US Still Making a Splash with Amazon, Visa and More

Undoubtedly, 2011 is already off to a roaring start in terms of payments, the mobile channel and all of the innovation going on. I mean- they're having entire mobile summits on it-no, seriously.  Also, NFC is blowing up all over the place, sometimes even with unexpected participants (like Angry Birds).

Recently I started thinking about all of the crazy mobile things that are happening abroad. DOCOMO and KT are involved in a NFC mPayment deal, with KT just recently going live with their smartphone mPayment service with the Galacy S II smartphones. (Their NFC payments system is  dubbed "olleh touch" and can be used at Lotte Mart (a Korean grocery store).

But the U.S. is still hanging tough. (Well, except for the iPhone fiasco.)Particularly with Amazon- who has continued to be quietly innovative (making it very scary). Amazon recently announced it's investing heavily into LivingSocial local-coupon-type services. They recently released the Amazon CloudDrive service, allowing users to store music online and automatically putting all mp3 purchases in the drive without taking up extra space. They've openly announced that they're also challenging the Googles and the Apples by getting into the mobile payment service business.This is actually interesting in light of its first quarter earnings statement, which showed that its building binge of warehouses and data centers have sacrificed its shot  term profits to lift business over the long term. It announced that it had no intention of slowing the spending as it looks forward to the future, but also said that its second-quarter profit, excluding certain costs, would fall as much as 65% or as little as 9%. 

[As a tangent: hyper-local coupons are becoming all the rage! LivingSocial is introducing its "Instant Deals" offers, which will offer special deals that are specified by time (between 2-5PM) and will allow merchants to increase volume during typically slow hours. EBay has also jumped into the bandwagon with its acquisition of its hyper local mobile ad network.Catalina Marketing, long known for providing shoppers with coupons at store checkouts, is also looking to get into the online coupon space. I know Americans like deals, but seriously!]

Visa is also continuing to step up its game. It's been at the forefront of most of the NFC pilots, was one of the first to roll out the microSD interim option and is now announcing that it's going to be in cahoots with Square (the small-merchant, hardware provider that allows for credit card swipes) and indirectly, with Apple. This comes days after Square announced that it would partner with Apple to sell its hardware in the Apple store.

Undoubtedly, NFC will continue to be a big deal, especially in the mobile payments world. I'm most intrigued to see how not only how the different companies battle it out, but also how the regions collaborate to figure it out together- to create an international payment service.

"Do You Have a Killer Career?"

So I recently opened up my Self Magazine for May (for the men and the unknowing, Self Magazine is a women's magazine that focuses on health (recipes, healthy eating, workout tips, etc.) and overall "feel good" life tips (lifestyle tips, touching articles about life and overcoming obstacles, etc.). Stay with me though.

One of the articles that I found kind of funny this month (that I don't think is supposed to be funny) was an article that they titled "Do You Have a Killer Career?". The message is sobering (You're going to die if your job is strenuous, but my internal dialogue was bitter (of course) but also kind of funny. So, to spread health information and to keep y'all out there safe at work, I'm going to share the highlights and my internal thoughts (in italics). This is how it went.

There are 5 sections that they deem "Ticker Traps" because "Tough days at the office can leave you more than frazzled. They can significantly raise your risk for heart disease. Learn to keep work woes from giving your health a pink slip". Who writes this stuff? It's like Dr. Seuss grew up and became a life coach.

• Ticker Trap #1: A Pressure Cooker Job- Women with a demanding profession have up to a 56% higher risk for heart disease than those with less strain, a study from Harvard University reveals. So, having a demanding job means I have a higher chance for heart disease. Luckily, most of the hard working corporate people I work with on the job don't have hearts. Ha! No, but seriously, that means I have a 34% chance of being completely normal... Those are pretty good gambling odds, right? Also, how are they defining "demanding profession"- does it mean we have a lot of responsibilities? Or that people make demands of us? Or, that we are we demanding? Either way, I'm screwed. I should probably start working out or something and stop stress eating.

• Ticker Trap #2: The Boss from Hell-  A crummy superior (someone who doesn't support her employees or is unclear about her goals) can increase the risk for heart disease by 64% in men, a study from the university of Stockholm finds. It's unknown if women suffer similarly....what??...but chronic stress from a lousy leader keeps adrenaline and cortisol levels high, straining your system. Seriously? Wait, why do they assume that my crummy superior is a woman? Couldn't my crummy superior be a man? Especially in my job, it is statistically more likely that it would be a man. Since most of the employees are men, and we know it increases the risk of heart disease in men...Oh NO! My company is a man killing machine!!

• Ticker Trap #3: Skipping Vacations- The fewer getaways women take, the more stress and depression (two big-time heart saboteurs) escalate, according to research from the Marshfield Clinic. What vacation? Last time I took a "vacation", it quickly got downgraded to "working from home" before I even left...

• Ticker Trap #4: Desk Jockeying- Sitting for six or more hours a day can raise your risk of dying- of anything but especially from heart disease- by 34 percent, regardless of how much you exercise, a study in the American Journal of Epidemiology reveals. Why do they use the term "desk jockeying"? "Desk jockeying" is such a nicer term for "sitting on your butt all day". I think the only time I really leave my computer during the day is to pick up lunch. To bring back to my desk. To eat there. That's probably bad.

• Ticker Trip #5: Too Much Overtime-Logging 11-hour workdays like it's, er, your job? Your heart disease risk jumps 56 percent, European Heart Journal finds.11 HOUR WORKDAYS? Where can I sign up?!  When was the last time that I worked less than 10 hours in a day...?

 So overall, it was disheartening to read for me because it brought to mind how much my job is killing me, but overall it's good information to know. Things to keep in mind as my life moves forward....

Mobile Is a Mixed Bag

Seems like people are kind of pumping the brakes recently in terms of mobile. Looks like the industry is asking lots of questions, beyond the "What do I need? How do I get there?" they're also doing a lot of introspection and market analysis. Let's blame it on the rainy spring weather- it probably inspires contemplation.

Retailers know what's going on! In a recent New York Times article, they profiled how multiple retailers have attempted to move into the mobile shopping space and are being met with mixed success. Apparently only 12% of the top 500 United States retailers had sites compatible with mobile browsers, while only 7% had apps. Most of the people trying to move into this space seem to look to Amazon as the holy grail for mobile functionality (see my blog post on why Amazon is scary, awesome, and scary awesome).

Google Data, for example, has been used through its "Google Trends" feature, which shows the surges in keyword searches to determine trends in the population. According to the trends, it seems like "people are closing businesses, buying fewer boats and RVs, buying things in bulk, taking the bus, and shopping at dolar stores". Additional interesting points include:

• Around Thanksgiving 2008, searches for "unemployment" doubled, then flattened out for 24 months- but don't think of this as an improvement- unemployment checks in the US stop after 99 weeks
• Coupon usage in day to day spending increased by as much as 200%, coupon usage grew by as much as 27%. This movement is probably caused by the same reasons that a record number of Americans are currently on food stamps (~45 million- that means nearly 1 in 7 people, or 14% rely on food stamps. This is equivalent to an approximate increase of 16% in recipients in 2010)
• Funnily enough, it's true that porn is the one recession-proof investment! Searches for  the word
  "porn" increased (significantly) starting in 2008 and is now at one of it's highest points ever
• Unsurprisingly searches for "mobile banking" have increased, but interestingly enough, the search for "mobile banking" closely mirrors the surge in searches for "iPhone" and closely approximates actual adoption rates among consumers

We also seem some partnerships (friends are never more valuable than when you're in trouble!) in these turbulent times. Facebook, Apple, Microsoft, Google, Netflix, Visa, Yahoo and others involved in TechNet (A sweet, super-hero like group of major executives at leading technology companies) (okay, maybe not super-hero like, but I like to think that they have some sort of consolidated alerting system in their offices, so Zuckerberg can jump out of his seat and yell things like "Quick! To the Vespa! Steve Jobs NEEDS ME!") have recently sent a letter of support to lawmakers expressing their support for Senator John Tester's bill that would delay the implementation of the proposed debit interchange caps. Although this is probably driven by their mutual concern over not makin' no mo' money (Ahem Google NFC pilots, Apple NFC pilots, Facebook credits in real life, Microsoft struggling to stay in the game, Visa trying to take over the mobile payments world) I like to think that it's also a pretty aggressive move by them to look out for each other's interests as well.

Some players are really looking out for themselves though. American Express, for example, is making some big moves in terms of their mobile payment strategy. They recently announced that they are leading the investment for Payfone Inc. This would allow a new targeted demographic (younger consumers for American Express) to have more robust prepaid card or credit cards from "virtually any financial institution". This is quite a break though from American Express' typical approach of supporting a proprietary payment network. Combined with their announcement of Serve, this could give American Express some additional international reach since international merchants don't accept American Express as quickly as they do Mastercard or Visa. What we know so far though is that Serve and Payfone will "provide consumers with the ability to make purchases from online merchants using their mobile phone number at checkout" using a "pre or post-paid mobile operator account". Rodger Desai, the CEO of Payfone said, "This relationship will be a defining force in the industry. By teaming up with American Express' new digital payments platform, Serve, we are not only delivering greater choice to consumers and merchants, with one of the most comprehensive and advanced e-wallets in the industry, we are also enabling mobile operators to participate in the transaction flow and benefit from an entirely new revenue source." It will be interesting to see not only how this American Express/Payfone thing pans out, but also to see how it will affect the way other disruptors (Google, Apple) will be cutting in on Mastercard/Visa's game. By the way, it's already been pretty clear how Google and Apple are making a major play in NFC, but so are traditional players (see previous post). However, because of their financial backing, it's going to be hard for Visa and Mastercard to compete with the likes of Google and Apple if they decide to move into payments (they could offer significantly lower swipe fees). I think this article at GoBankingRates.com lays out the situation pretty well.

To round up my mini-news round up, I wonder when we'll be hearing more about the laws and regulations will begin to catch up to the payments technologies that we have going on. In a recent interview with Suzanne Martindale of the Consumers Union, Pymnts reached a question we've all known for awihle- the US may have great ideas and technology, but how do we control all of this?!

QR vs. NFC (Fight!)

I read an interesting article today from the RFIDiva, "Google Decides that NFC Is Cooler than QR" and although my first instinct is to make fun of the name of this blog (I mean seriously, can I really analyze the movements of payments giants from a blog called the "RFIDiva"? Word of warning: she uses the term "NFC, obvi" in this article she wrote, which...well, the term "obvi" always inspires unexplainable hatred in me.) I really shouldn't because, well...people in glass houses.

Anyway. The gist of the article is that business owners and users used to be able to generate printable QR codes for their Google Place listings. For awhile, that functionality went away and no one really knew why. Then, Google came out and basically admitted that it was going to be moving away from QR codes toward NFC. What this means is that, instead of having printable QR codes that customers can scan in a store, Google will now send store owners RFID-embedded stickers that say creative things like "Recommended by Google" so owners can put them on their doors and at their checkout counters. Customers who wave their phones in front of the sticker will automatically transmit their recommendation online. One good point that the RFIDiva makes is that, when you compare this use case to Foursquare, this new check-in process is much better. Instead of sorting through a list of places that may (usually may not) be (relatively) near me, I can tap, check-in and start getting some awesome coupons ($2 off! woot!).

I have made it clear on my blog before that I am a HUGE QR proponent, but this move worries me. If tech giants like Google are hopping on the NFC bandwagon, this could begin to sway the mobile movement toward the NFC channel. However, my argument here is: well of course Google wants people to move toward NFC! They're coming out with NFC-enabled phones for their Droid phones, and if they decide to move to a Google Checkout/mobile payment model than it would probably be easiest in the short term (since they've already promised to seed specialized POS readers). However, in the long run, are merchants going to want the additional hard ware? In my mind, a POS reader with a NFC reader is still hardware, whereas scanning a barcode seems more software based- in the long run it might be easier to maintain and roll out non-hardware based payment solutions. (Especially since Google has been very upfront that it is NOT a hardware manufacturer.)

Also, I would think that the use case between checking in to receive mobile coupons or utilize social networking is going to be very different than the use case of mobile payments. I would hope that customers are okay with checking in as quickly as possible (outbound communication to Foursquare or Google Check In) but probably want slightly more security with payments. What do we know about this space? mopay (yup all lower-case, that is not a typo) recently released a study stating that:

1. Regardless of region, adults use more deliberately and thus, the global conversion rate of adults is twice as high.However, minors are a growing consumer segment and mobile payments is one of the few payment solutions to reach this valuable, untapped, largely underbanked/unbanked market
2. Mobile payments work best within $2.50 and $10. The "sweet spot" for mobile offers is around $8, while only three percent of of offers below $2.50 and only three percent exceeding $14.00
3. Average transaction value increased in 2010 (no surprise as mobile payments becomes more mainstream- I chalk this one up to a sampling skew- an early adopter in 2009 probably doesn't have a lot of opportunity to drop hundreds through mPayments, but 2010 is a different ballgame)
4. Consumers regularly spend up to $50 a month on mobile payments. There is a high percentage of repeat customers and although the pricing seems low, micro mobile payments tend to generate "macro-revenue" per user

So what does this mean? Consumers are edging into the space- they're not spending a huge amount, but they're spending, and the transaction value and volume is slowly increasing. They're strongly incentivized by offers. (Duh, see SK Telecom and their move to a "Groupon-like" service and Living Social's recent interview with Pymnts Adults are surprisingly the most common users, even though everything seems to indicate that younger users will rule the market in the future as they "come of age" (it's the real bildungsroman for the modern age).

[Tangent: Seriously, read LivingSocial's new plans on locally sourced group deals. They're basically making these deals "instant", so that merchants can make offers that will optimize traffic during slower business hours. So a slow restaurant can offer 20% off lunch, but only between 2-5PM. Users looking for deals can check their Instant Deals feed and will see all the deals within a half mile of their current location. They're currently piloting in Washington D.C. and plan to roll out nationwide by the end of the year. Talk about "right here, right now" functionality.]

Bottom line: Google seems to be pushing toward NFC for marketing and although its most likely motivated in part because they already have ponies in that game, it most likely will have a trickle down effect, making NFC the more popular channel for mPayments in the future. However, the question is, in the long run, is this the "right" decision. Shouldn't we be moving toward hardware-less customer interactions? I would guess if that's our goal, minimizing the hardware necessary for a transaction would be a first step, not just upgrading it to accept NFC instead of a card swipe.

Companies of the Future

Fortune magazine had an interesting article this month profiling the top 25 more powerful business people in Asia. In the introduction to that article, they mused on how the power pendulum has most definitely swung if not from the U.S. to Asia, at least to a more Asian-leaning direction. Of the top 25, the top 5 include:

1. Akio Toyoda of Toyota fame (and misfortune)
2. Ratan Tata of Tata Sons, leading a conglomeration of over 98 companies that do everything from hotel management, perform IT work, produce tea and build cars. His dreams of an affordable "consumer car" like the Nano (priced at $2900, 50mpg) is currently only in India. But he has his sights set on the U.S. market as well
3. Mukesh D. Ambani of Reliance Industries, is most popular as a "deal-maker", persuading big oil companies (BP) to invest heavily in India. He also was the first non-American nominated to Bank of America's board of directors
4. Kun-Hee Lee of Samsung has revolutionized the way Korean (and now global) consumers think about consumer electronics. Samsung's brand is now known worldwide for providing quality cellphones, televisions and computer chips
5. Ren Zhengfei of Huawei technologies is now China's largest telecom producer. Looking to branch into the American market, he has established a new R&D center in California

Unsurprisingly, the top 5 are all men, which is a bit disheartening, but there is a woman on the list! At #17, Chanda Kochhar is the managing director and CEO of ICICI bank, the largest bank in India, so there is some hope that the pendulum is not only swinging geographically, but across genders as well. All of this talk though made me wonder- so these are the most powerful business people in the world, but what about the companies they manage? What makes a company great?

I reflected on a conversation that I had yesterday with a good friend of mine, where he said that if he could start his own company someday, no matter what industry that company happened to be in, he would model it after Google. After we hung up, I reflected on his idea- in many ways, Google has done it right and is undoubtedly one of the most sought-after companies for employment (and not only in Silicon Valley!). But what makes it great?

Google's model is "Don't Be Evil", and of course there is a lot of controversy about that. Particularly after its ordeal in China (also highlighted in Fortune magazine this month), Google has had a lot of negative press. From the Chinese people it was "Why did you give up on us? You should've kept fighting!", from the Chinese government it was "Google doesn't play nice- look how petty they're being" and the news we got here in America was slightly confusing- "Google is trying to work things out, but refuses to cooperate. Google is fighting because they believe in the freedom of speech, but mostly because they see a huge untapped market in China. Conspiracy! The Chinese Google equivalent (Baidu) never had outages or system problems, but Google has them all the time!". Although Google has since withdrawn from China, it still hopes to move there in the future. Overall I see this as a loss to China because Google has so much to offer- if nothing else, it offers a strong case study on how to treat employees right. Maybe it's because I'm still very sensitive since the merger of my own company, but here's some things that I think Google does fantastically:

1. Letting Employees Know They Are Valued: Undoubtedly, I think this is the number one most important thing. Assuming that you are getting the types of people you want and that you want to keep these employees (related but not necessarily synonymous), this step is critical. Some companies stop at stock options or bonuses (and don't get me wrong, money is usually a great tool for this) but Google takes it a step further. Full gyms, free cafeteria food, pet/child care services, on-site dry cleaning and massage therapy, combined with a "fun" atmosphere (Foosball tables and video games) make going to work a pretty sweet gig. And why not? If employees are less concerned about outside things ("Where can I find a good baby sitter?") they're more likely to do a good job at work. 
2. Seeing People as People: Moreover, Google asks that their employees spend 20% of their time pursuing outside interests and hobbies while at work- this sends a clear message that they understand there's value in seeing people as people. Shortly after the earthquake in Haiti, a group of Google employees created a database so that family members could find and contact one another. This has since been adopted by many relief organizations to help reconnect families in disaster areas. That's pretty great from my perspective.
3. Being Flexible and Open: Maybe it's just because of its Silicon Valley upbringing, but Google is known about being flexible and open- the opposite of the normal hierarchy seen at most large companies- and they pride themselves on that fact. Google is known for its open feeling down to its campus- with open cubes, "brainstorming spots" and company leaders who regularly blog on company issues. As with all corporate initiatives, there is a fair amount of criticism, with TechCrunch releasing some "insider information" on Google employees, but this information is a bit dated and seems to be a minority view.

Overall, Google is impressive not only because of its extensive reach and infinite desirability for employees, but also in the reasons why these employees are attracted to Google. Google doesn't only mean a brand name in Silicon Valley, but employees are beginning to value intangibles as well- unsurprising as a we move into an era of outsourcing and teams of 100 or more. Although Google is by no means perfect, I think there is a lot to learn here- other companies should take heed!

Because Everyone Needs More Rube Goldberg in Their Lives

Time for a little bit of a break since it's a Friday. There's more to life out there than just cranking out work and doing things that make you money. How about doing things that don't necessarily give you monetary gains but provide happiness instead? Wouldn't it be great if you could do both? I don't think it's possible to find another company that embodies this motto better than Synn Labs, recently featured in Fast Company.

Known for creating great contraptions that fascinate the mind (Cue "OOOoOoo" and "Aaahh..." noises), they've worked with everyone from Google, Disney, Sears and the band OK Go (See clip above for their music video "This Too Shall Pass"). They describe themselves as "A drinking club with an art problem", but I think my favorite quote in the magazine comes from cofounder and designer Doug Campbell, who said, "We've shot flame balls in the air, trained hamsters, played with Slinkys, and built rockets. That's a week at the office."

The magazine notes that the flame balls were strictly for their own amusement.

Happy Friday!

International Moves

Just when you're least expecting it, the international players sneak up on you.

In early February, KDDI, Softbank and SK Telecom began testing joint NFC services for Japanese/Korean customers. This is an important move because both Korea and Japan are considered frontrunners in mobile payment technologies. This partnership will not only be one of the first cross-border partnership among mobile industry leaders, but also pulls in other major industry players like Mastercard (using their PayPass service) and "new channels" like smart posters (the pilot between the two includes posters equipped with NFC-compatible RFID tags placed in 110 locations in Tokyo and 150 locations in Seoul).

This also seems to be a direct challenge to another partnership also announced in early February between NTT Docomo and KT Telecom. Interestingly enough, NTT Docomo boasts over 50% of the carrier market in Japan, whereas SK Telecom boasts over 50% of the market in Korea. Makes me think that each country is making a play to expand in opposing directions....

In another interesting note, after SK Telecom's acquisition of an almost-majority of Hana Financial Services' (yup, of Hana Bank fame) credit card group in late 2009, Hana and SK Telecom quickly came up with SIM card based contactless payments/promotions service (in March 2010). This is interesting because SK telecom has recently made moves to offer Groupon-like services in Korea (announced April 2011), teamed up with China for mobile game development (announced April 2011) and also has been rumored to be thinking about bidding on Blockbuster (announced March 2011). Looks like SK Telecom is positioning itself to be a value-addedservices monster.

What does this mean to us though? Well, it seems that SK Telecom is really looking at the whole thing from a global scale, which is interesting because it's targeting very American companies (Blockbuster) as a potential growth trigger.  I guess we'll see....

What Mobile Is vs. What Mobile Could Be

I'm beginning to think that people who want to innovate in the mobile space (like outside alternative players) are moving at a much faster pace than the players who actually need to provide the foundation for these mobile services to function.

We already know that innovation is a-comin'. With all of the regulation swirling around making it increasingly difficult for banks to generate revenue from fees (and yet other studies-like the one from Pymnts.com- showing that even if they took fees from somewhere else, banks would most likely pay for it with the loss of customers), banks and other players need to do what they can to protect their interests in the landscape. Yet, it seems like the activity comes in cycles- after all of the flurry in late 2010 and the beginning of 2011, the dust has cleared and while there are a lot of exciting new announcements (AT&T/T-Mobile merger, ISIS, NFC trials all over the place), a survey conducted by Forrester Research of the top 15 U.S. banks/credit unions show that, particularly in mPayments, most players are content to sit on the sidelines and see how this technology plays out before making investments of their own. Another study by Fiserv suggests it's because financial institutions are focused on what the mPayment business case could be (according to their recently released white paper). And who can blame them? The mobile channel is still in question. A study released by the Federal Reserve Bank of Boston concluded that 10% of consumers had set up mBanking services in 2009, but a much smaller proportion actually used the services.

Traditional players are getting into the game though. There are a few front-runners, most notably Visa with its multiple NFC pilots. In fact, Visa Europe just announced that they plan to invest $144.2 million annually into mobile payments and e-commerce because they believe that this is where the areas of growth will be. Visa Europe expects that its cardholders will (~419 million cards in force throughout the EU) spend approximately $2.9 trillion dollars by 2015. Yet, at the same time, outside players like Vault Payments are continuing to make exciting announcements. Vault Payments, for example, plans to go mobile later this year with bar codes.

Even within the alternative player innovation-rama, they seem to be at each other's throats! Aislebuyer, for example, recently announced that they were going to be using image capture to add credit card capturing.Why is this a big deal? Because that means that other players (Square, anyone?) that offer POS services could be in deep trouble. So it's no surprise to see that Square is quickly attaching itself to a big hitter player like Apple. While many people are guesstimating that this move means that Square/Apple are getting in together to provide NFC services (a "meeting in the middle" of Apple's NFC plans and Square's corner on the cheap POS device market), another option is that Square was forced into this partnership because it desires to have greater market share, higher revenue, and basically be a critical stakeholder, but definitely lacks the backing to do so without the support of a technical behemoth like Apple.

What is the world coming to? Those that should be running quickly are content to sit on sidelines, value added services are fast outpacing the rate of typical consumption and the overall value of the mobile channel (still in question) is still being invested in through partnerships and impressive sums of money. Sounds like things will continue to get curiouser and curiouser....

$75K Can Make You Happy!...Right?

I just thought this picture was funny (terrible sense of humor, I know). People say that you can't put a price on happiness. That happiness is some sort of magical concoction of intangible feelings and  uncontrollable, outside forces that impact your life all at the same time.

In a recent article released by Time, a new study from Princeton University claims that maybe there is a number for happiness. That number happens to be $75,000. The study, which drew on more than 450,000 Americans polled by Gallup and Healthways in 2008 and 2009, claim that the further a person's household income falls below that magical $75K level, the unhappier he/she is. However, no matter how much more than $75K a person makes, it doesn't give them positive, correlated gains. For example, if I make $40K, my unhappiness is greater than my incremental happiness above "normal" if I made $120K.

I have to note though that the study also mentions that there are different types of happiness- there's the changeable, day-to-day mood and then there's the level of satisfaction you feel about the overall direction of your life.It seems like it's this second type of happiness that is most strongly correlated with income. This kind of makes sense considering income probably affects the way people think about how their lives are going- it's difficult to find any other metric to compare yourself against if you wanted to figure out how you stack up against the guy standing next to you.

The study believes that it's not low income that makes people sad, but more that less money makes people feel more ground down by other issues- like health, relationships, etc.(You know, the harder, more tangible problems- not just whether your stocks will vest in time or whether or not the funds you've put a few thousand in are showing positive gains.) Among divorced people, about 51% who made less than $1,000/month reported feeling sad or stressed the previous day, while only 24% of those earning over $3,000 a month did. At that magic number of $75K though, this discrepancy disappears, and individual temperament and life circumstances (age, education level, job, etc.) more significantly affect how a person feels. Economist Angus Deaton believes that it's because at this $75K level, people begin to feel like they have the expendable income to do things that make them feel good- like going out with friends.

All of this is interesting for many reasons. The thing that intrigues me the most is that the data was collected at possibly the worst part of the economic recession, so I wonder if the data would be slightly different now. (And if it was, would it be higher or lower? Higher than $75K signifying that people realize that money makes them feel much better than originally thought? Or lower, which would mean that people no realize that they can live on much less than they originally thought, and would be happy living simpler lives in light of the destruction the recession has caused?)

Finally, the study mentioned that money is closely tied to self-esteem (something that has a strong relationship but not to be used synonymously with happiness). The study showed that no matter their income level, people feel their life is working out better with each raise they receive, which means there's no harm in reaching for that next big thing!

The Dalai Lama

The Dalai Lama, when asked what surprised him most about humanity, said:

“Man. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present; the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.”

We're going to break it down here today  at The RY and take a breather. I have recently rolled off my mobile strategy project, and am beginning to look at my options for my next project.Three options, but with project work, we all know that in the consulting world, the number of potential projects that you can roll onto has an exponential positive correlation with your anxiety during your time period (multiplied by the amount of time they make you wait before your next project starts). Consultant math.

Out of the three projects, one's in San Diego, which could be awesome. But I don't know what my role could be. Another is on the east coast, but could have an awesome leadership role for me. One could be international with tons of visibility, but might not sell. D'oh.

So that's why we're ending up here today. Because life is short, and I need to take a couple of breaths to remind myself that there is more out there than just work. There's volleyball on the weekends, yogurt places where you can add your own fruit and people like the Dalai Lama out there. Yup. This. Is. Happening.

<Check out the funny wall>

NFC: New for Companies

I read an article recently entitled, "NFC: Under-hyped, ready to over-deliver" at VentureBeat, which basically argued that "The naysayers would have you believe that rival mobile technologies like SMS or barcodes are good enough, and that they can do everything that NFC promises. But in the end, NFC will win the in-store battle for five simple reasons: it's way faster and easier to use, it's infinitely more secure, it has a much lower cost to scale at the point of sale, and it's fully interactive near, in-store and at the point of sale." The argument goes on to say that mPayments is just a small piece of the puzzle, and in reality, NFC can and will be used for everything- acquisitions, marketing and payments included! My first reaction was, I don't understand how people are "under-hyping" NFC- it's been clear, from the amount of investment and news coverage its been receiving that it is anything but under-hyped.A basic search using Google Trends (below), shows that although NFC (esp. in news) has been steadily increasing, interest is definitely reaching a fever pitch in 2011.

NFC has blown up over the past couple of months. Seemingly, everything is coming up NFC. NFC, which stands for Near Field Communication, is how "touch and pay" systems are powered. So all of the news that we've been hearing recently about the microSD embedded chips from Visa or the new "NFC-enabled" phones from Google and Apple all rely on a small relay mechanism between the phone and the reader. Small amounts of information is given, and the POS still does most of the work, but the NFC bit supposedly will replace the swiping of the card by authenticating the user into the system and triggering the normal chain of events. As of right now, NFC chips are mostly one-way transmitters, but two-way interactions aren't uncommon, particularly in Asia.

Partnerships are already forming around the new potential mobile payments ecosystem, with the creation of a new player, the "Trusted Service Manager", who will facilitate the secure transmission of information between the consumer, the consumer's device and the institutions that need it. First Data and SK Telecom partnered to offer a commercial TSM solution, the first in the industry which streamlines the process so that interested consumers, MNOs, issuers, etc. can have a "one-stop shop" type of experience. Most obviously, we've seen the proliferation of "interim" solutions for the NFC push such as the microSD cards that can turn any phone that has an SD slot into a "NFC-enabled" phone. We've also seen a focus on the channel through conferences like NACHA ("The Electronic Payments Association") during its 2011 Payments Conference, with many discussions around the potential value of NFC. At the Alternative Payment Systems Innovations Conference in San Francisco in March, there was a lot of buzz around the NFC possibility, but only one participant dared to ask, "NFC has always been the solution in search of a problem. What exactly is broken with my mag-stripe card?"

And with that, I think we've arrived at the crux of the question. What does NFC bring us that our current technology can't? Well, supposedly, there's 5 reasons:

1. Faster to use
2. Easier to use
3. Infinitely more secure
4. Lower cost to scale at the point of sale
5. Fully interactive near, in-store and at the point of sale

Let's stop the madness. First of all, there's no way that mPayments is the least important part of the NFC equation. I see where they're going, and I agree-marketing, acquisitions, all that stuff is great. However, at the end of the day, if we're really just working on the marketing angle, that's nothing new and NFC could offer a "cool" factor, but really nothing that you can't do now using Google Shopper, Yelp Monocle, or the billion other apps to sell you things.

So the first two points, faster/easier to use- are questionable. NFC won't be easy to use if merchants don't accept it (because it's expensive to upgrade that software!) and it won't be fast to use if you need to input various MFA (multi-factor authentication) methods to access your funds (very, very likely, esp. if banks begin offering "debit" mpayments- PIN will most likely be required for purchases over $25). If speed and ease were the goal, I still don't understand why QR/regular barcodes aren't the answer. Software upgrade is  cheaper and scanning a barcode seems just as fast. As for security, I know that there is a large contingency arguing against it because of security, but many scanning processes still require a sign-in (something you can do while in line) and BOTH parties to confirm the transaction.

As for lower cost, esp. for small merchants, I imagine that using a company like Cimbal will be infinitely cheaper to move to than upgrading your POS reader. And as for its interactivity- again, codes can be anywhere that NFC can be (sometimes from even farther distances- see the Hana Bank marketing campaign where they plastered QR codes on sides of buildings for commuters). Additionally, QR codes offer not only "near, in-store and POS" opportunities, it also offers "right here, right now" functionality. Consumers could use it to pay for products while browsing through magazines or newspapers for example- if you like that coat in your magazine, scan and have it charged to your account and shipped to your house!

But having said all this, the bottom line is that the ecosystem doesn't know what the next big thing is, but is fixating on what they do know. NFC is tempting because it builds on existing functionality and could be integrated into existing hardware through software upgrades. But NFC and even codes are definitely not the end all be all. Mobile payments users are embracing all types of alternative forms of payment (like direct-billing). Bango, for example, just expanded its reach to Canada, embracing 200M North Americans (with over 600M users worldwide, in 120 countries!). Obopay, another mPayment firm specializing in funds transfer through text, just won the Asian Banker "Technology Implementation Award" for 2011.

So the moral of the story is that we don't what the future will be, but we shouldn't limit ourselves from exploring other options until we know more.

News Roundup!

A lot of things have happened recently in the world of mobile/financial services, etc. But I have questions!! Some of the articles are seemingly contradictory, and still others leave me with more questions than answers.Here's some of the news that I've been browsing over these past few days:

• An article released recently (as in, this morning) by the Atlanta Fed Blog also talks about security (me and the Fed- we're on the same wavelength) but their argument is that mobile payments are probably more secure than regular bank cards. The post, written by Cindy Merrit (the assistant director of the Fed's Retail Risk) concludes that "The ability to add passwords and GPS location functionality to the handset represent additional security controls to accessing payment instruments in the future mobile wallet".
• But at the same time,  Reuters featured an article today asking "How Safe Is Your Mobile Wallet?", and although it did state that "consumers shouldn't be any more nervous than they would be using their computers for banking", they did go on to talk about malware (20 million new pieces of malware!) and cyber criminals. I feel like I'm getting mixed messages
• But wait, in the same report from the Atlanta Fed (towards the end), she also states that because the US uses normal mag-stripe cards (vs. Chip/PIN cards in the UK) our security is becoming increasingly obsolete. D'oh.

And what about those crazy alternative cats?

• Google announced recently that it's put in a "stalking horse" bid on Nortel's patents. Nortel, which filed for bankruptcy in 2009 has sold itself off in pieces to recoup some money to pay off its remaining creditors. Its patents reportedly revolve around wireless services, data networking and LTE. Overall this seems like a logical move for Google as they expand in their wireless space, but one can't help but wonder what's in the mysterious goody bag of patents that's possibly worth $900M
• Speaking of Google, remember when I previously wrote about the cannibalization and hybridization? Well, a leaked version of the forthcoming Android Music update implies that Google is also looking to get into the cloud storage service. Yup, the same one Apple announced that it would do, that Amazon beat them to. I feel like Apple is just getting salt in the wound...
• But they shouldn't feel too bad, they just got some support from Bank Companion ("a leading provider of mobile banking software"). Bank Companion announced it would be integrating with the iPad2 for its industry leading mobile banking software platform. All in all, I have to say that it seems like quite a gamble for Bank Companion to put all their stakes on Apple...but perhaps they'll be announcing additional platforms shortly.
• As a tangent, I have to say that I'm wondering about the power of tablets- the article above claims that iPad sales reached 15M units in 2010 with over 7.3 units sold in its last three months of 2010. Users typically are the same as the iPad norm (30-54 yrs old) and that the tablets are mainly used for finance. Question: Are they including units sold to enterprise? Why an age range of 30-54 years old? You might as well say 20-70, and also, why the affinity for finance? Overall, is tablet a channel worth investing in? My gut feeling says no (at least if your target demographic is the "average consumer") just because iPads have a high cost of entry. Don't know if the masses can afford its minimum $500 price tag...
• Amazon is also still in the game, by the way, recently announcing that they are interested in NFC-based marketing services (not just payment services!). For example, a consumer who can't find the product they're looking for in the store could tap and have the item shipped to them through the Amazon. Although some argue that Amazon is actually pretty late to the party (Hello Google Shopper?) the point is that this is a way for Amazon to build on its strengths (e-commerce) and simultaneously move into a new space. So, Amazon is definitely trying to move into the physical goods space ASAP. Watch out Google/Apple- Amazon' gunning for ya!

And what about our traditional players?

• They're hip! They're "with it"! Visa, for example, just confirmed that they will be partnering with Samsung for the London 2012 Olympics. Visa says that it'll be working in conjunction with banks and retailers to bring NFC payments to the games. Currently, the estimate is that over 60K merchants will participate in London alone
• Sprint recently announced that they are going to provide a direct-to-bill solution by the end of 2011. They claim that they are already working with payment providers in an open platform solution. This seems to be a direct challenge toward the ISIS model and seems to piggy back on their original mobile wallet offering that they unveiled in late October (2010). In a surprising turn, initial speculation claims that instead of taking a transaction fee, Sprint might make their money from in-process advertisements instead

And the world keeps spinning.... Pretty interesting stuff- now that NFC has begun to pick up steam a bit, it seems like all holds are off and its essentially a free for all. If I was going to draw the innovation that's happening right now, it's obviously going up a steep hockey-stick type curve, but the question is, what event/product/player is going to fundamentally change the momentum? What crazy invention, off-the-wall idea, outside force is going to make the entire industry step back and say, "Hold on. Whoa. Let's slow it down a bit."? I would argue that right now, my bet is on regulation, but let's wait and see.

Security Opportunity

The more we get into this mobile thing, the more it becomes apparent that security is by far the top concern among consumers looking into transacting through their mobile phone. This fear most likely stems because the average consumer doesn't fully understand the ramifications of their electronic lives- the actions that they take every day to do simple things like using their credit card. The simple truth is, technology sophistication has outpaced the average consumer's knowledge of technology- leaving a lot of people (particularly in the pre-Gen X generation) slightly nervous about all that happens in the ether. Predatory "digital criminals" or "cyber criminals" have been making the news a lot recently, unsurprisingly leaving your average Joe thinking twice before he switches all of his banking transactions to the mobile channel.

Even in the news recently, we keep seeing sensational news stories of scammers running off with millions-MILLIONS!- of dollars. Even the big guys aren't immune, Conde Nast for example, was recently taken for $8 million after they essentially signed over control of payments to a scammer who was armed with some well-placed bits of information and the cover of being part of a company that Conde Nast frequently worked with. Combine the news propaganda with the public feuds that are happening between the likes of Verifone and Square and you get a weird story- mobile is the future, but it's so insecure it would be insane to use it!

Wired Magazine featured a whole issue around the "underworld"- one of the interesting articles they featured was about a Romanian town where the majority of income was from cyber crime. They followed it up with an overview on Crimeware Apps that cost anywhere from nothing to $7K. Undoubtedly, security will be a critical factor for a mobile future, but we will also need the news to encourage the evolution by focusing on the convenience and opportunities- not just focus on the pitfalls.

Why Millenials Are Different

I bought a new book over the weekend last weekend, called The World is Flat,and it's a revamped (3.0) version of Thomas Friedman's (of The Lexus and the Olive Tree fame) original book released in 2005. I just started it, but the first part of the book provides a review of the forces that he calls "world flatteners" or things that he thinks brought the world together. 

One of the main things that he cites as a "world flattener" is the power of communities, and beyond that the power of uploading and "community developed software" or, as it is more commonly known, crowd-sourcing. He uses examples of companies like Apache, which was created by some guys who just wanted the freedom to progress and evolve without the bureaucracy by syncing up with other like-minded smart guys all around the world. The question that Friedman gets to is, "If crowd sourcing is the future, then innovation will begin moving away from being profit-driven to being recognition-driven." He got this interesting response from Microsoft founder, Bill Gates, who said:

You need capitalism [to drive innovation]. To have [a movement] that says innovation dos not deserve an economic reward is contrary to where the world is going. When I talk to the Chinese, they dream of starting a company. They are not thinking, 'I will be a barber during the day and do free software at night'...When you have a security crisis in your [software] system, you don't want to say, 'Where is the guy at the barbershop?'

 Although I think that he has exaggerated a bit here, I see his point. If there's no economic incentive, there's no drive for progress. If there's no drive for progress, then crowd-sourcing can't possibly be the model of the future. However, I want to caution against this mentality because there is one fact that is not being taken into account here. Millenials are Different.

I've referred to it before, but Millenials are just different- studies all over the place have shown that they fundamentally think about work differently. A study conducted by GenBlending states that there are three main trends in working with Gen Y:

1. A Desire for Significance. Boomer have worked for 30 years to achieve success and now are turning their energies to achieving significance. Gen Yers, however, won’t wait for twenty or thirty years to feel like they’ve made an impact. They want to achieve significance now. Employers must rethink job design and provide innovative opportunities to have a significant stake in the outcomes.
   
2. A Zealousness for Improvement. Status quo will tempt them to go. Status quo is contrary to all they have ever been taught. They were urged to question everything; to constantly think about possible improvements and enhancements, ways to make things better, faster, more innovative. Employers must teach their managers how to effectively engage their thinking and more effectively listen to their ideas.
   
3. Trust is a Must. This is a generation that intensely dislikes to be micromanaged. Not because of their dislike for oversight, but more from the standpoint that micromanagement conveys a lack of trust; and that is a red flag for this generation. Trust is a must. Employers must work on ways to create stronger trust at all management-employee levels and between teams and departments. Expect this generation to have a much greater sense of self-management than previous generations. 

Based on what we know here, it seems pretty clear that Gen Y is mostly motivated by recognition and significance more than profit, so I wouldn't be so sure that the future of the economy won't move toward a less-profit driven model. When we compare the generational differences with Maslow's hierarchy of needs, for one reason or another (some argue its because of the lack of direct violence during our childhoods), we see that Gen Y/Millenials are concerned with self-actualization more than anything else. Whereas our parents were more concerned with love and belonging, asking "Where do I belong?", Millenials are more likely to ask "How can I make a difference?". In a quick experiment, go ahead and ask a Boomer what they take into account when thinking about changing jobs, almost guaranteed they'll ask questions like "Do I have strong relationships here?", "Have I been at this company for a long time/How much have I invested into this firm?" whereas Millenials are more likely to ask "What has the company given me?" and "Have I done anything significant at this firm?". 

So to loop back to Gates' indignant rejection of the future of our economy- I'm just not that convinced that this is such a ridiculous idea after all. Although it's probably true that community based progress will not be THE main model, I do believe that it will become A main model because of its draw for the emerging generation. Community-based cloud evolution isn't that crazy after all...

Google, Apple, Facebook and....Amazon?

Unsurprisingly, most of the tech world buzz is around either very large players (Microsoft, etc.), exciting/alternative players (because people love to speculate- see examples like Square, mFoundry, etc.) and then the cross-section of these two groups-the big, exciting/alternative players. This cross-section is inhabited by players like Google, Apple and Facebook. However, when we begin thinking about the future- how will these major players battle it out? Already we see that they are quietly creeping into each other's spaces (Amazon introduced Amazon mp3 as a response to the iTunes phenomenon, for example, but managed to beat Apple to the music cloud service).

But maybe we're underestimating some of the large players like Amazon.com. What do we know about this company after all? Is there a legitimate reason for the Apples of the world to be nervous?

• Late last year, they invested $175M for an undisclosed stake in LivingSocial, one of the largest local coupon providers in the market today
• Even though Amazon just announced its new cloud player for music bought through its Amazon Mp3 service (to multiple disapproving looks from record companies), its cloud player is already being ranked as one of the top android apps
• But what else does this cloud service offer? How about 20GB of free storage in their Cloud Drive with your firs Amazon mp3 purchase? That sounds awfully familiar to... Dropbox though, doesn't it? And although Dropbox certainly has the jump on Amazon (Dropbox was founded in 2007)
• But what about consumer base? Dropbox, for example, brags about its "millions of users", estimates from 2008 quote about 81 million users. I can only imagine that the number has grown
• They offer their own streamlined payment system (Amazon PayPhrase) by using phrases instead of PINs to authorize transactions across the web (this means secure express checkout with the ability to add controls around how much spend can occur)
• They have their own digital reader (jumping into that digital goods space) with the Kindle, so don't be surprised to see a tablet in production very soon 
• So, they have a large consumer base, they're looking to get into localized coupon offerings, they offer their own express checkout process...good thing they're not getting into the payment business or we'd all be in troub...wait a second... Amazon recently announced that it too is setting its sights on NFC mobile payments
• The danger with Amazon moving into NFC is that it means they're seriously considering moving from digital goods online to physical goods in stores, and everything in between- meaning that they could potentially evolve into something like Aislebuyer or GoogleShopper (allowing customers to scan barcodes in stores, comparison shop through online stores and either click to have the product shipped to your home) OR scan the barcode and use the "wallet" existing in your Amazon account to pay for your purchase. Simply present your receipt at the door and off you go

So is Amazon a threat? I'd say so. They're focusing on digital and physical goods, they have an expedited check out system, they already offer a "wallet" on their site, they're moving toward local while simultaneously offering services in the cloud. Basically, they're slowly overtaking most of the consumer shopping experience, from comparison to product storage afterward. Amazon also has an edge on some of these other players through its breadth. Google for example, mostly focused on driving consumers to purchases through their ad streams and Apple, has been focused solely on the purchase of digital goods (apps/music) or their own proprietary hardware (iPods, iPads, etc.).

So yes. I would say they're a threat. They're just being very quiet about it. Could this mean the new era of Amazon is coming?

The Value of Business School

I've already started talking about the costs of business school, but what about the value? There is a party line that anyone who has researched business school will hear- the value of business school centers around three main things: 1.) the things you will learn, 2.) the way you will learn it (in small working groups with opportunities for real life applications and 3.) the people you will meet (also indirectly, the network that you are absorbed into- imagine the network available to Stanford or Harvard alumni).

But what about an overall industry perspective of the value of business degrees? At the rate that business schools continue to grow, won't there be a saturation point in the market? It is estimated that in the 1960s, there were approximately 5K MBA students graduating per year, but that number increased to 100K in 2000. Now, business schools across the country are producing ~150K MBA grads a year!

So here are my three predictions for the future market for MBAs:

1. Red Line- assumes everything stays the same, the value for MBAs continue to increase as MBAs become more popular (aka you're expected to have one) OR value of MBAs will continue to increase as they become more popular, BUT under the condition that highly prized MBAs (Stanford, Harvard, Wharton, Kellogg, etc.) become MORE highly prized as the market becomes saturated
2. Dotted Black Line-value of MBAs will increase in the short term, but as the market gets saturated, the value of MBAs will decrease (because everyone has one) until it flattens out (at a lower final value than current market)
3. Blue Line- value of MBAs will increase in short term until market becomes saturated, at which point, the market will value you them less and in turn, the public will decrease attempting to obtain MBAs. However, at another inflection point, MBAs will be scarce again and MBAs will increase in value and people will begin going back to school to repeat the cycle again

The above graph from Fast Company (a very good infographic came out recently around the statistics of  inequality in the US- highly recommend looking through it if you have the time) claims that bachelor's degrees make approximately $350 dollars more per week than their lesser-educated counterparts. I would assume that this is even more pronounced once you get into higher education. It also indicates that this disparity has grown over time ($170 dollars in 1979 compared to $350 in 2006).

In the current economy,  I think that we're more of a red line than a dotted line. In the long run though, I think we're fooling ourselves if we don't think that there's a re-balancing that will occur soon. I think it's more likely that the blue line will be the truth overall (in that MBA value comes in cycles) but probably not in the exaggerated manner I suggested above. Perhaps it would be more of a cyclical upward trend like the graph below.

Either way, I hope I'm either on the upswing or in the red line model. It would be very disappointing if I was in a dotted line model. More things to ponder in the business school game...

Economic Hybridization or Cannibalization?

Okay, so a few posts ago I wrote about economic hybridization, where two companies can simultaneously move toward each other in terms of services and goods to become more similar than different. The end result is a company which really doesn't fit in any single category, but rather, sits broadly across them horizontally.

After I wrote that post, I began to read my daily news and I began to get the sneaking sensation that maybe, at least in some cases, it wasn't so much hybridization as cannibalization. What do I mean? Well, let's look at some examples.

Sometimes, there's just the cost of doing business. If someone comes out with 'the next big thing', competitors must adapt and adopt a similar functionality, or risk being left behind in the dust. A good example of this is Chase Bank, who released their remote deposit capture in 2010, allowing consumers to deposit checks by using their camera phone. Now, we see many other banks, some that initially branded themselves as more "progressive" or "branch-less" (like Ally Bank) trying to catch up to the innovation. To take a step back, Chase has also been offering envelope-less deposits for years now, and only now are people beginning to catch on (like Citibank), or, like Bank of America, beginning to question not only the value of an ATM but the value of bank branches overall. (Side note: Bank of America, as part of its thinner branch policy is actually planning on having 5,345 branches by the end of 2014, down from 5,856 at the end of 2010-approximately a 10% decrease.)

In other cases though, it seems as though they are directly cannibalizing each other's bread and butter. What are some examples of direct competition?

• Apple has not officially announced it yet, but snooping in the operating system code has shown that they have some plans to make a move into mobile photography. This space, originally commandeered by the likes of Instagram and Color, could potentially be more of Apple's territory, as Apple tries to hedge in on the current fad in mobile by adding a social photo sharing component to its phone services
• Apple has been thwarted however, by the likes of Amazon, who has recently announced it's new cloud-based music storage scheme, edging out both Apple and Google in the race to a cloud-based music storage system. (As a side note, this service looks pretty great- 20GB of storage is $20 a year, music bought from Amazon doesn't count toward your storage capacity and one purchase from Amazon gets you a first year of 20GB storage for free! Not huge, but hey, who's going to say no?)
• As if MOL didn't have enough competition trying to get people to pay hard cash at its terminals to buy Facebook credits, Zong and Boku are all over its business now
• And in the epic battle that never ends between Google and Apple, Google has begun to work a lot more like Apple, holding back on its release of the Honeycomb code in an effort to try to control the development on its brand new platform. Some argue that it's because there were major changes in the platform that they wanted to work out before releasing it, but others say its because Google is paying more attention to the strategy around releasing platforms and the synergies it can gain by controlling releases. By stealing Apple's strategy, Google is hoping that it can be...more uptight? Interesting move.

What does this mean though? Maybe it's a little bit of both hybridization and a little bit of cannibalization. Either adapt or be eaten (slowly through strategy or by someone stealing your product ideas). That's evolution for ya.

Mobile Banking

Mobile banking, in my opinion, is often the sad step-child of the mobile banking world. Insurance has all of these neat image capture capabilities, enterprise has all of the retail shiny objects- QR codes, targeted coupons! Mobile banking...well, for a long time all you could really do was download an app so that you could check your account balance online. But all of that is about to change.There's already been some leaders in the mbanking space: one of which, the Commonwealth Bank of Australia, has recently released an app that allows users to overlay an augmented reality layer to show property information like past sales history, current property listings and recent sales. These functionalities, although just a ploy to promote the bank's Property Guide iPhone app, definitely shows the road that the mbanking community is moving down.

In a recent survey, comScore found that there was a 54% jump between December 2009 and December 2010 in the number of people accessing their bank or brokerage accounts on their mobile devices. (Percentage-wise it seems impressive, but when we see the numbers, it seems that the number went from 19.3M to 29.8M users.) Of all the channels though, it's interesting to note that access through a mobile application has increased by 120% (going from 6.0M to 8.1M)....indicating that consumers are beginning to embrace all the smartphone abilities available to them!

And finally, my demographic is becoming known for something more than just that "aimless generation"- "the lazy generation". There's even been some interesting statistics around the demographic breakout. Now the Gen Y-ers are the most desirable emerging demographic for banks. A recent Javelin report states that 28% of Gen Y-ers have used mbanking in the past 30 days, compared to the 18% of everyone else. Moreover, other studies show that the Millenials are approaching $1 trillion in aggregate income. Although they currently only make an average income of $24K, predictions say that the aggregate income for 18-29 year olds will be $1.2 trillion in 2015, for a cumulative growth of 18% during 2010-2015.

What does all of this mean to banks? Well, as players like Mint.com and PayPal continue to hedge in on functions that were historically a banks domain (i.e. checking balances, tracking spend, viewing transaction history, transferring money, paying bills, sending checks, etc.) it seems natural that banks would begin to search for ways to supplement their diminishing powers. One suggestion that I believe is quite feasible is charging for mobile banking. The argument is that, if customers are willing to pay the $2-almost $4 fee per ATM transaction at a non-bank ATM, they would most likely be willing to pay $1 for mobile banking transactions like paying bills or transferring money. USAA launched their mobile deposits feature in 2009, and deposited more than 1.5 million checks in less than a year. If they had charged $1 per check deposit, they could be $1.5M richer, and that is a compelling business case (esp.for mobile transactions, where the initial build is the real expense, we're talking about increasing profitability per use!).

However, with that idea, I will also leave with a word of warning. Although mbanking is growing, I'm not convinced we've hit the tipping point where charging for basic services won't kill mbanking before it gets started. Forrester research claims that mbanking is definitely still not used by the majority of the population (there are contesting reports of this- apparently, the majority of people have used mobile banking to check balances, etc. but are rarely using more than once a month and not commonly for setting up bill pay or transferring money). A Forrester report from 2008 claims that ~40% of online adults feel that there is a lack of urgency with banking functions, and that is what's making them hesitate. Although dated, I can see the logic here- no one ever says things like "Good god! I need to see my past 5 transactions right now!!". In that same report ("Consumers Are Apathetic About Mobile Banking") 35% don't see the point of it and 33% don't think it's secure.

Studies done by Deloitte ("Mobile Banking: A Catalyst for Improving Bank Performance") suggest that ~10% of mobile users conduct banking transactions on the phone (~4.2M users if we're counting smartphone users only!). We know that Gen Y tends to be much more heavily drawn to mobile functionalities than other and a report by Cisco and IBSG ("The Next Growth Opportunity for Banks") suggests that this same demographic is also the most willing to switch banks (26%). That combination suggests that the potential for great bank gains is there, but with customers already wondering the value of mobile banking, it is highly possible that charging fees will actively drive consumers away.

My prediction? Banks will continue to offer these free services for the time being until a tipping point has been reached. Once the "standard" banking interactions come to include the mobile channel more frequently, banks will begin charging for premium services (urgent bank transfers/same-day bill payment) and then will offer flat fee packages ($10/year for any mobile banking services). Why?

1. It is in their best interest to encourage users to adopt at least basic banking functionalities, as it is much cheaper to service through mobile than through a call center (TowerGroup estimates a mobile transaction to be ~$0.14, whereas a call center transaction is ~$3.75)
2. In the future, they can get away with "premium services" particularly around rushing payments, because there is a legitimate sense of urgency around those transactions (Forgot to pay that bill? Do it now before you forget on your phone!)
3. Normally, the "merchant" (in this case, the bank) would charge a smaller fee for more basic functions. However, I think that the "packaged" method is more likely to be deployed because it directly correlates "premium services" with a sense of savings to the consumer (You're spending on average $5 a year on rushing payments? Pay $10 for a whole year!) and skipping over the "nickel and diming" perception that lowers customer loyalty and satisfaction (My bank charged me a $1 for a rush payment, but $0.05 for checking my account balance? Seriously? Why bother charging me five cents?)

Letter to You

Due to me disappointing myself recently, I wrote myself a letter before my weekend trip to the west coast. (I do this sometimes when I feel like I need to put things in perspective.) When I re-read it before saving it away (I pull them out later when I need a reminder, a little motivation or inspiration), I realized that I wished someone had said a lot of these things to me earlier. So I tweaked it a little bit and am now sending this letter out there to whomever might need it.

Dear You,

I know life has been a bit rough lately. Things may seem really unfair, and you can play the victim all you want, but let's just agree that this is the hardest way to confirm that you really are responsible for your actions. You are the only one responsible. For all of your actions. 

You may think that this is the end of the line- but let me again give you some tough love. It's not. Unfortunately or fortunately (depending on your current mood) the world will keep spinning tomorrow even though you can't fathom how that possibly can be true. People (you included) will still go to work, or school or do whatever it is that they fill their days with. Your friends will keep growing, moving forward, evolving. Things bigger than you will happen (companies will continue progressing, countries will keep growing, things you can't control will still happen). Whether you like it or not, the world goes on. You are not special. 


Fortunately, the world will go on and you are not special. A lot of your sadness right now probably stems from you feeling like you disappointed the people that were rooting for you. Although understandable, try to keep a little bit of your ego in check, as I'm sure that your setbacks don't affect them as much as you think. If they are good friends/family, they will continue rooting for you, and this minor setback has only made them cheer for you louder.


Right now, you have a decision to make. You are a smart person and perfectly capable of changing your life for the better. Tomorrow is a brand new day and your opportunities are limitless. Think about that for a second. Your opportunities are limitless. In this very second, you can start a new hobby, start learning a new language, get on a plane and be anywhere in the world in (maximum) 16 hours. You may have fallen into a routine where you feel like a lot of things are out of your control but they aren't. You only need to accept that change can and will happen- you just need to decide whether it will happen to you or if you will drive it. I suggest the latter.


You will have other rough days. But it would be a disservice to yourself not to move past it- let it make you a stronger person. You did not work your butt off to get through college, make those grades and land your job. Even though it's good to be humbled by how small you are compared to everything that's out THERE and widen your perspective on what "life" is- it's also important to remember how impactful you can be in your life right now. So stop playing the victim. You're not special, but that doesn't mean what you do isn't important. Giving up is not an option because life goes on.


Remember that you cannot be a perfect person all of the time, but you can be a perfect type of person some of the time. So if you need to be a perfect employee today, do it. If you need to be a perfect family member MORE, do that. But BE something. Don't let things happen to you. 

                                                                 Best Regards, 

                                                                                                        -Future You