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In the Age of the Customer, simplicity and ease of use is what’s key. Consumers want fewer layers between their choices and the actions they take to pay for those choices. As a result, mobility is a primary strategy in the consumer-oriented approach of digitalized firms, particularly financial services organizations. Gartner analyst Rajesh Kandaswamy is rather explicit about this: “Mobile technology provides mechanisms that can reduce the need to carry and pay via physical cards with the use of mobile phone capabilities.”
There are enormous dividends in that approach, according to Kandaswamy, with “[t]he total value of transactions using mobile technology is expected to grow from $35 billion in 2012 to $173 billion in 2017, at a compound annual growth rate of 31%. This projection includes merchandise purchases, ticketing and bill payments, while it excludes person-to-person payments and airtime top-ups.”
It’s why banks are not only going digital, but actively reducing their brick-and-mortar branch footprint. That may seem like an easy path to cost reduction—and it is. But cost reduction can be easily aligned with improvements in customer experience; one can’t operate without the other. Even retailers recognize this. When asked by CNNMoney what the greatest threat to big box retailer Sam’s Club is, CEO Rosalind Brewer responded it was “understanding what’s really on the mind of the customer … it’s a very difficult equation.” In the case of millennials, “[they] don’t want a lot of bureaucracy to pay for their goods.”
Financial service firms will then need to pursue the convenience of mobile strategies that remove digital and institutional or human layers from the payment calculus. That will mean mobile strategy can’t just be device-driven or simply the introduction of an app. As Forrester’s Peter Wannemacher and Benjamin Ensor note, it’s unproductive to engage a “haphazard approach to mobile strategy, rolling out apps and features without a rigorous assessment of where customers' expectations and business objectives align.” To succeed, that strategy requires more creativity and a complete focus on customer needs.
Forrester’s Michael Facemire, Tyler Shields and Ted Schadler touch on this as well, warning CIOs they will have to devise mobile strategies that can keep up with customers (interesting how suddenly the customer is faster than the technology). “Building mobile apps will simply spawn large numbers of mobile apps; it won't result in a comprehensive mobile strategy,” writes Facemire in a recent report. “To win, serve, and retain customers means addressing customers' mobile moments at the pace customers demand — this requires new technology strategies and new platforms.”
Obviously, banks are moving in that direction, rolling out more technology and closing more branches. Overall, mobile payments are becoming ubiquitous as competitors such as ApplePay and CurrentC. But of concern is whether or not regulators are keeping up with those fast, revolutionary changes. The IMF’s Tanai Khiaonarong notes,t “Such innovations have exposed grey areas in existing laws and regulations, and have led to legal reforms and the need to strengthen risk controls in some jurisdictions.”
In the meantime, until that’s sorted out, service providers would be smart to keep track of those developments. Doing so will help them not only better understand the evolving mobile landscape, but to also offer partners timely strategic advisement. That can be accomplished by tapping into the technical and thought expertise that is on the cutting edge of the latest in mobile technology.
Charles Ellison is a senior analyst relations strategist for TEKsystems. He keeps close tabs on changes and public policy shaping the innovation space. He is also a former congressional staffer, senior aide to state and local elected officials and an expert advocacy strategist. You can reach him with questions and comments @twoARguys via Twitter.