With a few notable exceptions (such as Apple) the fact is that technology doesn't really matter. What really matters, especially when you are targeting consumers, is application.
Sounds controversial? Let me explain what I mean. Look at the early days of movies - were you a Betamax or a VHS fan? What about the more recent Blu-Ray vs HD DVD war? And on the early PCs, there were many different companies trying to launch their own operating system to compete with many others on the market. Ditto for the early smart phones.
But look at where we are now - in each space it has come down to just one or two main players - very rarely are there three or more. And the reason is simple - it doesn't benefit consumers or the industry to be fighting about the technology. Instead the underlying technology needs to be agreed, so it is all interoperable and makes things easier for consumers, and then vendors can start to differentiate themselves with the service they actually offer to consumers. That is where the 'bells and whistles' come in, and where customers are won or lost.
Let's think about this in the payment card space. Imagine the headaches if we as an industry didn't all use one size credit card, or if Europay, MasterCard and Visa hadn't agreed on the EMV standard. We'd all have to spend so much time and money trying to work out how we work together when our products are so different, we couldn't afford to even think about new innovations or how best we serve the customer.
The same analogy must apply in the mobile world. At the moment it is a bit like a technology land grab, where everyone is trying to stake their claim, but we mustn't forget that what is delivered to consumers needs to be as interoperable, flexible and easy to use as possible. This means we must stop fighting over the technology and start delivering real benefits and convenience to consumers.
Mitch Armstrong
Director of Solutions Consulting
ACI Worldwide
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Tuesday, 24 January 2012
Wednesday, 18 January 2012
It’s 2012. Have you made your first mobile payment yet?
The year was 1996. Email was a really new concept and the few cell phones around were the size and weight of bricks. Selling products on the Internet had just started only a few years earlier and online sales had already reached $600 million. The industry was projecting a dramatic growth rate to $2.4 billion in 1997.
At the time, I had just started a new job at Firefly Network, one of the first Internet start-ups located in Cambridge, MA. Firefly was founded by a group of engineers from MIT Media lab and some business people from Harvard Business School. They had invented new technology, collaborative filtering, that helped you find new stuff by matching you with people you never met but were swirling around in cyberspace that liked the same stuff you liked. Back then it was hard to imagine that recommendations engines would be commonplace in e-commerce sites today.
My job was to help create a toolkit that online retailers like Barnes and Noble and Yahoo would eventually use to collect user preferences anonymously, make recommendations, and send targeted advertising from within their e-commerce sites. As a product manager, I knew it was important to put myself in the role of the consumer and make my first online purchase. I held my credit card in one hand while carefully entering the numbers one-by-one into the web browser with the index finger of the other. I’m pretty sure the browser was Netscape Navigator as Microsoft was playing catch-up with Internet Explorer. Naysayers were spreading fears about security and privacy while techno-optimists were declaring the end of the “brick-and-mortar” store.
Fast forward 16 years later. From our 1996 vantage point we couldn’t have easily imagined that e-commerce would become mainstream by 1999 and is now currently heading towards 1 trillion in online retail sales worldwide. It was hard to predict that the number of mobile phones would exceed the entire population of the world. Or, that the babies the dotcom era birthed such as Google, Amazon, eBay and Facebook would eventually grow up to become billion dollar companies. And that they would become the new entrants into the mobile payments market which is expected to reach $670 billion by 2015.
So when Google Wallet launched last year, as a product manager at ACI, I knew the significance and importance of making my first mobile payment. It was surprisingly easy to find a Nexus S 4G Android smartphone at the local Sprint store. It’s one of the few smartphones on the market that contains an embedded NFC chip that can send encrypted data a short distance (“near field”) to a reader located, for instance, next to a retail cash register. Loaded on my new phone was the Google Wallet which can hold my credit card information. Armed with my mobile wallet, I headed to my local store to make my first mobile payment. While checking out at the register I told the cashier I was going to pay using my phone – no plastic required. She had never heard of this and was excited to watch. And before I knew it there was a crowd surrounding me as I tapped my phone against the reader to make my payment. We all recognized we were getting a glimpse into a different future.
As product managers, business analysts and marketing professionals we are constantly challenged to step out of our comfort zones, stay curious and be willing to take risks with our product lines. Yet we also have the responsibility of performing the careful analysis to distinguish between the leading and the bleeding edge. We need to maintain the careful balancing act of putting forth wise investment proposals while still being early enough to market so that we can play a key role in a future the is unfolding before us. It is only by embracing the new while carefully navigating the currents of change that we will become co-creators of the future of payments.
It’s 2012. Have you made your first mobile payment yet?
Pamela LaTulippe
Director, Mobile Payments Innovation
ACI Worldwide
At the time, I had just started a new job at Firefly Network, one of the first Internet start-ups located in Cambridge, MA. Firefly was founded by a group of engineers from MIT Media lab and some business people from Harvard Business School. They had invented new technology, collaborative filtering, that helped you find new stuff by matching you with people you never met but were swirling around in cyberspace that liked the same stuff you liked. Back then it was hard to imagine that recommendations engines would be commonplace in e-commerce sites today.
My job was to help create a toolkit that online retailers like Barnes and Noble and Yahoo would eventually use to collect user preferences anonymously, make recommendations, and send targeted advertising from within their e-commerce sites. As a product manager, I knew it was important to put myself in the role of the consumer and make my first online purchase. I held my credit card in one hand while carefully entering the numbers one-by-one into the web browser with the index finger of the other. I’m pretty sure the browser was Netscape Navigator as Microsoft was playing catch-up with Internet Explorer. Naysayers were spreading fears about security and privacy while techno-optimists were declaring the end of the “brick-and-mortar” store.
Fast forward 16 years later. From our 1996 vantage point we couldn’t have easily imagined that e-commerce would become mainstream by 1999 and is now currently heading towards 1 trillion in online retail sales worldwide. It was hard to predict that the number of mobile phones would exceed the entire population of the world. Or, that the babies the dotcom era birthed such as Google, Amazon, eBay and Facebook would eventually grow up to become billion dollar companies. And that they would become the new entrants into the mobile payments market which is expected to reach $670 billion by 2015.
So when Google Wallet launched last year, as a product manager at ACI, I knew the significance and importance of making my first mobile payment. It was surprisingly easy to find a Nexus S 4G Android smartphone at the local Sprint store. It’s one of the few smartphones on the market that contains an embedded NFC chip that can send encrypted data a short distance (“near field”) to a reader located, for instance, next to a retail cash register. Loaded on my new phone was the Google Wallet which can hold my credit card information. Armed with my mobile wallet, I headed to my local store to make my first mobile payment. While checking out at the register I told the cashier I was going to pay using my phone – no plastic required. She had never heard of this and was excited to watch. And before I knew it there was a crowd surrounding me as I tapped my phone against the reader to make my payment. We all recognized we were getting a glimpse into a different future.
As product managers, business analysts and marketing professionals we are constantly challenged to step out of our comfort zones, stay curious and be willing to take risks with our product lines. Yet we also have the responsibility of performing the careful analysis to distinguish between the leading and the bleeding edge. We need to maintain the careful balancing act of putting forth wise investment proposals while still being early enough to market so that we can play a key role in a future the is unfolding before us. It is only by embracing the new while carefully navigating the currents of change that we will become co-creators of the future of payments.
It’s 2012. Have you made your first mobile payment yet?
Pamela LaTulippe
Director, Mobile Payments Innovation
ACI Worldwide
Tuesday, 17 January 2012
Loyalty Programs - have we finally cracked it?
I’m here at the 101st NRF Annual Convention and EXPO, and this year’s show is all about using technology to meet the changing needs and desires of consumers. Retail loyalty programs are one of the most successful and proven strategies for learning about and engaging with their customers.
With this in mind, we’re pleased to share findings from a new ACI Worldwide survey that found retail loyalty programs are working – the majority of American consumers report feeling their loyalty programs deliver benefits that are important to them.
Compared to similar research released by ACI Worldwide previously, the results show a marked increase in the number of consumers who are members of loyalty schemes, up from 74 percent in December 2010 to 84 percent now. This increase tallies with an apparent increase in the influence of loyalty schemes with 84 percent of members likely to choose a retailer over its competitor if they were members of the retailer’s loyalty program. Previously, nearly half (49%) of loyalty program members said that they never or rarely take advantage of loyalty program perks when shopping online.
This year’s survey also found women favor loyalty schemes more than men – with 91 percent of women having at least one loyalty scheme, compared to 77 percent of men. Men are also less likely to join as many loyalty schemes as women, with only 18% being members of more than three schemes, compared to 36% of women.
Additionally, the study revealed age plays a role in the level of consumer satisfaction with loyalty programs. More than 3 out of 4 consumers age 18-44 are pleased with the benefits they receive from their loyalty programs. However, satisfaction declines more than 10 percentage points when consumers reach age 45. On average, only 65 percent of consumers age 45 and older feel their loyalty card programs deliver valued benefits. With this in mind, retailers need to look more closely at the benefits they are providing to their customers in this age group.
Considering four out of five Americans (84 percent) are members of at least one retail loyalty card program, this adds up to a big opportunity for retailers when executed correctly. Although it takes time to build a successful loyalty program, the payoff is significant – we are now seeing proof that loyalty schemes are resonating with consumers and creating customer loyalty.
The key to success is placing the customer experience at the center of a retailer’s loyalty and rewards strategy. ACI is making it easy for retailers to integrate their loyalty and rewards programs so they can do what the programs were intended – create greater consumer loyalty.
You can find us at Booth #1362. Enjoy the show!
Rob Seward
Product Line Manager
ACI Worldwide
With this in mind, we’re pleased to share findings from a new ACI Worldwide survey that found retail loyalty programs are working – the majority of American consumers report feeling their loyalty programs deliver benefits that are important to them.
Compared to similar research released by ACI Worldwide previously, the results show a marked increase in the number of consumers who are members of loyalty schemes, up from 74 percent in December 2010 to 84 percent now. This increase tallies with an apparent increase in the influence of loyalty schemes with 84 percent of members likely to choose a retailer over its competitor if they were members of the retailer’s loyalty program. Previously, nearly half (49%) of loyalty program members said that they never or rarely take advantage of loyalty program perks when shopping online.
This year’s survey also found women favor loyalty schemes more than men – with 91 percent of women having at least one loyalty scheme, compared to 77 percent of men. Men are also less likely to join as many loyalty schemes as women, with only 18% being members of more than three schemes, compared to 36% of women.
Additionally, the study revealed age plays a role in the level of consumer satisfaction with loyalty programs. More than 3 out of 4 consumers age 18-44 are pleased with the benefits they receive from their loyalty programs. However, satisfaction declines more than 10 percentage points when consumers reach age 45. On average, only 65 percent of consumers age 45 and older feel their loyalty card programs deliver valued benefits. With this in mind, retailers need to look more closely at the benefits they are providing to their customers in this age group.
Considering four out of five Americans (84 percent) are members of at least one retail loyalty card program, this adds up to a big opportunity for retailers when executed correctly. Although it takes time to build a successful loyalty program, the payoff is significant – we are now seeing proof that loyalty schemes are resonating with consumers and creating customer loyalty.
The key to success is placing the customer experience at the center of a retailer’s loyalty and rewards strategy. ACI is making it easy for retailers to integrate their loyalty and rewards programs so they can do what the programs were intended – create greater consumer loyalty.
You can find us at Booth #1362. Enjoy the show!
Rob Seward
Product Line Manager
ACI Worldwide
Monday, 16 January 2012
Banks want interactions, not just transactions
Retailers mostly get it right, especially in the online world. They are doing really well at tracking everything their customer does and personalising the service they offer in response. Banks, on the other hand, don't tend to be very good at personalization - and I think a lot of that comes down to the inability to really understand everything that customers do with the bank, and a lack of true interaction with them.
In theory, a bank is in a really good position to understand their customer and know what is important to them. Your bank, for example, will know if you travel a lot because of where your cards are used overseas. They might even be able to tell if you travel for business or pleasure, depending if you pay for your own flights and hotel. They might be able to tell if you do a lot of driving, if you buy a lot of petrol. They know what supermarket you use, if you shop online and who your mobile phone provider is. The might be able to tell when you renew your household insurance or your car insurance, or even things like if you're a member of the National Trust!
But all too often, that information doesn't get used. Banks don't have the systems in place to take a view of a customer across all activity and use that information to create 'intelligence'.
Imagine if they could though.
Imagine if my bank knows that I do a lot of driving so they tailor my gold account 'package' to that - with breakdown cover, windscreen insurance or a free winter check for example. But if the customer doesn't do a lot of driving, but instead travels overseas, their benefits package could include travel insurance, commission free currency, or access to airport lounges. The possibilities are huge, and I know some banks do try to do this, but it certainly isn't widespread.
For many banks, this is a long way away, but I think there are things they could do now that would help them get to know their customers better - by talking to them. Don't just offer a standard package of travel insurance, breakdown cover and phone insurance for your gold account holders - perhaps give them a choice for them to pick the benefits that would make a difference to them. Suddenly you know them a little bit better. Many banks encourage customers to tell them before they go overseas - but then the bank should use that information to sell currency exchange or travel insurance for example. If a customer sets up a new direct debit for home or car insurance, perhaps plan to contact them before the anniversary to offer your services.
I really believe that there are lots of things that banks can do to strengthen their relationships with customers, and the closer those relationships, the less likely it is that the customer would change banks, and the more likely it is that they will start coming to their bank for even more services.
Mitch Armstrong
Director of Solutions Consulting
ACI Worldwide
In theory, a bank is in a really good position to understand their customer and know what is important to them. Your bank, for example, will know if you travel a lot because of where your cards are used overseas. They might even be able to tell if you travel for business or pleasure, depending if you pay for your own flights and hotel. They might be able to tell if you do a lot of driving, if you buy a lot of petrol. They know what supermarket you use, if you shop online and who your mobile phone provider is. The might be able to tell when you renew your household insurance or your car insurance, or even things like if you're a member of the National Trust!
But all too often, that information doesn't get used. Banks don't have the systems in place to take a view of a customer across all activity and use that information to create 'intelligence'.
Imagine if they could though.
Imagine if my bank knows that I do a lot of driving so they tailor my gold account 'package' to that - with breakdown cover, windscreen insurance or a free winter check for example. But if the customer doesn't do a lot of driving, but instead travels overseas, their benefits package could include travel insurance, commission free currency, or access to airport lounges. The possibilities are huge, and I know some banks do try to do this, but it certainly isn't widespread.
For many banks, this is a long way away, but I think there are things they could do now that would help them get to know their customers better - by talking to them. Don't just offer a standard package of travel insurance, breakdown cover and phone insurance for your gold account holders - perhaps give them a choice for them to pick the benefits that would make a difference to them. Suddenly you know them a little bit better. Many banks encourage customers to tell them before they go overseas - but then the bank should use that information to sell currency exchange or travel insurance for example. If a customer sets up a new direct debit for home or car insurance, perhaps plan to contact them before the anniversary to offer your services.
I really believe that there are lots of things that banks can do to strengthen their relationships with customers, and the closer those relationships, the less likely it is that the customer would change banks, and the more likely it is that they will start coming to their bank for even more services.
Mitch Armstrong
Director of Solutions Consulting
ACI Worldwide
Tuesday, 3 January 2012
Happy New SEPA
About a year ago, in my blog ‘On your marks for SEPA’, I commented on the European Commission’s proposals for the setting of end dates for the migration from legacy instruments to SEPA credit transfers and direct debits. I wrote: “At least the whole industry knows that serious planning can now no longer be delayed. We don’t yet have the final ‘go’ but we now know we’re under starter’s orders.” Well, twelve months later and it seems that we now have the final ‘go’ - 1 February 2014 is when the witching hour will be upon us.
But there is still little evidence that serious planning is underway. It seems that a combination of the ‘Eurozone crisis’ (to give it a name) and the wait for the end-date regulation has induced a state of dormancy in many banks. That can no longer be justified. Sound business sense must prevail and SEPA must be viewed as an opportunity, not a compliance exercise.
It’s the time of year for resolutions. Banks must resolve to enable SEPA payments and thereby transform their payments business and fully respond to their customers’ needs. The wait really is over.
Paul Styles
Solutions Consultant
ACI Worldwide
But there is still little evidence that serious planning is underway. It seems that a combination of the ‘Eurozone crisis’ (to give it a name) and the wait for the end-date regulation has induced a state of dormancy in many banks. That can no longer be justified. Sound business sense must prevail and SEPA must be viewed as an opportunity, not a compliance exercise.
It’s the time of year for resolutions. Banks must resolve to enable SEPA payments and thereby transform their payments business and fully respond to their customers’ needs. The wait really is over.
Paul Styles
Solutions Consultant
ACI Worldwide
Friday, 16 December 2011
Should banks be held liable for Ponzi schemes?
Ponzi schemes were named for Charles Ponzi after he defrauded customers out of approximately 20 million dollars back in 1920 (over $225 million today). While the idea of paying out investors with their own money rather than any money earned legitimately via investment had been around prior to 1920, the name Ponzi become synonymous with the scheme based on the amount of publicity and high dollar loss associated with his activity (including the downfall of six financial institutions).
Over the past few years, we’ve seen a tremendous increase in the magnitude of Ponzi schemes. Fingers have been pointed at the fraudsters, as well as the SEC, and more recently, the guilty label is being extended to the financial institutions providing services for the schemes.
In recent cases, the argument made by prosecutors was that the banks were negligent in not identifying red flags for these investor accounts, making them guilty of ‘aiding and abetting’ these criminals. To be guilty of this, in most states in the US, there must be three elements: the existence of fraud, the defendant’s knowledge of the fraud and proof that the defendant provided considerable assistance to the progression of the fraud scheme. Though this is the standard primarily under US law, this does not permit international financial services firms or banks from being included in the lawsuit, as seen in the case against Banco Santander in 2010, which involved defendants from seven different nations around the world.
The question of ‘knowledge’ of the fraud and providing assistance can be a bit subjective, since the banks didn’t know directly about the scheme. The question is: if they didn’t implement the appropriate steps to look for red flags or simply failed pay attention to them, does this make them guilty? For instance, in the Madoff scheme, an activity monitoring system to detect transfers between investor and personal accounts may have triggered an internal review of the activity and shut down accounts before investors were defrauded of the full $50 billion.
So what can banks do to prevent these schemes, and also ensure they are not on the receiving end of a lawsuit? Financial institutions need to implement a sophisticated transaction monitoring tool that is flexible enough to quickly adapt to the changing fraud schemes. Activity monitoring must be implemented across the enterprise, in order to detect complex patterns of activity that may seem normal alone, but when viewed collectively may be a red flag for a large fraud scheme.
Taking proactive measures to ensure that your institution is doing everything possible to prevent fraudulent schemes will help protect customers and keep your institution out of the hotseat should a new scheme appear, despite your best prevention efforts.
Amanda Burley
Senior Business Analyst
ACI Worldwide
Over the past few years, we’ve seen a tremendous increase in the magnitude of Ponzi schemes. Fingers have been pointed at the fraudsters, as well as the SEC, and more recently, the guilty label is being extended to the financial institutions providing services for the schemes.
In recent cases, the argument made by prosecutors was that the banks were negligent in not identifying red flags for these investor accounts, making them guilty of ‘aiding and abetting’ these criminals. To be guilty of this, in most states in the US, there must be three elements: the existence of fraud, the defendant’s knowledge of the fraud and proof that the defendant provided considerable assistance to the progression of the fraud scheme. Though this is the standard primarily under US law, this does not permit international financial services firms or banks from being included in the lawsuit, as seen in the case against Banco Santander in 2010, which involved defendants from seven different nations around the world.
The question of ‘knowledge’ of the fraud and providing assistance can be a bit subjective, since the banks didn’t know directly about the scheme. The question is: if they didn’t implement the appropriate steps to look for red flags or simply failed pay attention to them, does this make them guilty? For instance, in the Madoff scheme, an activity monitoring system to detect transfers between investor and personal accounts may have triggered an internal review of the activity and shut down accounts before investors were defrauded of the full $50 billion.
So what can banks do to prevent these schemes, and also ensure they are not on the receiving end of a lawsuit? Financial institutions need to implement a sophisticated transaction monitoring tool that is flexible enough to quickly adapt to the changing fraud schemes. Activity monitoring must be implemented across the enterprise, in order to detect complex patterns of activity that may seem normal alone, but when viewed collectively may be a red flag for a large fraud scheme.
Taking proactive measures to ensure that your institution is doing everything possible to prevent fraudulent schemes will help protect customers and keep your institution out of the hotseat should a new scheme appear, despite your best prevention efforts.
Amanda Burley
Senior Business Analyst
ACI Worldwide
Wednesday, 14 December 2011
Card fraud arrest 'too expensive'?!
The concern with stories like the recent one in the Telegraph about it being too expensive for the police to arrest a fraudster - so there are no consequences for the card fraud criminal - is that they erode confidence in the entire payments system. We often talk about fraudsters going for the weakest link, but we don't often think the police will be that weakest link!
The problem with stopping fraud is that the closer you get to 100% fraud prevention, the more cumbersome and expensive it is. For example, a bank could stop a lot of consumer fraud if every single transaction was verified personally over the phone with a consumer - but it would be very expensive for the bank and very inconvenient for the consumer, the trick is to find the balance.
Stories like this go to show that the best way to tackle card fraud is to prevent it. The retailers should ensure that they are working with a merchant acquirer who uses comprehensive fraud detection tools and techniques to identify and block fraudulent transactions before they happen, and before goods are delivered - so the retailer doesn't end up on the front line of trying to stop the criminals single-handed.
Paul Love
Solutions Consultant
ACI Worldwide
The problem with stopping fraud is that the closer you get to 100% fraud prevention, the more cumbersome and expensive it is. For example, a bank could stop a lot of consumer fraud if every single transaction was verified personally over the phone with a consumer - but it would be very expensive for the bank and very inconvenient for the consumer, the trick is to find the balance.
Stories like this go to show that the best way to tackle card fraud is to prevent it. The retailers should ensure that they are working with a merchant acquirer who uses comprehensive fraud detection tools and techniques to identify and block fraudulent transactions before they happen, and before goods are delivered - so the retailer doesn't end up on the front line of trying to stop the criminals single-handed.
Paul Love
Solutions Consultant
ACI Worldwide
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