The emerging payments market is fragmenting into a number of exciting new areas, such as NFC, mobile payments, Google Wallet, and a variety of online experiences. While many people are focused on getting the technology right for an eager consumer, one of the key questions to consider with any of these emerging payments is who “owns” the customer?
True technology convergence means payments methods are now available via mobile. So both the banks and the mobile operators are looking very closely at their traditional manner of “owning the customer”. Banks are rarely early adopters when it comes to payment innovation and they have always been able to afford to be last to market, not least because they exclusively owned the customer relationship as the account holder and/or issuer.
Mobile operators have a similar view to banks on the customer relationship. While ever a transaction is originated from a mobile device it runs over a mobile network, and mobile operators will see themselves as owning the relationship around that mobile transaction. So in a payments transaction done via a mobile device two powerful parties are trying to own the basic customer relationship.
Emerging payments methods fundamentally change that dynamic. They put a variety of payments technology options directly in the customers hands via a mobile application, give them choice as to when, where and how they access payments transactions.
While banks and mobile operators view themselves as being able to own the customer there are other parties looking to merely access the same customer on the same transaction. Other significant companies such as Google, Amex, and Apple are successfully using payment technology advancements such as Google Wallet, iTunes and Facebook to access the customer, hijack the base relationship, and cut into the payments value chain, pushing the payment processing into the background.
Getting the customer relationship right will be critical to success for both the MO’s and banks as other parties create a position in the customers perceived value chain through new technology. How the banks and mobile operators own their customer base and continue to create ongoing value for their customers is going to become much more granular in the near future, and both parties will need to be nimble to position themselves correctly. To quote Bill Gates – “Banking is essential. Banks are not”.
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