Tony Virdi, VP of Banking and Financial Services in the UK & Ireland, Cognizant
Every few years, advancements in banking technology significantly disrupt the industry. Credit cards reduced our reliance on cash, online banking paved the way for the decline of the cheque book, and now mobile payments are poised to be the next major turning point: potentially the decline of the plastic credit card as we know it and the arrival of a new virtual card.
The concept of using a mobile device to pay for something isn’t new – the likes of Google Wallet and pay-by-phone parking services have gained some consumer traction already, while other services like Zapp are on the horizon. However, with the introduction of ApplePay, we may now have seen the pivotal moment that could presage the decline of plastic credit cards. For many countries where credit cards were never widely adopted in the first place, and the banking structure is not as widely spread as in Europe, ApplePay could enable a quantum leap to a new culture and mindset around payments.
Apple’s strength is all about the customer experience and making things as simple and intuitive as possible. It is this ethos which may allow it to succeed. But what lessons could other businesses take from what looks like becoming Apple’s latest success story?
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Understand your customers
Apple has a huge advantage moving into the payments space: 800 million existing iTunes customer accounts, most of which are associated with a credit card. Apple’s loyal fan base is already accustomed to making electronic payments using its technology and, crucially, they have learned to trust them with their payment details. This trust is linked to the power and influence of the brand, which has been built on a combination of innovation, design and all-inclusive marketing. Very few tech companies have a similar grasp on their customers.
But this point was not reached overnight. It can take years of work honing an offer to meet customer demands, build loyalty and even predict what they might want next, in the same way that companies such as Amazon predict what you may like based upon your browsing and order history. Banks call this ‘Next Best Action’. For all organisations, regardless of sector, this shows the importance of analysing and understanding what makes consumers tick. In today’s socially connected world, there is a wealth of information and behavioural patterns that surrounds every individual – what we call Code Halos – that can be tapped into. By monitoring and analysing this data, businesses can personalise products or services in more meaningful ways and build a strong sense of customer insight, loyalty that can be used as a platform to launch new products and services.
Play to your strengths
Another big advantage for Apple in the mobile payment space is its ability to offer a combined hardware and software solution, enabling it to have total control over the successful and secure integration of the two.
Importantly, ApplePay has been designed to meet online and physical needs in the same seamless way, making it easy and quick for customers to use.
Other companies in the mobile payments market will doubtlessly be looking at how they can adopt similar models, or partner with other organisations to share ecosystems or platforms that can offer similar levels of convenience and ease. But there is a wider lesson here for any organisation: the importance of knowing your unique strengths and building on them.
If you haven’t already, go mobile first; don’t see it as an additional channel.
How we use mobile devices is rapidly evolving. Most businesses will be well aware that mobile is changing how consumers and businesses operate, but not all will be prepared for just how fast the market is being disrupted.
ApplePay potentially gives any retailers or banks who have lagged behind on mobile a very powerful incentive to catch up rapidly, since consumers will assume a smooth mobile experience as the norm. Websites that are not optimised for browsing on a mobile device, online services that are not integrated with their offline equivalents, or apps that deliver a poor user experience are all examples of things that simply will not fly in today’s mobile world. In contrast, designing around a mobile first experience is most likely to provide greater benefits.
Never neglect security
In their flurry to innovate and keep up with customer demands, companies need to ensure they have robust security in place, especially when financial information is involved. Another one of ApplePay’s trump cards is its security, with a fingerprint ID system and secure element, generating a unique, random number for each transaction.
In a world where even major corporations are subject to hacking and personal data being compromised, it is crucial for any organisation to put significant time and resources into security. Figures have shown that the number of data breaches in 2013 was up 62 per cent from the previous year, with more than 552 million identities exposed. Companies that fall victim to attacks take time to rebuild customer trust and confidence.
The wind of change is here
Ultimately, the success and levels of adoption of new payment apps and methods will depend on customer and retailer acceptance. After all, if customers demand mobile payments to run better, retailers will have to follow suit and adapt by running differently to provide an innovative, workable and robust approach. If ApplePay does prove to be successful –and its innovations in product design, security and customer understanding give it a very strong chance, we will look back on this moment as a pivotal, disruptive moment in the retail payments industry, and one that all businesses can learn from.