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BBVA Innovation Edge. Mobile Payments (English)

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					                    NOVEMBER 2012
                                    4




Mobile
Payments
Paying with a mobile device
mPayments (quick overview)
Elevator Pitch
Smartphonatics
Cashing in on the opportunities


   also
 in this
  issue      Trending issues
             Technology trends
contents
  mPayments.................................................................................................4
  Elevator Pitch ........................................................................................... 11
  Global Snapshots ...............................................................................17
  BBVA & Mobile Payments ......................................................22
  SmartPhonatics...................................................................................24
  Cashing in on the Opportunities ...................................28
  Innovation Forecast ........................................................................31
  In Depth....................................................................................................... 34

  Sections .......................................................................................................36
    Trending Issues............................................................................36
    Technology Trends ................................................................. 43

  Mobile Payments & Banking event .............................47
  BBVA Innovation Center Open Day...........................48
  Credits ...........................................................................................................50
mPayments
quick overview
The mobile payments trend, undoubtedly, is on its way of
becoming a mainstream phenomenon. It will change how
society thinks about monetary transactions. Let’s take a
look into mPayments, meet the main actors and gain a basic
understanding of this fast moving trend.




04
                                                                                                               Definition
                                                                                                               Mobile payments are payments made using a mobile device.
                                                                                                               Generally, there are two ways to pay by mobile:
                                                                                                               online payments and proximity payments.
                                                                                                               “mPayments will transform customers’ lives”. See video




          Online Payments                                                                                      Main Actors
          Mobile payments for digital or physical goods. Digital goods
          payments refer to products/services consumed on mobile de-
          vices, such as app purchases or digital content. Also, person to
          person (P2P) payments may be considered as online payments.                                                    Banks & Card Companies
          Physical goods payments refer to products/services delivered                                         Incumbents who are currently dominating the general payment
          physically, but purchased via a mobile device.                                                       landscape; as the overall leaders, they are generally taking a wait
                                                                                                               & see approach, looking for the right product at the right time.


          Proximity Payments
          Mobile payments for products & services purchases on-site via
          a mobile device (short range radio technologies, such as NFC).
          Generally used at POS terminals, transit, etc.




Example of wallets                    Mobile wallets
     VISA                             Mobile wallets are platforms that bundle together products and
     ISIS (AT&T, Deutsche             services from several providers. In general, mobile wallets offer:
     Telecom & Verizon)
     Google                           ■■■A prepaid account (equiva-      ■■■Loyalty programs & offers
                                         lent of cash in real wallets)      (coupons)
                                      ■■■Credit, debit & charge cards    ■■■Transit (public transportation)

                                         (payment instruments)           ■■■Other (ID, electronic key, etc.)




06                                                                                                                                                                                   November 2012 | MOBILE PAYMENTS 07
             Retail Companies
     New entrants who are disrupting the payments business with
     mobile technologies, such as Starbucks and Amazon .                                                             Technology companies
                                                                                                           The financial services market is a new area for growth for these
                                                                                                           aggressive players. Armed with the latest and greatest in technologies,
                                                                                                           they are very active in experimenting with new value bundles and
                                                                                                           business models.

                                                                                                           Companies include Google         , Facebook      , and PayPal      (an
                                                                                                           eBay company).

                                                                                                           Also, the mobile device is being used to process transactions. Retail
                                                                                                           stores may now enable payments with a mobile device functioning
                                                                                                           as a POS, such as Square or PayPal Here .




                                                                  Mobile Operators (MOs)
                                                        Looking for new avenues for growth, MOs
                                                        are looking to mobile payments as a way to
                                                        make their relationship with clients stickier by
                                                        offering payment services, as a part of the
                                                        overall voice & data portfolio.




08                                                                                                                                                                                   November 2012 | MOBILE PAYMENTS 09
                                                                                                     Mobile Payments
                                                                                                     Mobile Payments


     mPayment & Value Bundles                                                                        elevator pitch
                                                                                                     Let’s take visual journey through the mobile payment
     “The smartphone is simply an enabler                                                            space. We’ll look at the users and usage, deployment
     — not a driver — of changing behavior.”
     Ron Shevlin, Aite Group
                                                                                                     scenarios, business models, and take a peek into the
                                                                                                     future and the market.

                               “Mobile payments on their own are not
                               sufficient to drive consumer adoption but
                               the value bundle — payments together with
                               incentives and offers — has a higher chance
                               of persuading consumers to change their
                               behavior.”
                               Advanced Payments Report 2012, Edgar, Dunn & Company




                                                        Therefore, each actor is using or will use
                                                        mobile payments to design and build the
                                                        “best” value bundle for a given customer
                                                        segment. Lots of collaborative models
                                                        are emerging, such as ISIS and Boku
                                                        which are collaborations between mobile
                                                        operators and other entities.
                                                        See video (Boku)




10                                                                                                                                                   November 2012 | MOBILE PAYMENTS 11
Mobile Payments

Users                                                                                                   Deployment

                                                                                                        How is the mobile payment
What is happening
                                                                                                        industry shaping up?
with mobile payments?                                               39%
                                                                   Millenials
                                                                                          18%
                                                                                           Young
                                                                    (18-26)              Boomers
In the next five years, insiders expect a majority of                                     (40-50)
brick-and-mortar retail transactions to take place on
mobile devices. That is a big change-up for a $5.5
trillion marketplace. Meanwhile, mobile devices users
who utilize mobile payments are expected to swell
                                                                                                                              Mobile           Financial
from 6.8 percent in 2009 to 21.3 percent in 2012.                                          9%                                 carriers
                                                                                           Old                                                 institutions         Merchants
                                                                    31%                  Boomers
                                                                   Gen-xers               (51-61)                 DEPLOYED        16%                17%                 8%
                                                                    (27-39)
                                                                                        Seniors (62+)      READY TO DEPLOY        16%                13%                 9%
                                                                                            3%
                                                                                                                TRIAL STAGE              39%               38%                 28%
                                                              Who is using mobile payments?
                                                                                                            PLANNING STAGE           25%                28%                        36%
Usage
                                                                                                         NO INTEREST SO FAR     5%              3%                           19%




                                                                                FOCUS
                                                                                    HIGH
     53%           66%                                                                                                        Handset          Payment              Application
                                                                 43%                MODERATE
                                    70%             47%                             LOW                                       manufacturers    service              providers

                                                                                                                 DEPLOYED        10%                 19%                     22%
     27%           20%                                                                                     READY TO DEPLOY           20%              24%                        37%
                                                                 37%
                                                    35%                                                         TRIAL STAGE              37%                45%                 30%
                                    22%
     10%            12%                                          16%
                                                        18%                                                 PLANNING STAGE             29%        11%                    10%
                                    8%
  Retail           Fast            Mass            Digital      Online                                                          3%              1%                     1%
                                                                                                         NO INTEREST SO FAR
 purchase          food          transport       downloads     purchase

12                                                                                                                                                                November 2012 | MOBILE PAYMENTS 13
Mobile Payments

Business models                                                                                                                   The market (1)


 What is the most                                                                                                                 Global E-payments:
                                                                                                                20%                                                                                                                               30.3
 viable business model?                                                             43%
                                                                                                               Third-party
                                                                                                             intermediation
                                                                                                                                  number of transactions                                    Number of
                                                                                                                                                                                            transactions
                                                                                                                                                                                                                                     25.4          2.7
                                                                                                                                                                                                                                     2.0
 By 2014, an estimated 13 percent of all smartphones                             Mobile-financial
                                                                             institution partnership
                                                                                                                 model
                                                                                                                                  (billion), 2009-2013F                                     (Billion)
                                                                                                                                                                                                           17.9
                                                                                                                                                                                                                        21.3
                                                                                                                                                                                                                         1.5
 will have built-in NFC capabilities.
                                                                                                                                  Most payments are not mobile. Alternative pay-              15.1          1.2
 *common platform shared by alliance of carriers                                                                                  ments, which includes mobile, will account about            0.9
 and financial institution.                                                                                                       for 8% and 9% in 2013 of e-payments transactions.                                                               27.6
                                                                                                                  7%                                                                                                                 23.4
                                                                                                             Mobile carrier                                                                                             19.8
                                                                                                                                                                                                           16.8
                                                                                                              going solo                                               CAGR                   14.2
                                                                                    26%                           Financial                                            ‘09-’13F
                                                                            Open federation model*               institution         Total                             19.1%
                                                                                                                 going solo
                                                                                                                                     Alternative Payments              32.1%
                                                                                                                    4%               Non-banking competition
                                                                                                                                                                                             2009         2010         2011F        2012F        2013F
                                                                                                                                     Debit, credit, prepaid cards      18.1%                Source: Capgemini I World Payments Report 2011, September 2011


The future
                                                                                                                                  The market (2)

                                                14%
                                             Mobile carrier          What will be the most                                        Global M-payments:                                                                                             15,284
            27%                               going solo                                                                                                                                                                                          1,223
         NFC-enabled
          payments
                                                                     popular mobile payment                                       number of transactions                                    Number of
                                                                                                                                                                                            transactions
                                                  13%
                                               Java-based
                                                                     app in the near future?                                      (billion), 2009-2013F                                     (Million)                               9,814
                                                                                                                                                                                                                                     785
                                                payment              As merchants, financial institutions, and mobile carriers    Banks are still in charge, but the competition is grow-                              6,756
                                               application
                                                                     work together to figure out the future of the mobile         ing faster. By 2013, the new entrants will have taken                                 473                      14,062
                                                                                                                                                                                                         4,587
          19%                   16%                                  payment system. People should not be surprised if            about 8% of the mPayment business, from a base of
       SMS-based              Embedded                               their phone starts to replace the contents of their wallet   0.5% in 2009.                                              3,120        272
                                                                                                                                                                                                                                    9,029
       payments               credit cards                                                                                                                                                    156
                                                  10%                over the next few years.                                                                                                                          6,283
                                                  Other
                                                                                                                                                                CAGR                                      4,315
                                                                                                                                                                                             2,964
                                                            USSD-
                                                                                                                                                                ‘09-’13F
                                                            based
                                                          payments
                                                             1%
                                                                                                                                     Total                      48.8%                        2009         2010         2011F        2012F        2013F
                                                                                                                                     Non-bank providers         67.3%
Percentage of respondents                    Source: Deloitte.com                                                                    Bank providers             27.6%                       Source: Capgemini I World Payments Report 2011, September 2011


14                                                                                                                                                                                                                       November 2012 | MOBILE PAYMENTS 15
Mobile Payments

The market (3)
                                                                                           Mobile Payments is a dynamic
                                                                                           trend; and, as such, is drawing a
                                                                                           lot of attention from around the
                                                                                           world. This section takes a look at
                                                                                           selected banks & card companies,
                                                                                           retailers, mobile operators and
                               The market                                                  technology companies and see
                                                                                           what they are up to.
        In 2010, the total
     volume of global credit    The number of mobile      We are forecasting
     card payments totaled     payment users will reach    a market with



     $6.2 212.2 448
                                                                                          Global
                                 million in 2012,         million users
      trillion dollars
                                     up from                by 2016
                               160.5 million in 2011




                                                                                         snapshots
                                                             Source: Gartner, May 2012

16                                                                                                                          November 2012 | MOBILE PAYMENTS 17
                                                                                                                                                                         AT&T, T-MOBILE AND VERI-
                                                                                                                                                                         zON WIRELESS: ISIS
                                                                                                                                                                         The Mobile Operators led consortium is offering a
                                                                                                                                                                         mobile wallet platform. The Isis mobile commerce
                                                                                                                                                                         network will be available to all merchants, banks, pay-
                                                                                                                                                                         ment networks and mobile carriers.
                                                                                                                                                                         Fuente: Pay with Isis



                                                                                                                  Mobile                                                 TELIA, TELE2, TELENOR AND 3 (ThE
                                                                                                                                                                         SWEDISh BIG 4 MOS): WYWALLET
Banks & Card                                                                                                      Operators                                              WyWallet, the mobile wallet joint venture from Telia,

Companies                                                                                                         TELEFONICA: O2 WALLET
                                                                                                                                                                         Tele2, Telenor and 3 has been launched with support
                                                                                                                                                                         for person-to-person money transfers, SMS transit
                                                                                                                  A deal with Facebook, Google, Microsoft, and RIM       and ticketing payments, and online shopping. Live
BARCLAYS: PINGIT
Users can send and receive money by using just a
                                                                                         Retail                   allows a Telefonica subsidiary customers (O2) to pay
                                                                                                                  for digital goods and services directly through the
                                                                                                                                                                         tests of POS payments using NFC are set to start in
                                                                                                                                                                         July, with full-scale roll-out scheduled for 2013.
mobile phone number.                                                                                              mobile phone bill.                                     Fuente: WyWallet

See video                                                                                                         See video
                                                           STARBUCkS: ANNOUNCES
COMMONWEALTh BANk: kAChING                                 DEAL WITh SQUARE
Allows customers to make payments to email, to             The coffee giant chooses Square to process pay-
Facebook, to mobile, and to PayPass (MasterCard)           ments in all of its stores and also takes an equity
contactless terminals.                                     investment. “The focus is on the experience, and
See video                                                  putting that above everything else,’ says Square
                                                           founder Jack Dorsey about Starbucks’s stores.”
ChASE: INVESTMENTS & PARTNERShIPS                          FastCompany added, “Square treats payments a
■■■Square,    GoPago (investor)                            lot like Starbucks treats coffee: by focusing on the
■■■ISIS   (partner)                                        experience around a product that is more or less a
Source: GoPago                                             commodity.”
                                                           Source: Starbucks
ChASE: QUICkPAY
Allows customers to make P2P payments to emails            AMAzON MPS
or mobile phone.                                           Amazon allows its merchant partners to accept mo-
Source: Chase                                              bile payment with its Amazon Mobile Payment Ser-
                                                           vice (Amazon MPS). On the other end, Amazon offers
MASTERCARD: PAYPASS WALLET                                 its customers to make payments via mobile devices.
It’s a digital wallet service that makes online shopping   Additionally, Amazon facilitates P2P, sending money
safe and easy by storing payment and shipping              to an email or a mobile number.
information in one convenient and secure place. With       Source: Payments. Amazon
PayPass Wallet, customers simply shop, click and
checkout faster online.
Source: PayPass


18                                                                                                                                                                                                 November 2012 | MOBILE PAYMENTS 19
                                                                    amount of buzz as Facebook continues to grow and
                                                                    the company is uniquely positioned to completely
                                                                    revolutionize commerce.
                                                                                                                              Other notable
                                                                    Source: Thedailybeast l June 2012
                                                                                                                              companies
                                                                    SQUARE
                                                                    With Square, small business owners and merchants          BANkS & CARD COMPANIES            TEChNOLOGY COMPANIES
                                                                    can accept card payment using an Android phone,           (TEChNOLOGY PROVIDERS TO BANkS)
                                                                    iPhone, or iPad. Also, the company offers “pay with       ■■■Telepin   Software             POS SOLuTIOnS
                                                                    Square,” allowing customers to pay with their mobile      ■■■Customer    Engagement         ■■■Charge   Anywhere
                                                                    device at the POS.                                        ■■■Corfire                        ■■■VeriFone

                                                                    Source: Squareup                                          ■■■MChek                          ■■■InTuiTGoPayment
Technology                                                          PAYPAL hERE
                                                                                                                              ■■■FirstData
                                                                                                                              ■■■Braintree
                                                                                                                                                                ■■■Roam  Data
                                                                                                                                                                ■■■RedFin network


Companies                                                           Keeping up with its competitor, PayPal recently
                                                                    launched PayPal Here, allowing customers to accept
                                                                                                                              ■■■JMango                         ■■■Moneris Solutions

                                                                                                                                                                ■■■Corduro

                                                                    cards and also checks. Also allows users to invoice       MOBILE OPERATORS                  ■■■Handpoint

GOOGLE WALLET                                                       and track cash payments. Of course, PayPal contin-        (IN APP PURChASES, BILL TO
Fast and easy payments, with any card. Google Wallet                ues to win mindshare as it facilitates payments, in-      MOBILE COMPANIES)                 LOyaLTy PROGRaMS
now supports all major credit and debit cards, from                 cluding mobile devices. Recently, a survey revealed       ■■■Bango                          ■■■Foursquare

Visa, MasterCard, American Express, and Discover.                   that 8 of 10 consumers would use PayPal’s wallet, if it   ■■■PayOne                         ■■■Mogley

Google Wallet stores cards online so they’re available              were to be available.                                     ■■■Mopay                          ■■■Swagg

wherever customers go in the real or virtual worlds.                Source: PayPal                                            ■■■Dimoco

See video                                                                                                                     ■■■BilltoMobile                   nFC
                                                                    LEVELUP                                                                                     ■■■DeviceFidelity

APPLE: PASSBOOk                                                     A new mobile payment network, LevelUp provides a          MOBILE WALLETS                    ■■■Giesecke   & Devrient
With the iOS 6, Apple introduced the “Passbook,” a                  QR code pay-by-phone application for consumers and        ■■■Serve                          ■■■Ingenico

mobile app which manages boarding passes, tickets,                  a terminal system for merchants. Recently it raised $21   ■■■Magtek                         ■■■Oberthur   Tecnologies
store cards, and coupons. The leading mobile tech-                  million ($9 million coming from the venture capital       ■■■MasterCard                     ■■■Vivotech

nology company is expected to further pursue its                    arm of Deutsche Telekom) in a 2nd round funding.          ■■■MobilePay                      ■■■Xius   Innovate Lead
“iWallet” strategy. The company launched Passbook                   See video                                                 ■■■Cimbal

with it newest OS, the iOS 6. “Apple controls the hard-                                                                       ■■■Tabbedout

ware and the mobile OS, and now with Passbook, it                   IzETTLE                                                   ■■■NoMoreCards

provides brand app developers the ability to link their             Europe’s answer to Square, iZettle allows businesses
products to a centralized and easy management.”                     to take card payments using an iPhone or iPad.
Source: Forbes | What CIOs Need to Understand about Apple’s Pass-   See video
book Service, October 2012.

                                                                    DWOLLA
FACEBOOk                                                            The company’s product allows anyone with an in-
Facebook has scrapped its Facebook Credits and                      ternet connection to safely send money to friends
has everyone wondering what they will do in the                     or businesses.
mobile payments arena. There is a tremendous                        See video

20                                                                                                                                                                                          November 2012 | MOBILE PAYMENTS 21
BBVA &
Mobile                           The Channel Director of




Payments
                                 BBVA Bancomer, Mauricio
                                 Pallares, highlighted during the
                                 presentation that the company
                                 is turning to electronic banking
                                 to lead it’s strategy to bank the
                                 unbanked and promote financial
BBVA Bancomer recently           inclusion. With ‘Mobile Money,’
launched ‘Mobile Money’, a new   the group intends to extend
                                 banking services to 1.5 million
service that allows customers    customers and reach a volume
to send money anywhere in        of 19.5 million transactions in
the country using a mobile       the first year of operations.
phone. This service will         BBVA Bancomer Mobile
provide access to banking        Money results from an interest
to 1.5 million users,            in developing a modern and
                                 innovative bank that offers
contributing to their
                                 alternatives that facilitates access
financial inclusion.             to low-cost, financial services
                                 while ensuring safety, proximity,
                                 availability, time savings, and
                                 convenience. The new service
                                 launched by BBVA Bancomer
                                 is also available in Spain under
                                 the name, “dinero móvil.”
22                                                 November 2012 | MOBILE PAYMENTS 23
                                                                Smartphonatics
                                                                Are a group of consumers who are driving the demand for
                                                                mobile payments. They aggressively change the way they
                                                                shop and pay for products and services.




                                                                         Importance
                                                                       of mPayments
                                                                                                                                          smarphonatics!


                                                                              Very
                                                                            important                          4%                            24%

                                                                              Less
                                                                                                         41%                                 31%
“smartPhonatics”
                                                                            important




 The rise of the mobile class
                                                                                                                                                                         Interest in
                                                                                                                  Low                             High                   mPayments
                                                                                                                                                                         ussage

     Customer surveys always seems to facilitate
     understanding. In this section, we’ll take a look at the              Based on a global survey of 4,200 consumers (realized in Q1 2012), Aite Group’s
                                                                           research reveals leading mobile payment consumers, the Smartphonatics.
     recent survey results related to mobile payments and                  Source: Aite | The Global Rise of Smartphonatics: Driving Mobile Payment and Banking Adop-
                                                                           tion in the Americas, EMEA, and Asia-Pacific, May 2012.
     some insights they reveal.


24                                                                                                                                                                 November 2012 | MOBILE PAYMENTS 25
Where are they?                                                                                                                  Smartphonatics / Key Findings
                                                                                                ■■
                                                            11% Sweden

                                             16% UK                    10% Germany                   31% China
                    7% Canada
                                               8% France                    27% Italy
                           20% U.S

                                                                 34% U.A.E
                                                                                                              60% India


                                                                                    24% Singapore

                 37% Brazil

                                                                                                       16% Australia
                                                                                                                                       Are twice as likely than non-Smartphonatics to adopt
                                                             42% South Africa                                                          mobile payments.

                                                                                                                                       Are driving mobile payment adoption around the world .

                                                                                                                                       Offer clues to creating and meeting demands for mobile
                                                                                                                                       payments (albeit at different rates across the globe).
Who are they?                                                                Mobile payment usage
                                                                                                                                       Represent a country’s mobile maturity level.
                                                36%
                                 32%                                          Smartphonatics
                                                                                                                                       Do not necessary use smartphones (it’s all about the behavior).

                                                                                                                                       Will continue to use a myriad of payment options,
                   18%                                                                                                                 including mobile.
                                                                                       70%                    Others consumers

      6%                                                                                                               23%

                                                                                                                       23%
                                                                              has used mobilephone to make
     Senior      Boomer         Gen X          Gen y                          a payment in the last six months.


Source: Aite | The Global Rise of Smartphonatics: Driving Mobile Payment and Banking Adoption
in the Americas, EMEA, and Asia-Pacific, May 2012



26                                                                                                                                                                                            November 2012 | MOBILE PAYMENTS 27
Cashing in on the
opportunities
Whoever creates the most meaningful financial      New business models
value bundle for a given customer segment will
win marketshare. The walls between industries
                                                   B  e part of someone else’s value bundle! Banks can collabo-
                                                      rate with platform providers for value delivery. For example,
                                                   Chase, CapitalOne and Barclays are part of ISIS mobile wallet, a
are beginning to breakdown and the market          consortium of mobile operators.

is turning into a free for all. Can the banks be
competitive?




                                                                                       November 2012 | MOBILE PAYMENTS 29
Meaningful
Value Bundle
For banks, mobile payments are not an end to it-             trust and confidence, such as offering value added
self. In a world of customer experience as the new           financial products/services; such as helping custom-
value proposition, products by themselves do not             ers to save, to invest, and to borrow. In other words,
offer a competitive advantage. Together with other           banks are positioned to provide a meaningful expe-
building blocks of the business model, banks can             rience to customers when it comes to addressing
leverage mobile banking and put together a value             their financial needs/wants, including the ability to
bundle that can delight customers and regain their           pay for purchases via mobile devices.




                                                                                                                      Innovation
     Mobile G
     BANKIN


                +   Mobile T
                    PAYMEN




                                                                                                                      forecast
                               +   Mobile S
                                   WALLET
                                                                                               GFUL
                                              +
                                                  PRODUCTS
                                                            d financial
                                                  Value-adde/SERVICES     =            MEANIN
                                                                                       VALUE E
                                                                                       BUNDL

                                                                                                                      Mobile Payments is a trend that is gaining a lot of
                                                                                                                      momentum and, as such, banks and other financial
                                                                                                                      services companies are watching it closely. In this section,
                                                                                                                      we’ll take a quick look how banks should understand
                                                                                                                      mobile payments and how to approach it.


30                                                                                                                                                                      November 2012 | MOBILE PAYMENTS 31
                                                                            Insights

                                                                                                                                                                 Suggestions
Take the Long View                                                                                            The Long View
B   etween the seemingly imminent domination
    of mobile payments as seen in the news and
knowing that they represent a small percentage of
                                                      Group in their recent article, how Banks Can Take
                                                      the Lead in Mobile Payments, offers some in-
                                                      sights for banks:
                                                                                                              The article also offers suggestions for banks on
                                                                                                              how to seize the moment:

total payments lies the true relevance this trend.                                                            ■■■Invest to gain experience.
Mobile payment is a business opportunity for          ■■■The value will be in deals and offers, not in pay-   ■■■Form  a “house view” on the m-wallet.
banks... it’s just a matter of timing.                   ments.                                               ■■■Preserve the attractiveness of cards.

                                                      ■■■Cards will not disappear anytime soon.               ■■■Establish security protocols.

For now, most banks are dipping their toes to see     ■■■mPayments are not yet superior to traditional pay-

how the water is... and don’t seem to be in a hurry      ment methods.                                        Sources: BCG | How Banks Can Take
to dive in. In this context, the Boston Consulting    ■■■Banks are the masters of their own destiny.          the Lead in Mobile Payments, June 2012




32                                                                                                                                                                     November 2012 | MOBILE PAYMENTS 33
      In depth                                                                                              On the Web
                                                                                                            Amazon | Amazon Mobile Payment Service
                                                                                                            Barclays | Pingit
                                                                                                                                                                 Brandon McGee | Mobile Banking Blog (covers mo-
                                                                                                                                                                 bile payments as well)

A list of sources to other useful tools and                                                                                                                      Mobile Money
                                                                                                            Boku | Introducing Boku Accounts. Smarter phone,
resources that you may find useful as a                                                                     smarter payments (Vimeo), February 2012.             Mobile Payments Today
supplement to the information offered on                                                                    Boston Consulting Group | how Banks Can Take the     New York TImes, Technology | PayPal here is More
the ‘Mobile Payments’ report.                                                                               Lead in Mobile Payments, June 2012.                  Than a Square Imitator, July 2012
                                                                                                            Business2Community | Facebook Credit Card As         NFC World


Books &
                                                                                                            Your New Universal Payment Solution?, July 2012      Payments News
                                                                                                            Chase | QuickPay                                     Pymnts.com: What’s next in payments

Publications                                                                                                Commonwealth Bank | kaching
                                                                                                            Daily Beast | Universal Wallet: Facebook’s Very
                                                                                                                                                                 PayPal here
                                                                                                                                                                 PayPal | PayPal’s Global Mobile Solution Unveiled:
                                                                                                            Bright Future                                        Merchants Around the Globe (YouTube), May 2012.
Aite | The Global Rise of Smartphonatics: Driv-        EFMA | EFMA Global Yearbook 2012, May 2012.
                                                                                                            Dwolla                                               PayPal | PayPal here: how It Works (YouTube),
ing Mobile Payment and Banking Adoption in the
                                                       Ernst & Young | Global Banking 2020: Foresight &                                                          March 2012.
Americas, EMEA, and Asia-Pacific, May 2012.                                                                 FinExtra
                                                       Insights
Capgemini | World Payments Report 2011, Septem-                                                             Google | Google Wallet                               SapientNitro | The Future of Money and Mobile Pay-
                                                       Gartner | Forecast: Mobile Payment, Worldwide,                                                            ments (YouTube), June 2012.
ber 2011.
                                                       2009-2016, May 2012.                                 Google | Introducting Google Wallet (YouTube), Au-
Capgemini & EFMA | 2012 World Retail Banking Re-                                                            gust 2011.                                           Square | Boccalone Gets Paid with Square (Vimeo),
                                                       IDC Financial Insights | Consumer Payments Survey,                                                        December 2011.
port, April 2012, May 2012.
                                                       July 2012.                                           GoPago
Celent | Preserving Merchant Relationships When                                                                                                                  Square | Pay with Square
                                                       Juniper Research | NFC Mobile Payments — No Con-     Intuit | The Marketplace in Your hand, 2012
Mobile Comes to the Retail POS, January 2012                                                                                                                     Starbucks | Mobile Apps
                                                       tact Required, June 2012.
presentation                                                                                                ISIS
                                                       kPMG | 2011 kPMG Mobile Payments Outlook, July                                                            Starbucks | New! Starbucks iPhone Apps (YouTube),
Deloitte | Cell me the money: Unlocking the Value in                                                        ISIS (PayWithIsis) | The Isis Vision (YouTube),      September 2009.
                                                       2011.
the Mobile Payment Ecosystem, 2011.                                                                         February 2012.
                                                       kMPG | kPMG Banking Outlook Survey, June 2012.                                                            TechCrunch | Apple Announces New Passbook App
Forrester | 2012 US Mobile Banking Functionality                                                            izettle                                              To Store Movie Tickets, Retail Cards, And Board-
Rankings, April 2012.                                  kPMG | Monetizing Mobile: how banks are preserv-                                                          ing Passes, June 2012
                                                                                                            Lafferty | QR code to boost mobile payments dra-
                                                       ing their place in the value chain, July 2011.
Forrester | Consumers Bankers Association Survey,                                                           matically, September 2011 (subcription article).     Telefonica (O2) | Mobile Wallet
June 2012.                                             MasterCard | The Mobile Payments Readiness In-
                                                                                                            LevelUp                                              Visa | Visa Digital Wallet (YouTube), May 2011.
                                                       dex, May 2012.
Deloitte | Mobile Payments: a Deloitte Analysis --
                                                                                                            MasterCard | PayPass                                 WyWallet (Telia, Tele2, Telenor and 3 - the Swedish
Managing change in the “mobi-payscape.”                Pew Internet & American Life Project | The future
                                                                                                                                                                 Big 4)
                                                       of money: Smartphone swiping in the mobile age,
Edgar, Dunn & Company | Advanced Payments Re-
                                                       April 2012.
port, March 2012.



34                                                                                                                                                                                          November 2012 | MOBILE PAYMENTS 35
     Trending issues
In this section, readers will find summaries of the most relevant news of selected
topics that have been published over the course of the month based on its relevance                                      Mobile banking
to the Banking industry. The summaries were prepared by the editorial board. Further
information is made available for each given topic.
                                                                                                                         Which Way to Go?
Core banking platform                                                                                                    Most mobile banking apps in the market today are native
                                                                                                                         apps. That is to say, the kind of apps you purchase from an
Have the need to better                                                                                                  app store for a particular mobile platform, such as Apple’s
understand customers                                                                                                     App Store, Google’s Play, etc. These apps currently provide
                                                                                                                         the best experiences for customers as it integrates the
and the value bundle?                                                                                                    functionalities of the smart devices into the mobile banking

Go back into the core.                                                                                                   app, such as camera or GPS. However, keeping the mobile
                                                                                                                         banking up to date for each platform can quickly run up
“Banks need to seriously consider core renovation.                                                                       the costs. With the coming of html5, banks can “write once,
Core renovation allows modern architecture to                                                                            publish in many platforms;” not only html5 can save money,
deliver new functionality like dynamic pricing and                                                                       but also decrease time to market. Banks will have more
product and pricing simulations which help banks                                                                         choices regarding mobile banking applications in the post
to understand, at an enterprise level, the value of                                                                      PC era. Which way to go?
customer relationships and the potential of any
                                                                                                                         Source: Finextra | Apps, a continuing debate: html5 vs. native, 12 August 2012
given product offer or bundle.”
Source: Finextra

                                                                                                  New formats            Enterprise 2.0

                                                             The future of bank channels,                                The Knowledge Economy
            would not be
             happy, but
                                                                      as seen by Cisco                                   is coming
           would keep the
30%        same deposits                                           Cisco Internet Business Solutions Group Global        “The knowledge workers’ revolution will come from a re-
                                              would switch   Research reveals new ways for banks to prosper in the       newed workstation, and it will live in the cloud, whether
 25%                                            banks
                                                                      omnichannel world: the future of the branch.       it is public, private or hybrid,” fueled by Desktop as a
20%                                                                   ■■■The old branch is dead; long live the           Service, Social Desktop or whatever it may be called.
                   25%      would not be                                 omnichannel branch                              Currently, the challenges enterprises face include:
 15%                         happy and           22%
                            would reduce                              ■■■Mobile: The promise of embedded
 10%                          deposits                                                                                   ■■■Growing number of communication channels: email,
                                                                         banking in consumers’ lives
                                                                                                                            Facebook, Twitter, Skype, RSS, etc.
                                                                      ■■■Social: The potential is here—when will
     5%                                                                                                                  ■■■Dispersed knowledge (internal and external)
                                 7%                                      banks be ready?
     0%                                                                                                                  ■■■Short-term vision of social integration
                                                                      ■■■Video: Seeing is believing
                            virtual banking
                                                                                                         Source: Cisco   Source: Forbes | July

36                                                                                                                                                                                                        November 2012 | MOBILE PAYMENTS 37
     Trending issues

 Social Media                                                                                                                                                                                              Crowd finance

                                                                                                                                                     Put your money
                                                                                                                                                     where your mouth is
SOCL (Global X Social Media Index Fund) Nasdaq GM. 2 - Aug - 2012 SOCL (Daily) 11.93



                                                                                            The social bubble
Open 12.07 high 12.10 Low 11.84 Close 11.93 Volume 125.4k Chg -0.15 (-1.24 %)
                                                                                   15.8
                                                                                   15.6
                                                                                                                                                     Crowd-sourcing is used to fund innova-
                                                                                                    seems to
                                                                                   15.4
                                                                                   15.2                                                              tive farm and food projects. ThreeRevo-
                                                                                   15.0
                                                                                                                                                     lutions.com offers food and farm enter-
                                                                                               be bursting
                                                                                   14.8
                                                                                   14.6
                                                                                   14.4                                                              prises an opportunity to raise funds from
                                                                                   14.2
                                                                                   14.0                                                              appreciative consumers who are eager to
                                                                                   13.8       A quick look at the Global X Social                    support and connect with their favorite
                                                                                   13.6
                                                                                   13.4      Media Index Fund pretty much tells                      businesses and really put their money
                                                                                   13.2
                                                                                   13.0    the whole story. The fairy-tale story is                  where their mouths are ...
                                                                                   12.8
                                                                                   12.6     ending and it’s time for social media                    Source: Marketwatch | July
                                                                                   12.4
                                                                                   12.2      companies to begin delivering real
                                                                                   11.93    value to consumers and businesses.
     Sep   Oct    Nov    Dec    2012 Feb      Mar    Apr    May    Jun     Jul   Aug

                                                                                                                  Source: Seekingalpha




Mobile payments                                                                                                                          Digital Marketing


20 % of Europeans                                                                                                                        Interesting digital marketing stats:
already make payments                                                                                                                    people use tablets in the evening
with mobile                                                                                                                              & interactivity is best in tablets
According a recent report from Forrester, 1/5th                                                                                          Taken from weekly stat monitoring by Econsul-
of european consumers. “Banks need mobile                                                                                                tancy, a digital marketing firm:
payments to protect their retail payments                                                                                                ■■■Between 7.30pm and 9pm more people click on

businesses from digital disruption.”                                                                                                        tablet ads than on mobile ads
                                                                                                                                         ■■■A quarter (25%) of respondents said they would be
Source: Internetretailing | July
                                                                                                                                            likely to click interactive ads
                                                                                                                                         Source: Econsultancy




38                                                                                                                                                                                               November 2012 | MOBILE PAYMENTS 39
     Trending issues

                                                                             New Gizmo era    New banking concepts

                                                                                                                                                      It’s not a bank; it’s
                                                      3D printers to go                                                                               a banking store: The
                                                      Couple of MIT students developed                                                                Virgin Money Store
                                                      the first truly portable 3D printer                                                             The first Virgin Money Store opened its doors in
                                                      that fits inside a metal briefcase, a                                                           July, with plans to open some 70 plus more stores
                                                      “personal fabrication machine.” In a                                                            in the future. The “stores” feature free WiFi, iPads and
                                                      short period of time, consumers will                                                            iMacs, and a “no hard-sell policy” adopted by staff.
                                                      become mobile manufacturers. What                                                               “Customers can simply come in, take the weight
                                                      could that enable? Time will tell.                                                              off their feet, enjoy a cup of tea and use our free
                                                      Source: Arstechnica                                                                             facilities.”

                                                                                                                                                      Source: Thefinancialbrand




App ecosystem                                                                                 Join & enjoy



      They’re finally here:                                                                   “Only” 1.6% of Facebook
      enterprise app stores                                                                   users spent money on
      Now big software vendors hope to stream-                                                virtual goods
      line the searching and buying process by
                                                                                              In percentages, it’s pretty paltry. But ... when
      following in Apple’s footsteps. SAP and other
                                                                                              expressed in dollars, that becomes over 1 billion
      enterprise software companies are opening
                                                                                              dollars. Uh, that would be nine zeros. “The newly
      app stores and hoping that they can monetize
                                                                                              launched Facebook App Center will spur pay-
      the app ecosystem, such as The SAP Store.
                                                                                              ments usage. In addition to in-app purchase, app
      Sources: PC Advisor / EcoHub.                                                           developers (not only social games developers)
                                                                                              now have the flexibility to charge users one-off flat
                                                                                              fee and/or subscription.”
                                                                                              Source: Forbes | August 2012



40                                                                                                                                                                                  November 2012 | MOBILE PAYMENTS 41
     Trending issues                                                                                              Technology trends
                                                                                                                The following section outlines the upcoming technologies that will change
 Smart cities + urban mobility                                                                                  everything, with predictions on what may come of them in financial industry.




                                                                     According
                                                    to Daimler AG, it’s the best                                     3D Printing
                                                      way to get from A to B                                         3D printing is a process of making three dimensional solid objects
                                                                                                                     from a digital file. 3D printing is achieved using additive processes,
                                                 “Moovel,” brings together entirely different means of
                                                   travel and presents the options so that they can be
                                                                                                                     where an object is created by laying down successive layers of
                                              seen at a glance – transparently, in a user-friendly way               material. In other words, 3D printing turns bits into atoms.
                                                  and on an equal footing. The recommendations are
                                             based on the offers of the mobility service providers. A                “3D printing makes it as cheap to create single items
                                             pilot program is launched in Stuttgart and another one
                                                is planned in Berlin. As of July, the app is available for           as it is to produce thousands and thus undermines
                                                                       download in Apple’s App Store.                economies of scale. It may have a profound impact
                                                                                        Source: Media Daimler
                                                                                                                     on the world as the coming of the factory did. …
                                                                                                                     Just as nobody could have predicted the impact of
Health                                                                                                               the steam engine in 1750
                                                                                                                     —or the printing press
                                                                                                                     in 1450, or the transistor
Is there a doctor in the phone?                                                                                      in 1950— it is impossible
There is an explosion of mobile medical          Diabetes monitoring
apps, beyond the diet and exercise kind.
                                              ■■■
                                                                                                                     to foresee the longterm
                                              ■■■Heart EKG monitoring
The president of the American Academy         ■■■Blood pressure monitor (wrists)                                     impact of 3D printing.
of Physicians, Glen Stream states, “People    ■■■Electrocardiogram device                                            But the technology
want to be empowered to take care of their    ■■■E. coli sensor

health” and are asking for apps for help.     ■■■Ear infection checker
                                                                                                                     is coming, and it is
Current apps include:                                                                                                likely to disrupt every
                                                    Source: USAtoday l August 2012
                                                                                                                     field it touches.”

                                                                                                                     Source: The Economist




42                                                                                                                                                                                       November 2012 | MOBILE PAYMENTS 43
     Technology trends

T    he market for 3D printing and related products
     and services are expected to grow because ad-
                                                              ■■■The material base is expanding. Plastics, metal
                                                                alloys, ceramics, food, etc.                                                                      Technology
                                                                                                                                                                  as marketing
ditive manufacturing essentially makes the cost of
complexity free (or almost free). Massive personali-          ■■■3Dmodel creation is being democratized. What
zation doesn’t mean massive costs. In terms of man-             was a complex & expensive is now simple & af-
ufacturing, personalization becomes essentially free.           fordable; and readily accessible.                                                                 WHEN TECHNOLOGY BOOSTS
                                                                                                                                                                  MARKETING CAMPAIGNS
■■■The    cost of 3d printers is dropping dramatically.       3D printing comes in all shapes and sizes. For ex-
                                                                                                                                                                  Building a product is just the beginning. Once in
     The cost of basic home 3D printer is dropping to about   ample, they can go big or go small and everything
     $1,000 and a industrial 3D printer to about $10,000.     else in between.                                                                                    the market, users will evaluate if the application
                                                              Source: Forbes
                                                                                                                                                                  developers have been working on during the
                                                                                                                                                                  last months is good enough or not. It is true
                                                                                                                                                                  that this evaluation depends on a never-ending
      3D printed passenger planes
                                                                                                                                                                  number of variables - customer satisfaction,
                                                                                                                                                                  needs covered, look and feel, expectations,
                                                                                                                                                                  overall experience - which makes the success
                                                                                                                                                                  almost impossible to predict.


                                   Printing Houses
                                                                                                                   E  ven the most simple solution needs a
                                                                                                                      marketing campaign accompanying
                                                                                                                   the launch —it may not be mandatory
                                                                                                                   but it really helps!— Spreading the word
                                                                                                                   can be done in many different ways, but
                                                                                                                   surprising the final users is becoming
                                                                        Fat, even at nano-scale                    harder and harder. Google has detected
                                                                                                                   the opportunity and their teams are creat-
                                                                                                                   ing amazing examples about how to take
                                                                                                                   their products to the limit. In other words,
                                                                                                                   Google uses the technology beyond their
                                                                                                                   product as the marketing campaign. Let’s
                                                                                                                   enjoy with a few examples.




44                                                                                                                                                                                           November 2012 | MOBILE PAYMENTS 45
     Technology trends
                                                                                                                                                                                     Events

Play the Cube                                                                                                 Mobile Payments
                                                                                                              Mobile payments are on their way to become a mass phe-
PlayMapsCube is a tilt-to-roll marble game using 3D
                                                                                                              nomenon. Analysts believe that on the next five years most
and the Google Maps API. The game is a tutorial for
                                                                                                              of the transactions done in physical commerce will be ex-
Google Maps but it includes some features that make
                                                                                                              ecuted through mobile devices.
it an addictive game. Is it really needed to explain how
Google Maps works? For most of the people probably                                                            This payments will shape the way monetary transactions
not, but it is cool and it will be useful during the maps                                                     are seen in the future by the society as a whole, and will
war for sure.                                                                                                 surely transform the clients’ lives.

                                                                                                              The Mobile Payments event will be held
                                                                                                              on November 29th.
Chaos to perfection                                         World Wonders Project                             From 9.30 to 2.00 pm. BBVA Innovation Center
The Google Cultural Institute has created an amazing        Another example created by the Google Cultural    Plaza de Santa Bárbara, 2, 28004. madrid
3D virtual tour of the Palace of Versailles. This           Institute to show how Google Street View works.
example shows the true power of Google Chrome               Google makes world heritage sites available
navigator working with WebGL for rendering                  to users across the globe by using the Street
interactive 3D graphics without the use of plug-ins.        View technology including videos, photos and
                                                            in-depth information. Users can now explore                                                     Other events
                                                            the world wonders just as if they were there.               Videos,
                                                                                                                     pictures and                           ■ INICIADOR
                                                                                                                                                            Iniciador Madrid with Enrique Burgos “Keys to developing
                                                                                                                     all the info                           your personal Brand”.
                                                                                                                                                            Iniciador Madrid dismissed the 2012 season with an interview
                                                                                                                    More info
                                                                                                                                                            to Enrique Burgos (Chief Marketing Officer at QDQ Media) to
                                                                                                                                                            discuss the main keys to creating a personal brand.
                                                                                                                                                            Date: December 12th, 18.00 in BBVA Innovation Center

                                                                                                                                                            ■ KNOWSQUARE
                                                                                                                                                            know Square Workshop: “Creating an optimal present”.
                                                                                                                                                            The crisis has led to a further weakness in the already difficult
                                                                                                                                                            world of channeling emotions. This workshop aims to fami-
                                                                                                              Check out the videos and photos               liarize and empower main mindfulness, from the standpoint
                                                                                                              of the event in our web                       of both theoretical and practical.
                                                                                                              www.centrodeinnovacionbbva.com                Date: December 18th at 18:30 BBVA Innovation Center


46                                                                                                                                                                                             November 2012 | MOBILE PAYMENTS 47
                                                                                                         Where we are



Open day
                                                                                                                                                               Calle
                                                                                                                                                                       de Sa
                                                                                                                                                                            gasta
                                                                                                                                                                                                 Alonso




                                                                                                                                                        ncia
                                                                                                                                                                                                 Martínez




                                                                                                                                                      ficie
                                                                                                                                                    ene
                                                                                                                                                la B




                                                                                                                                                                                        ra
                                                                                                                                               e de




                                                                                                                                                                                      rba
                                                                                                                                                                                                                               Ca
BBVA Innovation Center Madrid, is a place where ideas become reality. Would you                                                                                                                                                  lle




                                                                                                                                             Call




                                                                                                                                                                                      Bá
                                                                                                                                                                                                                                       de
                                                                                                                                                                                                                                            Gé




                                                                                                                                                                                  ta.
like to know? You can see the prototypes we created to model the bank of the fu-                                                                                                                                                              no




                                                                                                                                                                                 eS
                                                                                                                                                                                                                                                va




                                                                                                                                                                                  d
ture, to understand how we crossed the barrier of convention to seek new sources




                                                                                                                                                                               za
                                                                                   Just make a




                                                                                                                                                                           Pla
of value for our customers and to observe new forms of work that we have de-       reservation the day
ployed to support our innovation methodology.                                      that want to come
                                                                                                                                                                                           Plaza de Sta. Bárbara, 2. 28004 Madrid.


The first few days available for
the month of December are:                  December                   1  2
                                             3    4    5  6  7         8  9                              www.centrodeinnovacionbbva.com
December 4th at 18:00                       10   11   12 13 14        15 16
December 12th at 10:00                      17   18   19 20 21        22 23                              Follow us:
                                            24   25   26 27 28        29 30                                           www.facebook.com/centrodeinnovacionbbva                                     twitter.com/cibbva
December 19th at 18:00
                                            31                                                                    www.youtube.com/user/centroinnovacionbbva                                           www.slideshare.net/CIBBVA




48                                                                                                                                                                                                                                           November 2012 | MOBILE PAYMENTS 49
                                                                                                                 BBVA Innovation Edge is the first corporate magazine
                                                                                                                 focused on innovation. Innovation Edge aims to
                                                                                                                 explore new trends and technologies that may impact
                                                                                                                 the financial industry, especially retail banking.
                                                            BBVA Innovation
                                                            Edge is the result of a
                                                            collaborative work done
                                                            by all the people who are
                                                            involved in innovation at
                                                            BBVA Group.
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                                                            Reyes Bolumar
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                                                            Javier López
                                                            Marcos Marrodán
                                                            David Martín                                                   PDF: To read off-line
                                                            Luz Martín
                                                            Manolo Moure
                                                            Marcos Pastor
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                                                            Javier Sebastian
                                                            Luis Uguina
                                                            Gustavo Vinacua                                                                  Are you interested                           More info
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Description: The mobile payments trend, undoubtedly, is on its way of becoming a mainstream phenomenon. It will change how society thinks about monetary transactions. In this issue we sum up the best social business case study and we analyze future opportunities around it. `BBVA InnovationEdge' is the first corporate multiplatform magazine focused on innovation. Each edition featuresarticles, analysis and huge information about a particular theme. The mainpurpose of the magazine is to express the new trends and the upcomingtechnologies that may impact to the financial industry.