Following Mobey Forum’s recent quarterly member meeting in Utrecht, Elina Mattila, Executive Director at Mobey Forum, caught up with Douglas Hartung, Senior Director of Global Software Innovation at host member Diebold Nixdorf, to get his take on ‘connected commerce’ and what it means for banks and retailers.
EM: What is ‘connected commerce’?
DH: It’s a term used to describe two different concepts, which share a common goal – to deliver a better user experience in financial services.
Firstly, connected commerce describes the idea of moving beyond ‘omnichannel’, where banks and retailers focus on delivering a great customer experience regardless of whether it be in-store, online or mobile. This is now insufficient. Sure, we live in mobile-centric environment, but there are plenty of consumer journeys that cut across different channels; many now start in one channel and migrate to another. Netflix is a good example. I can start watching a film on my phone during my morning commute, then when I arrive home that evening I can open Netflix on my television to pick up where I left off. For banks and retailers to achieve this, they must look at the world as a series of channels which, when connected, take consumers on an enhanced journey.
Secondly, connected commerce also means breaking down the silos between banks and retailers to enable real-time visibility and integration across every consumer touchpoint.
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When a consumer is thinking about making an expensive purchase like a car or a watch, for example, a collaborative approach between retailers and banks will also enhance the customer experience. Geolocation technology can help the retailer to identify what the consumer was looking at, enabling the delivery of targeted incentives to encourage the purchase. Simultaneously, this information can be relayed with banks who are able to offer a tailored product to support the purchase, such as an insurance package or personal loan. It is this meaningful collaboration that defines this notion of connected commerce.
Do you think that banks and other financial institutions can stay relevant if they don’t take advantage of these new platforms?
Put simply, no! With new competitors emerging from other sectors, including Amazon, the basic features of banking are available through a variety of non-traditional providers. To stay relevant, open systems must be a key focus for banks and other financial institutions.
European banks are at a unique advantage here. With PSD2 compliance imminent, this is a driving force compelling banks to take advantage of these new platforms. For all banks, open systems can be used to connect their core systems to third parties and fundamentally reconstruct how they deliver new products and services to their customers, such as personal financial management applications and account aggregation platforms.
Any other tips for banks on approaching connected commerce?
Banks must take a proactive approach to conquering connected commerce. Happily, this appears to be happening already. A good example of this is the evolving discussions around PSD2 and open banking.
18 months ago, banks didn’t really know what PSD2 meant or what steps they would be required to take. Now, in a relatively short period of time, the conversation has switched to how they can leverage PSD2 to interconnect with partners and deliver innovative, seamless services to their customers.
This is great progress, but banks must keep their foot on the gas as their competitors become increasingly active.
IoT is an enabler of connected commerce. Where do banks fit within the emerging IoT ecosystem?
IoT presents an interesting situation for banks and provides various opportunities. Fundamentally, they must still be able to play the classic role of identification and authentication.
To do this, banks will be challenged with authenticating machine-to-machine transactions. With devices such as televisions, refrigerators and smart assistants now making purchases, banks must address the question of which device is tied to which individual, and which account that individual holds.
But regardless of how a transaction is made, by a person in-store with a card or by an IoT device, the role of the bank remains constant – to be a trusted provider of value transfer.
How important is cross-industry collaboration in enabling the future of connected commerce?
While consumers interact with brands, what they really want are great experiences.
As the IoT and M2M landscapes continue to expand, open banking systems that connect your financial world with other aspects of your life are essential to delivering these experiences. But there are very few companies who can take on this challenge alone.
To address the challenges and compete effectively, both banks and retailers must collaborate. It is critical that they draw on their respective strengths within the opening banking infrastructure to deliver a customer experience that is personal, seamless and secure. Enabling and facilitating this all-important collaboration is why associations like Mobey Forum are so important.