the status quo is true innovation.

A great example is the cards business in the US. There is not much that can motivate the US to make wholesale changes to POS infrastructure to support chip-and-pin or even contactless (although NYC taxi cabs are getting there and contactless cards are starting to emerge.) However, I think an NFC-enabled iPhone 5 might just do it. Why? Because it will change behavior.

The hardest thing to change in banking is behavior. Right now we are seeing customer behavior (consumer and corporate) shift extremely rapidly in banking terms. This is allowing innovators in the cloud, mobile, payments, etc to slot in a layer of innovation between banks and their customers. Largely this is not because banks 'just don't get it', but the reality of changing their internal behaviors is just too hard. 

Financial services may not be changing, but the world is. There will be some in the FSI sector that adapt and change with this, and others that watch the change from afar. But the fact is change will occur whether we like it or not. Call it innovation, call it behavioral shift, call it progress - the fact is change is speeding up and putting your head in the sand is a very different strategy to deciding to try to scale everest. Those are essentially the choices...

Brett King, Author - BANK 2.0

Dave,

Yes, that is the fear. Disintermediation as a result of lack of rapid action is a certainty.

Brett

Erik,

The problem is that banks look at this and say only 3-5% of smartphone owners use mobile banking, but of course, it doesn't occur to them that this is because they don't actually provide a mobile banking option for their customers. So even if they WANTED to use their phone for mobile banking, they actually couldn't. It becomes a self-fulfilling prophecy.

As bankers we have to start building journeys to make engagement with customers easier, frictionless. Mobile and internet are massive opportunities, but are so underserved today it is ludicrous. For example, 90% of daily visitors to retail bank websites click on the login button, but the amount of revenue generate behind the login - minimal...why? Because we aren't selling stuff behind the login.

Banks need to focus on behavior of customers - clearly customers are highly mobile, time poor and use these devices for just about everything else, so what is the reason they aren't doing banking on the move? Because as banks we just don't adequately support the channels.

Brett King, Author - BANK 2.0

Stephen,

Great points, and I think that issues like security and certification are valid concerns.

However, I think what ultimately will drive the marginalization of plastic is that it is certainly no more secure than your phone at the end of the day, and that behaviour will force the hand of banks. Ultimately it's easier to carry all my 'cards' on my phone and swipe with my phone, than carry physical plastic or use an outmoded method of payment like cheques. Ease of use, technology adoption diffusion, usability and accessibility will ultimately be the drivers behind the mobile payments revolution.

Case in point - mobile NFC payments have already been in use in Japan and Korea for many years, use there is rapidly increasing due to ease of use, and fraud is significantly lower than on traditional physical modality around cards.

Brett King, Author - BANK 2.0