As usual, some good stuff in Wired Magazine this month.
One article stood out for me in particular, which is about the rivalry between Foursquare and Gowalla. I’d heard of Foursquare but not much about Gowallla, and now see the next rise of web usage in more clarity.
Both sites are about checking in with your mates and being able to track where they are, what they are doing and whether there’s anything interesting happening nearby. Like seeing the GSM signals of all of your friends in real-time.Sure, Google Latitude was a good start point for this stuff, but there’s now many new ways of socialising this physical and virtual network. For example, you arrive in London and know that someone had recommended the Comedy Club ... but which one. There’s quite a few in London and you might not get the one that was recommended. But it goes further as these sites link mobile, social, gaming and location. Like a Facebook with rewards. The idea is to get badges for visiting locations, and awards for achievements. So, if your peer group think McGinty’s Bar is cool, then you’ll get an award if (a) you get to McGinty’s and (b) you down a shot of whisky chaser at the rear bar. All of which can be tracked in real-time and checked by your friends through the geolocation services.In other words, you set challenges and take challenges, and get badges on your social profile for achieving.Great stuff.
What really stood out in the article though, is this chart from John Battelle, who cofounded Wired US and wrote “The Search: how Google and its rivals rewrote the rules of business and transformed our culture”.
As you can see, the chart shows the five revolutions tracked through the connected network and could be reworded as:
Buying stuff
Finding stuff
Building a community
What are you doing?
Where are you doing it?
On that basis, I think I could speculate about a few more cycles of revolution to come:
Whilst I hid in Singapore last week, Finovate - the excellent financial innovation conference run by Jim Bruene and co at NetBanker - took place in San Francisco. I wanted to go this year, as Finovate is definitely the one place you will find the NEXT generation of banking and financial solutions and providers.
The way it works is that the NetBanker team pick out the most innovative firms in the online financial world and invite them to appear on stage for seven minutes to pitch their wares. At the end, a small few are picked out and tipped for the top, with previous winners including highly disruptive and now successful firms such as SmartyPig and MINT.
There was obviously a good buzz going on there this year, with over thirty-six firms getting their seven minutes of fame in front of a record audience of 500 industry executives ...
The winners of the Finovate awards for Best of Show were announced on Wednesday last, and these are:
Bobber
Interactive: Launched a youth-oriented online
banking/savings program with gaming and social features.
Expensify:
Demoed new tools for managers to track and monitor employee
spending via "expense reports that don't suck."
oFlows:
Showed its new end-to-end paperless loan-
application system.
Wikinvest:
Launched its new Hurricane stock information system to
deliver real-time info faster than other outlets.
Meanwhile, other bloggers have been commenting, with Tom Cochrane picking out these firms to be of note:
Wikinvest: There would seem to be little doubt about
the future success and impact of this company. Financial services data
aggregation is a common theme at Finovate but it is rapidly becoming a
commodity. Wikinvest is heads and shoulders above the field when it
comes to leveraging data aggregation to provide interesting
features/analytics and outstanding products.
Kabbage: On-the-fly credit risk analysis and
lending to online sellers. This is something very different, innovative
and potentially disruptive. An impressive demo with an applicant’s
account funded in less than 7 minutes.
Bobber Interactive: I am not sure whether this was a
product or a very elaborate demo that has yet to become a product. In
any event, it was very impressive and I am certain would appeal to my 15
year old nephew. Certainly seems that this company and demo should
have caught the eye of any early stage venture investors in attendance.
Cortera: Think of a Web 2.0 version of Dun and
Bradstreet that is focused on small medium sized businesses. In other
words, commercial credit analysis and information with a social media
bent that covers the vast majority of American business. Not
necessarily sexy, but very, very interesting.
Continuity Control: Financial institution compliance
services. Seems like a no-brainer in light of pending financial reform
and everything other crisis-reform cycle that has taken place in the
financial services sector over the past decade or so. A solid
presentation and what appears to be a solid management team.
eRollover: Have to them a nod as the company hits
close to home with the focus on retirement planning. Also spent some
quality time with their very high quality CEO . A breath of fresh air
for the retirement income industry and a company we will
continue to follow.
Meanwhile, if you wanna know more, it would do you no harm to follow their twitter stream.
Finally, there are two more Finovates coming up in the next year:
FinovateFall, October 4th and 5th, New York (I've already booked my ticket); and
Inspired by three events this week, I focused on apps for my panel discussion today ... and got shot down in flames for talking bollards.
Harrumph.
Here are the events, the logic, the proposal and why it got shot down.
First, the events.
Event number one: my first iPhone
My Blackberry has just been switched for an iPhone. Now, not knowing the beauty of iPhone apps personally until I made the switch, I am so in love with the new phone. It’s not just the ease of everything, the thousands of choices of apps from flight and traffic alerts to currency values to imitating noises your bottom makes, it’s something else that really amazed me. The ease of setup.
You see I am used to programming things, like the PC and Blackberry. With the iPhone, you just plug it in and it automatically synchs all your contacts, calendar, email accounts, music etc. No setting up involved, it just does it. Fantastic.
Event number two: bank bloggers unite
This week, James Gardner kicked off a debate about iPhone apps and the lack of one at HSBC. A good debate is always a great way to resolve an issue, and between James and Brett King’s entries on this, I think it’s obvious that the iPhone and iPad have some potential in banking.
Event number three: apps are for dummies
Number three event is the front page in the business section of the Straits Times today, which has headlined with an interview with Philip Yeo. Mr. Yeo heads up the Singapore government’s innovation and enterprise
programme, Spring Singapore, and has managed to incur the wrath of Apple's fanatical followers by saying that they buy 'useless applications' for Apple's products as 'gullible customers'.
In fact, he goes one step further and calls them ‘dummies’. Tut-tut. He did clarify later on that he meant dummies as in ABC for dummies, the books, rather than being idiots although, listening to the interview, I think he meant the latter.Anyways, these three events inspired me to outline a vision of the future based upon this logic.The logic is that banks are being componentised, as mentioned many times before.As banks componentise their services into little pieces of functionality, my original proposal is that they would then offer these as widgets to customers who could build them back into any form of integrated service they wanted.
Now, my view has gone a step further with the belief that the banks will actually wrap them into apps. I should say that my use of the word app here, is in terms of the ease-of-use of Apple apps but it does not mean that has to be Apple based.
Just so you know I'm not an Apple fanatic, just someone who can see the ease-of-use of apps is a revolution. So where I talk about apps, think about Google's Android phone or any other phone that makes mobile interet access easy, as these are the new generations of phone that are revolutionary.
Y'see first there were SMS and WAP-based phones; then there were mobile internet access smartphones; and now there are intelligent mobile internet phones with apps.
That's the revolution.
The first phones were mainly for just that - telephone calls. The second wave allowed us to pull information to the phone, but push internet services were more difficult. Push began with the Blackberry, but that was just for push email. The iPhone revolution of apps gives us location-based push services that users download to gain such usability.
That's the revolution.
It gives us the ability to create location-based components of functionality that are relevant at the point of action.
It gives users the immediate access to pieces of functionality on demand.
It makes using the internet on the mobile as simple as touching a screen.
That's the revolution.
Now, back to banking and treasury services (note: the only reason for the focus on treasury, corporate and B2B is because that's the conference I'm attending this week).
If banks are component-based, and each bank offers different treasury apps and usability, you will soon end up with a million banking apps. There will be a liquidity risk app, an e-invoicing app, a supply chain app, a cash management app, an accounts payable app, a foreign exchange app ... and so on and so forth.
Corporates will then take these apps and select those that work best for their businesses.
They will download the apps to their corporate treasury iPads, iPhones and Androids (Google), and roll these out to their ‘dummies’: the employees who need to look at days sales outstanding, inventory, supplies and logistics, etc.
These dummies will be used to the interface and service – a bit like folks got used to using PC’s and keyboards to access the internet in the old days – and will take to this easily.
Similarly, the users, the corporates and the banks will be in continual ‘synch’ because, just as my iPhone automatically synched with my iTunes and Outlook, it will automatically synch with my corporate treasury processes, data and content.
In other words, you end up with treasury being redefined as we move to banking-on-demand 24*7 through treasury-in-the-pocket.
The critical point in this logic is that, by making treasury app-based, corporates will be much more efficient:
They will be able to mix and match the apps and the app providers – banks – to best fit their business model;
They will be able to ensure that even the most unskilled member of staff, associate, player, employee or whatever can use them;
They can be easily adjusted to suit business changes over time through centralised control;
They can be a mix of in-house created or bank provided and operated or collegiate, open source apps; and
They will always be secure, up-to-date, controlled and managed in real-time 24*7.
All of the above will give the treasury ops incredible flexibility, agility and speed to adapt to changing circumstances.Now ok, I said a lot more than that, but this was the gist of it.
So here’s the proposed treasury operations future.
The corporate treasury runs on SAP today, and will in the future probably. However, the CFO will have consolidated all treasury ops onto SAP as a single platform and determined that a small number of bank partners will be selected to integrate with it.
Those bank partners will be selected on the basis of the beauty, ease, adaptability and refreshment of their component-based bank app functionality, and its fit with the business needs of the corporation.
To me, this is a simplified future as we have turned a tipping point from proprietary bank lock in and lack of standards in the past, to very easy and flexible developments that are open sourced and simple in the future.
And here’s where I got shot down.“Oh, but treasury is far more complex than your simple consumer view of the future.”“Oh, but this won’t work because our processes and infrastructures are too difficult to change to this vision.”“Oh, but technology is expensive.”“Oh, but oh but, oh but, yea but no but yea but no ...”
I was really disappointed with this reaction. Of course, I had views on these points which have been explored on this blog before, but the disappointment is that I expected more buy-in for such a vision in visionary Asia.Then I got it.
None of these guys use iPhones (double click image to enlarge, and note Chinese and Indian iPhone users):
Note: Japan and Australia don’t count in this context as these are developed economies versus emerging markets
The thing that really sticks in the throat is that by omitting to view these developments, corporates and banks will miss the whole trend towards business simplification that such tools allow.
Luckily some banks are not so short-sighted in Asia, as the announcement of the iPad coming up for sale from July in Singapore was underscored with the news that OCBC and DBS have both developed specific apps for this service, amongst the first.
Meanwhile, and to put the record straight, HSBC and First Direct are on the case with these technologies as they are sponsors of this conference and have told me some of their plans.
Finally, and the real underline of this blog entry, is that it now explains why, when the Chair of the panel I was on asked: "Chris, what are the new things you see happening? Do you think, for example, that we could use the iPhone for Treasury one day", he got a big laugh with that opening question.
Like Philip Yeo, these guys think the iPhone is just a toy.
It's not.
The iPhone, Android and, more importantly, the app is for business use as much as it is for consumers.
Get real.
Postnote: it's a shame but I suspected this at the time. Apparently many folks in the audience thought that I was some Appleite with iPhomania because I kept referring to 'apps'. To be honest, I meant apps as an interchangeable idea with widgets and gadgets to refer to the componentised bank functions.
It actually doesn't matter that much if folks did interpret this as being Apple-based however, as the PC-age was Microsoft-based, the internet-age is Google/Firefox/Explorer-based and the mobile internet is now Apple-based.
With 100 million units shipped in just three years, a further 58 million this year, the iPhone is becoming the de facto standard for the mobile internet.
Ah but wait, what's this?
Android tops iPhone: Google's Android operating system edged out Apple's iPhone operating
system for the No. 2 spot in the U.S. consumer smartphone market in the
first quarter, according to research firm NPD Group.
Gamestation has discovered that more than 88% of the British public do not read the terms and conditions of a website before they make a purchase online.
As a result of the research, Gamestation has announced that on April 1st, in a test of its customers, it will include a clause in the terms and conditions stating that the customer grants the retailer the right to 'claim their immortal soul'. The online customer will be offered the opportunity to opt out of forgoing their soul by ticking a box in the small print. As a reward for their vigilance, they will receive a GBP5 discount voucher.
90% of customers agreed to the terms and conditions without reading them (either that or they were happy to surrender their souls). They then received an email stating: “Little did you realise that upon your last purchase from Gamestation.co.uk you also granted us a right to claim your humanity [...] To avoid future fatalities, always check the terms and conditions.”
After my post last week about my latest presentation with an audio file, my keynote in Bahrain this week was going to be a variation of the presentation. Due to being unable to fly to Bahrain, I mentioned on Monday that most of the day had been spent editing a video file for the conference to be able to present my keynote.
This 'aired' for the first time this morning and so here is the video version for the blog:
Bearing in mind that this was made with a cheap ($200) HD video camera, free video editing and slide management software and cheap ($59 per year) hosting services, it's an extraordinary way for anyone to create and become their own media channel in the 21st century.
Mind you, they could improve the looks of the anchor hosts a bit, couldn't they?
Building on the World of Me post last week, I’ve just found out how powerful the tools are that are at our disposal today.
This week, I’m meant to be chairing a conference in Bahrain: MEFTEC.
MEFTEC is now in its sixth year, and I’ve attended every year as a speaker or as chair.
Guess what?
Not there this week due to ash clouds from Iceland (that sounds like a new thing on the shopping list) ...
... so what can one do?
Their whole program is shot to pieces due to many of the speakers being ill or from outside the region, but the attendees are still coming as they are mainly flying in from around the Gulf region, or Asia and Africa.Well, I went out and purchased a little HD Flip Video camera last week as those of you who read, and now watch, the summary of the week's entries know.Now I didn’t do that for some vain glorious reason, but because it’s the only way I can get my presentation from London to Bahrain in a form that works.So yesterday I sat and recorded the presentation using my $200 video recorder and today I edited it using my free download of Videopad software. Posted on Vimeo, where I opened an account for under $60 a year, and the conference gets a completely tailored video presentation of the keynote I would have given had I been able to make it.What really amazes me is the ease with which I could record, edit and then distribute the video. Why that amazes me is that I used to make video recordings regularly as a marketing director ten years ago, and each video would cost a minimum $20,000 to film and edit professionally.Today ... it’s near enough free.That’s why I’m regularly blogging about the world of me and what it means to banks, as banks still seem to struggle to get this one.
Meanwhile, my personalised video keynote is just another example of the world’s axis changing from centrally created goods being distributed to the masses, to the masses creating goods distributed to anyone who wants them.
... an event we've partnered with for the past few years, and which enables banks and vendors to network in a convivial, exclusive and private conference. Next year's is already in plan in Brussels for March 2011, and is well worth a look for those interested in the future of banking.
As those who follow this blog know, I write regularly about services such as Facebook and PayPal.
This is because they are disruptive and fresh, as well as being incredibly successful. For example, Facebook is now the world’s #1 website, bigger than Google. Not bad for a five year old. Meantime, PayPal is still growing fast, making over $95 a second in revenues based upon $3 billion in revenues this year. This makes them the interweb’s sixth most successful website by earnings. Not bad for a ten year old.But these sites are not the be-all and end-all. You have to bear in mind that they are purely popular in their language of origin: English.
As a result, there are several other search engines, social networks and P2P payment services that are succeeding out there, from China’s QQ to Russia’s Yandex.
Here's a world map of social networks, taken from the blog of Vincos, Italy (doubleclick to enlarge picture):
Although Facebook is a big hit worldwide with 400 million users, it’s tiny in some countries like the Czech Republic (Lidé is the #1 social network), Hungary (iWiW), India (Google’s Orkut), Japan (Mixi), Netherlands (Hyves), Philippines (Friendster), Poland (Nasza-Klasa), Russia (vkontakte), South Korea (Cyworld), Taiwan (Wretch) ...
Similarly, PayPal is hardly recognised in some countries. In the Netherlands, for example, the banks launched iDEAL, a set of standards to facilitate online payments. iDEAL was created in 2005 by a range of participating banks with ABN AMRO, ASN Bank, Fortis, Friesland Bank, ING, Rabobank, SNS Bank, SNS Regio Bank and Triodos Bank on board today.Some of the major features of iDEAL include the fact that it offers both real-time payment initiation and authorisation by both the issuing and acquiring bank, followed by irrevocable credit transfers to the merchant at the time of online purchase.The participation of the banks along with real-time processing, has created a strong perception of iDEAL being SAFE. As a result, iDEAL has gained over 15,000 participating merchants and 5.8 million users, resulting in a total of 45 million transactions in 2009 worth over €3.4 billion (up 60% over 2008). * maandtotalen = monthly total In other words, iDEAL has a 40% market share of all e-payment transactions in the Netherlands, with an acceptance rate at almost 9 out of 10 online merchants (88% of all Dutch merchants) compared with only 1 in 4 for PayPal (although that’s up on 1 in 5 a year ago, thanks to the decline of AMEX in the Netherlands). So the banks do have a PayPal service equivalent ... but, right now, only in the Netherlands, although iDEAL aims to expand across more of Europe by gearing up for SEPA Credit Transfers (SCT) and the Unify XML standards.Meanwhile, in Russia, their version of Google Checkout has taken a place ahead of the market.Google Checkout is actually called Yandex.Money run by Yandex, Russia’s largest search engine.According to Liveinternet.ru, Yandex increased its share of search traffic from 56% in January 2009 to 59% in December to 62% in February 2010.
Yandex.Money claims to be the leading online payment system in Russia as a wholly owned subsidiary of Yandex. Founded in 2002, Yandex.Money has seen payment volumes grow 135% CAGR, processing 21.5 million transactions per year worth $350 million.
This may sound small, but the appeal of Yandex.Money is for the vast numbers of unbanked and underbanked Russians who want to deal online.
Yandex.Money provides over a million prepaid cards per year through 100 distributors, to be used in over 50,000 participating outlets all over Russia. They have over 200,000 participating terminals to load cash on the cards in 80 of Russia’s largest cities, and 1 in 5 customers use them as top-up wallets. Meanwhile, 61% of users pay directly from the Yandex.Money interface online.
So Russia’s online payments market has developed a slightly different way.Meanwhile, China has an incredible story of the success of Alipay, a division of Alibaba the B2B ecommerce portal.
Alipay is China's primary payment platform thanks to being the preferred payment system for sister firms Taobao and Alibaba.com, along with over 460,000 external merchants. The result is that Alipay has a 49% market share today for all online payments in China:
Q1 2010 market share figures from iResearch
Equally, it has a larger userbase than even PayPal with over 300 million registered users as of March 2010, with five million transactions per day worth an average RMB 1.2 billion (US$176 million).
Why should this be of interest to our global banking community, and PayPal specifically?News Headline, April 11th 2010: “Alipay, China’s largest online payment network, has announced that Alibaba Group will invest a total of RMB5 billion (US$732 million) over the next five years to upgrade the payment solution for e-commerce in China and around the world.”Serious stuff!Meanwhile, in a non-exhaustive list, there are many other online payment services worth a look including 2CO, AlertPay, Bill Me Later, C-gold, CashU, Dotpay, E-Gold, LiqPay, Mobile Wallet, Nochex, PayPay and Z-Payment.So in future, when I talk about PayPal, don’t forget that we’re also talking about their national equivalents such as iDEAL, Yandex.Money and Alipay. Similarly with Facebook, don’t forget that there’s also Mixi, Hyves, Orkut and Friendster.
The implications of these services on core banking is exactly the same which is that we are seeing the creation of many disruptive, fresh and incredibly successful web services for social and P2P finance ... leading, in future, to social B2B finance.
Sandi was the girl who played music in her bedroom, put it on MySpace, got picked up by a record firm and became an overnight star with a massive hit: "I Wish I Was A Punk Rocker (With Flowers In My Hair)" back in 2006.
She was saying how she didn’t like the record firm she had dealt with so now had her own label and acts as her own agent, media, publishing, recording and distribution firm, as well as being the creative artiste.She has created a musical world of her own. A quarter of a century ago this would have been far more difficult or even impossible but, thanks to today’s cheap technologies and distribution services, it’s easy. So she can do that. She can be her own agent, PR, distributor, publisher, record label etc.Similarly the world of words has been restructured thanks to today’s cheap technologies and distribution services.
Fed up with the way that book publishers behave towards artistes, more and more authors are self-publishing. It doesn’t mean they reject the publishers, but often they can’t get published in the first instance but believe they have a good idea.
Nowhere is this more evident than Sally Bee’s experience, where she self-published a recipe book which Michelle Obama ordered.
Result: a #1 bestseller on Amazon and a major deal with a publisher.
I’ve often related this to my own experiences with the Financial Services Club (FSClub).
The FSClub would have cost over a million dollars a year to run a decade ago, with 85% of the costs wrapped up in printing, postage, mailing and telecommunications costs.
Today, those costs are nothing as all you need is a broadband connection and a typepad account to write a blog, distribute news, invite people to meetings, communicate 1-to-1 or 1-to-many worldwide in real-time.
So the only costs of anything are the physical costs of travel, room hire, drinks, food etc.
All the virtual costs
are free. More than this, everything today is mashable. I can mix and match pieces of functionality from all over the mobile internet into a lifestyle structure that suits the World of Me.
This has fundamentally changed things because I can now design the World of Me.The World of Me is defined by how I structure and connect with friends, companies, governments, media and more. It defines how I structure and connect with everything, including and especially for banks and banking.For media, the World of Me is defined by the blogs I consume, the YouTube videos I watch, the diggs and RSS feeds I absorb, the tweets I read ... I create my world which is why iPhone, iPad and iPod.I is everything. Me is all.It sounds very selfish but it’s not.It’s actually about me designing the world around me.That is the world we, and especially Me, lives in.I want to publish my thoughts – I can.I want this in print on Amazon – simple.I want to share my music – no worries.I want to get my bank to work around me ...Hmmmm. Bit more difficult that one.Sure you could use social credits or Hyve payments, but they all need to be backed by a banking system that has not changed much in the last decade.For example, how do I interact with my bank?Via a dull online bank statement that looks just like my old printed bank statement?Via a call centre and branch, with these interactions appearing to have no relationship with the online or mobile bank, and no ability to access these services via my net-based banking service?Via a bank that has no blog, no social interactions electronically and, only if I’m very lucky indeed, might respond to an email to open an account?This will change of course, as new entrants open up new social finance services and a few innovative banks interact electronically via tweets and status updates.But what will really revolutionise this world is when a bank offers all of their services as individual apps, gadgets, widgets and wikis, to plug and play into the World of Me and my internet lifestyle.This is a theme I have regularly explored, particularly in depth a year ago, and continue to play with today.When I can design my bank services around me, by taking:
a little bit of transaction servicing from bank A’s widget,
a snippet of card services via bank B’s app, and
a sprinkle of P2P payments via bank C’s wiki,
then I’ll truly be living in a world of 21st century banking.
After Brett's post the other day which posed the question: "what if the internet is your bank?", I was quite amused just now, as I loaded Citibank's homepage and nothing loaded.
Nothing at all.
Nowt.
Nada.
Zero.
Nothing.
Why so?
Because I use an add-on in Firefox called NoScript.
NoScript describes itself as the "best security you can get in a web browser! Allow active content to run only from sites you trust, and protect
yourself against XSS and Clickjacking attacks."
The only problem is that it results in screens like this:
No big deal, but made me laugh.
What is not so laughable is if you really do depend on internet access to get to your bank, and you can't access it. Hello Bank of America ...
January 29th 2010
The Bank of America website is down since morning. Bank of America's main page is still not accessible as of now. The Bank of America website could be down due to cyber-attack, but it might just be a technical glitch.
If you are trying to access your BofA online banking account, you can follow the Official Bank of America help account on Twtter (@BofA_Help) for updates.
The website is still functional if visitor enter through specific pages. For example, the Bank of America "About" page could be accessed without problem. Once in the website, you can navigate through the website normally.
UPDATE-1: The BoA website is back online.
UPDATE-2 (1:52 PST): The website seems unstable now, and have gone offline again.
UPDATE-3 (3:39 PST): BoA has ruled out a cyber attack but is still trying to identify the cause.
Hmmm ... cyberattacks work I guess. According to informed sources, this was a Denial of Service attack, but BoA aren't letting on. They haven't made any official statements about the cause ... and why would they as it either shows weakness of security or might encourage similar attacks in the future.
In this guest blog entry Brett King, blogger at Banking4Tomorrow and author of the new book Bank 2.0, looks at what it means to live in an age where the internet is THE bank ...
In a quick straw poll recently conducted via Linked In we had a set of responses that confirms pretty much all the other data we are seeing in relation to channel adoption and utilization. The key issue is that despite the obvious data and conclusions, Internet is still seen as either the poor cousin of Branch banking, a necessary ‘burden’ or normally as a transaction channel for cost reduction – rather than what it is today…a customer channel.
The question we asked in the LinkedIn poll was very simple. Which Channel is the most important for your day-to-day banking needs? The answer was clearly Internet banking.
Poll Results - Which channel is the most important for your day-to-day banking?
Now, the conservative bankers amongst us might think that asking for people to participate in an Internet survey guarantees results skewed towards the ‘internet’ and to be honest this is not a rigorous piece of multi-variate research. However, even if you factor in that in most developed economies Internet Penetration is at 65-75%, that Internet Banking is hovering around 40-50% of the populatio and that the highest demographic of users of social media online are the coveted 35-44 year old age bracket, why would you bother arguing that Internet is not a significant channel for retail banking today?Let us use some very simple logic. Even in the US where Internet Penetration looks as if it has started to flatten out in the last few years around the 75% mark, is it reasonable to think that Internet Banking is likely to decline in usage in the near future, or is it likely that as more people shift to internet banking via mobile phone that it will continue to increase?Patrick Chew, Head of Delivery from OCBC in Singapore, was reported in the Straits Times this week saying“Mobile banking customers are no longer only professionals, the technologically savvy or those who are better educated…these customers now come from all walks of life.” Patrick Chew, Head of Delivery, OCBC Bank SingaporeIn Singapore already OCBC has the majority of it’s customers on Internet Banking and expect within 2 years that approximately half of their customers will have migrated to mobile banking. Daniel Li, Director of E-Business at Citibank in Singapore, indicated similar plans, saying that one in 10 of their customers will be on Mobile Banking by the end of the year. Bank of America has had phenomenal growth in Internet banking with their user base now approaching 4 million users. A recent survey by mBlox showed that already mobile internet banking has surpassed both branch banking and traditional telephone banking in terms of usage. Internet Banking surpassed branch in respect to transaction volumes back in 2003, so that battle is long over.But do banks really know what they are doing online? Do they understand the value proposition given that Internet is now the primary channel for the majority of customers? It appears not.
Look at the table below. It illustrates number of page updates made to the primary domain of major retail bank websites in 2005 compared with 2008. In every case, mysteriously, the major retail banks have scaled back on their commitment to Internet since 2005 reducing the number of updates they have made by about 50-75%. This is a worrying trend – it most likely signifies three things. Firstly, banks are over the initial ‘buzz’ around internet, further reinforcing the perception that it is actually mainstream. Secondly, that they don’t know what else to do, all the initial experimentation, etc has been done – what new tools do we have in the toolbox to deploy? Lastly, there has been consolidation of a lot of content that just wasn’t useful online. But, this does closely correlate with budgets online – they aren’t increasing. If anything they are decreasing.
What happened? Reduction in web banking spend has been universal...
Branch expansion is once again slowing too in the US, UK and many other markets (see FDIC:Quarterly). This is argued to be a function of cost reduction and the effects of the recession, but we can’t discount behavioral shift as a key element of this development. Yet, traffic of each of these sites has increased significantly in the same period with Internet Banking usage doubling globally in the period 2004-2009.One global bank I met with in the last few weeks told me in confidence that they have budgeted US$800m for branch related costs this year, but less than US$8m for web, internet banking, social media, web marketing and mobile banking. What was the business case for spending 100 times more on digital versus branches – it is a function of existing infrastructure. The same bank realizes that today the Internet contributes as much revenue as the branch, and does 300-600% more transaction volume. But can’t conceptualize that Internet and mobile is underfunded.So let’s get this straight. The web is now the dominant channel for customers. Internet and Mobile banking are growing at significantly higher rates than branch banking, branch growth is leveling off and yet we are not leveraging non-branch channels for revenue. In fact, Bans are reducing spend on non-branch because of the financial crisis.There is something seriously wrong with this picture. First of all, banks need to realize that 80-90% of the daily traffic that comes to their site goes straight for the login button and that a great deal of time and effort needs to be spent on understanding how to sell behind the login to existing customers. I would argue as much time and money needs to be spent on cross-sell and up-sell within Internet Banking as we currently do training staff for the very same within branches – at least as much, if not more. Secondly, Banks need to better understand what customers actually want to do through internet banking and mobile internet banking. Let’s not assume it’s just checking account balances, paying bills and doing transfers. Let’s think about which products suit these channels and would make the lives of our customers easier.Remember the two key drivers for Internet usage are convenience and price. The key driver for mobile internet banking is still convenience, but increasingly mobility itself.
Banks are getting this wrong because they are measuring the wrong things internally. They are busy measuring how much revenue increased channel by channel, product by product, and they aren’t looking at the big picture nearly anywhere near as effectively as they should. They are still thinking like the bank of the 1990s when branches continued to be the primary channel because customers had no choice.
So yesterday I argued that PayPal and their brethren of social monies don’t matter. It was like unleashing the sceptical banker that I know resides deep within me, and it felt good.
Then I got a dose of new reality vision (maybe due to so many comments on yesterday’s piece) and it felt not so good, because PayPal and their brethren really do matter. In fact, they matter a lot more than we think.Most of their secret lies in the pages of the innovator’s dilemma, which I’ve written about before: The premise is that a new operator enters your industry offering something that looks irrelevant; before you know it, the irrelevant operators subsumes you and the industry by changing its economic paradigms. The best example is Japanese car operators in the USA in the 1950s who offered cheap new cars. Ford and GM thought they were rust buckets and dismissed them as such. However, Americans could suddenly buy new cars and they did en masse. The second hand car market disappeared and, over the years, the Japanese car manufacturers upscaled and produced cheap luxury cars. After half a century, Ford and GM were on their knees and the Japanese had won.This central tenet of theory is absolutely critical when we look at PayPal, Facebook credits, Twitpay and more, as these developments will be a dilemma for banks, in the innovator’s dilemma style. The question is: do the bankers see the threat?First, PayPal and their clan are not thinking about being the cream or froth on the cake. They are, instead, thinking about a new market dedicated to froth and cream that has nothing to do with cakes.Whilst bankers focus upon cake, PayPal and the new breed of payments processors are focusing upon cream.They have recognised that customers don’t want boring old stodgy cakes, but flexible sweet products that can go with cakes, meringues, biscuits, crumbles and even drinks: think cappuccino!So they are creating a whole new market for cream, or rather payments, that has nothing to do with traditional processing but sits alongside it today, and could replace it tomorrow.This new payments market is focused upon convenience, fun and the socialisation of money, rather than on the payments process or the need to pay. This is why it is so different – it’s the virtualisation of exchanging credits – and so yes, it is frictionless, flexible and free. More than this, it’s different.
Second, just like the car industry of the 1950s, it’s also insignificant as a dilemma right now. As mentioned before, PayPal are processing peanuts - $72 billion of transactions – compared to banks that process $4 trillion per day ... but give it time and you have to inevitably ask:
When do we take this market seriously?
When it gets to a trillion dollars a year?A trillion a month?A trillion a day?You see, PayPal are moving and extending reach into higher ticket items and into core merchant services.
And what happens if and when PayPal offer a cashback program? Oh yes, they already do.
So what would happen if PayPal started offering real incentives, as in undercutting banks if you use a PayPal account as your core payments account, rather than paying via card or withdrawing into a bank account?
They could easily do this, as PayPal don’t allow negative balances, and are rumoured to hold over a billion dollars in deposits on accounts at any time.That’s a significant figure to play with as a float.Third, and most important, who owns the last mile?This is the most critical question, and was raised in yesterday’s comments.After all, if your main interface to monetary movements becomes PayPal or Facebook, so much so that you forget that a bank or bank account exists behind that brand, then does anything behind it matter?So here’s the long-term play.PayPal becomes your primary interface to money.
After a while, using their banking licence, PayPal gains direct access to the electricity generators of monetary movement – the clearing, settlement and payments infrastructures of the world.
They move upscale from being peanuts processing for consumers to displacing acquiring and issuing banks from the payments process through an ever expanding range of services:
PayPal for Merchant Services
PayPal for Working Capital
PayPal for Supply Chain Finance
PayPal for Trade Finance
PayPal for Trading
PayPal for NYSE
PayPal for the London Stock Exchange
PayPal for ANYTHING!
BTW, it's not just PayPal at this point of time, but any firm that wants to operate in the cream and froth market.
At this point, you’ve realised the innovator’s dilemma.What started as insignificant small beans payments that appears to be froth or cream on your cake, has suddenly become core business services and major margin erosion as the new entrants upscale and redefine the model. The payments businesses erode and are substituted by new markets services.
To be clear, if you remember that PayPal currently generates around $800 million in revenue per quarter, or $3 billion a year, then compare this with today's other big boys. The world’s largest global transaction processors, such as Citibank, typically generate around $10 billion in revenues and $3 billion+ in profits.
So today, Citibank’s transaction services is three times bigger than PayPal.
In 2002, PayPal’s annual revenues were around $200 million.In 2005, they broke a billion.Today, they’ve reached three billion.They’re growing at an average of over 25% per annum.And they can keep growing as they expand services and upscale.What will inexorably happen is that the core of the payments world – the infrastructures, settlement systems and clearing houses - will remain. These do not need to be substituted, as it's just cables and pipework. But like the electricity and water companies, it's the owner of the interaction and therefore, the customer, that is key and will change. The owner of the 'last mile' as we refer to them. And that’s where our creamy new players are making their froth.You see they enjoy being the cream on the cake because they are defining two separate markets – exchanging virtual credits in a digital world versus making a payment.In conclusion, PayPal and their brethren matter because they are redefining payments and may be insignificant today ... but tomorrow?Meanwhile, bankers can cry: ‘Let them eat cake’ ... trouble is, what happens when no-one wants cake anymore?
Many of us get excited about new and different toys in the payments world.
From Jack Dorsey’s twittering Square to PayPal’s billions of payments, we think the world is changing dramatically. SMS texting payments in Africa and credit exchanges on Facebook add weight to our arguments for change in the core of bank processing.
We then use these illustrations of small change to make allegations about big change. We speculate that everyone will be using twitter for payments via PayPal’s core system within the next few years, for example.I do it myself because it’s nice to see a bit of concern in a banker’s eye; a slightly less confident swagger in a global transaction processor; a jitter of confidence in a commercial banker’s pricing.But it’s all just a bit of noise when you look at the reality of these systems. It’s just cream on the cake. In fact, I would say that all of the online P2P consumer developments in payments are nothing more than a wart on the backside of the flea attached to the hairs on the backside of the cat, which purrs in the lap of the banker who operates just a small piece of the parts of the whole, that comprise today’s global payments industry.Oh yes, and that backside’s wart includes PayPal.Shock, horror, heresy but yes, it is nothing special. PayPal, Facebook Credits, Square ... even prepaid cards and mobile payments, it’s all just a little bit of froth or cream on the layers of the cake of the core banking industry, and its heart of payments processing.Let me illustrate it best by picking on PayPal (sorry mates).Today, PayPal deals with around $80 billion worth of transactions per annum – they broke $20 billion in transactions processed for the first time in Q4 2009, processing $21.4 billion in transactions for a revenue of $795.6 million.That sounds significant, doesn’t it? For them, it is as PayPal is a major growth machine that has eaten its parent, eBay, by becoming the de facto standard for online payments. PayPal's revenues hit a billion per year in 2005 - now they do that per quarter. The thing is that it is major for them but, in the scheme of the overall payments world, it’s not major at all.First, their revenues are peanuts. Assuming PayPal generates around $3 billion per annum in revenues this year, it’s still a long way off the largest banks that make $3 billion in pure profit in a typical year.Second, PayPal sits on top of the core banking infrastructure. It hasn’t created anything new. It’s just added a layer of cream to the cake of payments. It sits on top of Visa and MasterCard which, in turn, sit on top of bank accounts.So nothing has changed.This is why PayPal is cream on the cake, but not a core ingredient.The core ingredients are the infrastructures of clearing houses and banks, of counterparty systems and SWIFT messaging, of Real-Time Gross Settlement and Card Processing systems. PayPal is just a little bit of cream on those layers of cake.For this reason, although I love PayPal as a model of providing payments for new internet and mobile services, from a payments context it is nothing serious.As for Facebook Credits or other add-on services like Twitpay, which all use PayPal as their underlying service, these are just froth on the cream.
Third, even if you take them seriously, what are they actually doing? They’re providing a bit of payment functionality on top of the card and bank account functionality.
Actually no, they’re not even providing that. What they’re actually providing is a bit of account aggregation of payments for a small fee.
In other words, because banks and payments processors aren’t interested in sub-$10 payments processing, someone had to do it and that someone was PayPal.So PayPal scooped up all of these P2P small payments online, and that’s their core business.It’s not high value payments processing. It’s peanuts processing.OK, so PayPal does the odd airline ticket for $1,000 but, for every airline ticket, they process $1,000’s of more dollars for buying cables, DVDs, mobile phone covers and similar goods at $10 or less.Bring on Facebook credits and Twitpay and they’re processing $100s of more dollars for sharing a note, reading a page or downloading a song for $0.99 or less.In other words, they are just payments aggregation services.Like a telephone billing service, PayPal and its gang of payments aggregators offer small payments processing on a massively scalable platform. By doing this, it enables them to generate enough to warrant a worthwhile bank payment per month.But they are not payments processing, just aggregating payments like a telephone service.A telephone service provider processes 100s of transactions a month to generate a single worthwhile monthly payment through the banking system. PayPal, Facebook and Twitpay are doing the same thing for online services.This is why they are actually irrelevant, in terms of core payments processing.Core payments processing represents $4 trillion of debit and credit card payments per annum, significantly more than PayPal’s $72 billion for the year.
Core payments represents the almost $4 trillion in foreign exchange transactions performed every day.
That's over a quadrillion dollars worth of transactions per year.
A quadrillion dollars per annum makes PayPal look like a bit of detritus on the landscape of global payments volumes.This is not to say that PayPal are detritus. They are important, but they are not all consumingly the be-all and end-all of innovation or even change because, when it comes to payments, nothing much has changed. In fact, banks are starting to eat back into their business by launching secure online payments systems like iDeal and Rightcliq by Visa. And this is easy, when you have an industry that processes gazillions of dollars per year using standards, structures and systems which have globally stood the test of time.These standards, structures and systems allow the billions of transactions in global capital markets and corporate supply chain and person-to-person payments to operate.These are the core ingredients of the cake.So yes, add to this a little bit of cream on the cake, PayPal; or add to this a little froth on the cream, Facebook and Twitpay.But don’t mistake the froth and cream as core.It’s not.
Thanks to the Italian blog Banca2.0, I stumbled across Dexia Belgium’s marketing campaign to Gen Y that worked wonders almost a year ago.
The campaign is based around Dexia’s youth bank, Axion, and the bank’s aim was to appeal to 15 to 30 year old Belgian’s by highlighting music as the theme.But not just any old music: web music.The bank used media agency Boondoggle to come up with a brilliant campaign whereby an internet ‘banner ad’ styled stage was built, and then a bunch of well-known Belgian bands were filmed to kick-start the competition.The competition?Oh yea, the competition is based upon so many struggling bands out there on MySpace and YouTube, why not give them a showcase.This video describes the whole campaign:If you can’t watch the vid, here’s what it says:Banks and youngsters.It’s not really love at first sight.They try to win your heart and wallet by giving you ... ... a free sports bag!But what if a bank actually did something meaningful for young people?Wouldn’t that be a better way of connecting with future customers?Axion is a Belgian Bank (and division of Dexia) that decided to really support youngsters. In one of the most important aspects of their life: music.The past few years, there’s been an ever increasing number of young bands, trying in vain for MySpace fame.In a time when the international music industry is struggling to survive, Axion decided it was time to give these young bands a little push.We created an internet first: “Banner Concerts”.We built boxes in exactly the same scale as online banners.We invited well known Belgian bands to perform live in the boxes, and filmed their concerts.We played these videos as the first Banner Concerts ever.
Each banner led to the Banner Concerts website: the first website that consisted of nothing but banners.
On the website, you could enter your own band’s work, to try to win your very own Banner Concert.
We raised extra awareness by spreading posters in music and CD stores, bars and restaurants ...
... broadcasting commercials on MTV and TMF, and sending out emails.
In the second phase of the campaign, a jury selected 25 bands out of 255 entries, and went back to the studios to record 25 new Banner Concerts videos.The 25 new Banner Concerts we heavily promoted the winning bands on lots of other websites, and the public got to vote for which was the very best Banner Concert.The bands themselves were also very creative about promoting their work on social networking sties.And the winning band – Bad Cirkuz – won a recording session and a real gig at Ancienne Belgique, one of Belgium’s biggest concert halls.The results:
25 young bands got an exposure for their live gig via 6,807,442 banner impressions on Belgium’s most popular websites and, by providing an embed option, a further 43,479 impressions were generated on fan pages and blogs
Between October and December 2008, 44,845 unique visitors went to the Banner Concerts website and, between December 1st and 10th, 7,581 people voted for their favourite Banner Concert.
And that’s how the advertising space of a bank became the advertising space of a band.
If you want to know more about this campaign, I also found that Finanser soulmate Jeffry Pilcher of the Financial Brand wrote a good case study on this last month.
Everywhere I go these days, I see ads for following businesses on Facebook and Twitter. The latest was down at the local winebar where they have this ad on the counter:
GET DISCOUNTS IF YOU FOLLOW US ON FACEBOOK!!!!
Works for me.
Apparently, some 27% of UK SMEs use social media to connect with customers according to a survey by Virgin Media and other studies show that the fastest growing companies are those using social media to communicate.
And yet, apart from First Direct, I still can't find a blog, facebook or twitter button on any mainstream bank website in the UK.
Mind you, it may be that banks are waiting until social media's issues are resolved before they dive in. For example, here's a direct tweet I received from First Direct this morning:
Maybe that's the reason that most banks are onthe fence about social media, as they are waiting until the hackers and underware issues are resolved before they jump into the fray.
That also makes sense to me.
UPDATE 13:00 26th February
First Direct have clarified what happened and yes, they were hacked!
If you're reading this you're probably aware that at 5 am this
morning first direct's Twitter account
was hijacked and used to spam our followers. We'd like to apologise for
the message itself (no need to repeat it) and for the way we dealt with
it in the first instance.
We would like to offer you some explanation for our actions...
How did it happen?
This morning (about 00.30 am) we received a rather salacious Tweet
from one of our followers (their account had been hijacked too) and
whilst checking it out proceeded to read the other direct messages we'd
received. One direct message was from a trusted source it read "ha ha
is this you?" and included a link which we unthinkingly clicked on.
We
can confirm that our Twitter password is extremely secure (a long
string of randomised characters, and regularly changed), and the only
reason they were able to gain access to our account was through the
mistake we made. Obviously we changed our password as soon as we
realised what had happened (and we have revoked the OAuth access of the
spam generator), so our account is secure again.
Why did we respond the way we did?
We tweeted quickly out of a desire to re-assure people and perhaps
should have gone straight to the third of our three tweets. We should
have got an apology up sooner, and we probably shouldn't have used the
word "hack". Twice. We've now put steps in place to make sure it
doesn't happen again.
Have any other first direct accounts been
tampered with?
Absolutely not. This was an isolated incident affecting our Twitter
account only.
Final word
This is new to us and to the financial services sector as a whole. We
made a mistake, fixed it as soon as possible and we're taking steps to
ensure it doesn't happen again. We're very sorry, but we are only human
afterall.
Brett King, author of the new book Bank 2.0 - which I can recommend to those of you working with social media in finance as a focus – has worked with me in the past few weeks, analysing the inital and general results from our social media survey.
Almost 450 folks responded to the survey (thank you all) and here are a few fast facts:
the majority of the participants would participate in social media before making a decision on a financial service provider
93% of participants consider social networking will be worthwhile or critical for banks in the next five years
78% said social media is worthwhile or critical for corporate banking relationships today
the majority of customers would go first to independent community discussions before coming to the brand itself
Facebook and Twitter scored as the highest value social media channels for retail banking engagements
LinkedIn, Blogs and Privately Managed Online Communities scored as the highest value social media channels for business interactions
74% said their use of social media organizationally will increase over the next two years, whilst only 1% said it would decrease
For the full 30-page report analysis:Our conclusions93 per cent of the 443 respondents to the Financial Services Club survey indicated that a focus on social media would be essential to the future of financial institutions over the next five years. Only 1 per cent of the survey group said that they feel their institution would be likely to decrease their use of social media in the next two years...only 1 per cent! All indications are that this is a hot topic for pretty much every service organization out there which is surprising as so few firms are doing anything about it! Adoption rate of social media is scary. Two years ago Twitter was unheard of. Although Twitter started beta testing their concept in 2006, it is largely agreed that it didn’t formally launch till April 2007. Since then Twitter has taken off by storm – globally, in the USA and in Australia, Twitter ranks as the 12th most popular website by traffic, in the UK it ranks in the top 10, and in most of the EU it ranks in the top 30 or 50 websites. It took Facebook 4 years to achieve the same impact; so social media adoption is definitely speeding up, not slowing down. Given the rate at which Facebook, Twitter and other such social networking sites have impacted popular culture, it should come as no surprise that financial service providers are starting to think about integrating social media into their business. However, the path to integration of these new media tools into the institution is a tough challenge. Firstly, organizations understand that this is an issue requiring total commitment across the organization, but achieving such is difficult because finding someone who can garner that support is a challenge. Secondly, brands in general are starting to understand that social media is a medium they can’t ‘spin’ – that is customers are largely in control – and that is worrying, particularly in the current environment where FIs are facing significant perception challenges at large. The real conclusions of our research show that individually we know that it is inevitable that social media will be integrated into our business, but our organizations are looking for direction. The difficulty is that there is no one size fits all solution. Each of the popular social networking sites works in different ways, so we need strategies that reflect this. The survey showed, for example, that LinkedIn is a far better tool for business-to-business discussions and for promotion of services to professional individuals, such as priority banking and wealth management. For general brand marketing, Facebook is an effective tool, but our respondents wouldn’t use Facebook for banking contacts or LinkedIn for private and personal socializing. So banks must target effectively if they are to get the socialization of finance right. The strategy needs to be localized and involves pay-per-click embedded advertising as well as sponsored groups and consumer support. Twitter as a tool is an excellent research tool. We would say that this medium in its current form would probably yearn more data than your best of breed focus groups and customer satisfaction surveys if it can be harnessed correctly. When it comes to Twitter it is all about listening. Our survey showed that consumers would use social media first to ask other customers about their experience with your brand, rather than engaging with your brand directly. The survey shows the biggest missed opportunities for banks and financial service providers are more in respect to their own properties. Banks need to be using blogs to give more of their own voice to the social discussions, along with privately owned social networks embedded into the customer website experience. If you are not sure what privately owned social networks mean, think say Amazon’s product recommendations and rating system, PayPal’s Blog, and Wells Fargo’s Stagecoach Island? Our survey essentially shows that most banks are missing a key development in customer engagement – both at the consumer and, more importantly, at the corporate level – by not deploying and utilizing this media effectively. For example, respondents are familiar with some of the key bank provided B2B networks, such as those from Bank of America and HSBC, but these examples are few and far between. This is the case even though most consumers and corporations feel this is critical to the future! There needs to be an immediate and concerted effort to integrate social media into your organization today. More than that, this needs to be a cross-discipline, multi-department effort and it’s going to be difficult, but not necessarily expensive. If used properly, the bank will improve delivery, revenue and customer engagement significantly. For the full 30-page report analysis:
It's well worth reading the whole 20-page report but, if you don’t have time, here are the stats (always useful).
Social Audiences
Facebook is the globe’s largest online social network with over 350 million users.
Facebook’s audience is bigger than any TV network that has ever existed on Earth.
Were it a nation, Facebook would be the world’s third most populous after China and India.
70% of its audience is outside the United States.
Twitter had 58 million web visitors in October 2009 ... or is it 23 million? See end of this entry.
Facebook took almost five years to get its first 150m users, but just eight months to double that number.
LinkedIn has over 58 million members, and it took 16 months to reach its first million users whereas the most recent additional million came on board in only 11 days.
Mobile Social
eMarketer estimate that over 600 million people will use their
phones to tap into social networks by 2013, a more-than-fourfold
increase on last year’s 140 million.
Facebook has 65 million mobile users.
Social Content
Facebook’s users post over 55 million updates a day and share more
than 3.5 billion pieces of content with one another every week.
Over 2.5 billion photos a month are uploaded to Facebook, making it one of the largest photo-sharing sites on the web.
Facebook has one engineer for every 1.2 million users.
Facebook has over 1 million developers creating software for it and its online directory contains over 500,000 apps.
Twitter has spawned over 50,000 apps, including offerings from
firms such as Twitpic, which lets people post photos to their Twitter
feeds, and Twitscoop, which highlights popular topics being talked
about on the service at any moment.
Social Revenues
Facebook does not reveal numbers, but its revenues last year are
thought to have been at least $500m and quite possibly more, which
helped it to turn cash-flow positive in mid-2009.
Although user numbers were sharply up last year, the
social-networking industry’s revenues in America, its biggest
advertising market, rose only by a modest 4% to $1.2 billion according
to eMarketer, a market-research firm.
That was still an achievement, because the total online advertising
market shrank in 2009 and MySpace revenues, the largest share, are
thought to have fallen last year.
This year eMarketer expects revenues to grow by over 7%.
ComScore found that one in five adverts viewed by American web
users last June ran on social-networking sites, with MySpace still
accounting for the biggest chunk of the total.
Social Games
In 2008 Tencent, the Chinese ‘Facebook’ which runs QQ coins, listed on the Hong Kong Stock Exchange and reported revenues of just over $1 billion, with $720m coming from online gaming and sales of items such as digital swords and other virtual goods.
Ning, another social networking tool, is targeting gifts rather than games and launched an initiative in October 2009 that allows people to sell customised digital items to their members. These cost anything from 50 cents to $10, and over 400,000 are being exchanged every month, splitting the profit equally with its customers.
In the game “Sorority Life”, users complained about the lack of virtual men to date so Playdom quickly introduced some last November – some 10 million of the boyfriends were promptly snapped up with a few players buying as many as 500 boyfriends each; some paid for their digital darlings with virtual credits won in the game, but others stumped up over $5 a time for their beaux.
Although Asia remains by far the biggest market for digital knick-knacks, Inside Network, a research firm, has estimated that sales of virtual wares in America on many different kinds of websites reached $1 billion last year and could grow to $1.6 billion in 2010.
ThinkEquity, an investment bank, reckons that revenues in America from social games could hit $2.2 billion by 2012, a big leap from last year’s $375m million.
“The best virtual goods have real currency,” says Mark Pincus who runs Zynga, on eof the biggest gaming firms on Facebook.
Social Marketing
A survey of 1,000 heavy users of social networks and other digital media conducted in August 2009 by Razorfish, found that 44% of those following brands on Twitter said they did so because of the exclusive deals the firms offered to users.
One in five tweets mention specific brand names in the updates.
O2 found that 17% of Britain’s small businesses were using Twitter to attract new customers and some believe they have saved around £5,000 ($8,000) a year from other forms of marketing by doing so.
Social Hiring
US Cellular, a telecoms company, says it saved over $1m last year by using a LinkedIn system that produced good candidates for its jobs faster than traditional recruitment channels.
A survey by CareerBuilder.com of about 2,700 executives in America last year found that 45% of them looked at job candidates’ social-network pages as part of their research, and more than a third of those had unearthed information there that put them off hiring someone.
Social Not-working
A survey of 500 small businesses in America conducted by Citibank last October found that most of them had not used online networks at all because they thought they would be a waste of time.
Morse estimate that personal use of social networks during the working day was costing the British economy almost £1.4 billion ($2.3 billion) a year in lost productivity.
Nucleus Research, an American firm, concluded that if companies banned employees from using Facebook while at work, their productivity would improve by 1.5%.
A survey of 1,400 CIOs by Robert Half Technology last year found that only 1/10th gave employees full access to networks during the day, and many were blocking Facebook and Twitter altogether.
If you like this sort of thing, then please join our survey on social media in finance. Click to take the survey: https://www.surveymonkey.com/s/NXWW2B3The survey is closing very soon, so feel free to join the 425 professionals from banks, corporations, consultancies, governments and the professions who have responded so far. Results published at the end of the month. Meanwhile, if you like this sort of thing a lot, then here’s a few more social media numbers, this time from this year’s World Economic Forum (WEF):
WEF reached a worldwide audience of 430 million readers online through the use of social networks this year.
Facebook ran real-time pulses, polling over 200,000 people and bringing their views into the discussions.
WEF has over 6,300 fans on Facebook.
Webcasts of public sessions on Livestream reaching a cumulated audience of over 210,000 viewers.
News conferences were seen by over 70,000 people, and they could put questions to panellists via Twitter and Facebook.
Over 250 participants and 120 journalists continuously sharing their impressions on Twitter
A Twitterwall allowed participants to see a running micro-commentary on the meeting as it progressed.
‘Davos’, ‘WEF’ and ‘WorldEconomicForum’ were mentioned 30,000 times on Twitter.
UPDATE: I ran a competition related to this entry asking folks to say how many visitors went to twitter in October 2009. The Economist had the figure 58 million but the winning entry sent me this from Usuable NZ:
"We can provide a lot of things that I think have been missing in payments – specifically like around the receipt, for instance. We all get these receipts, these paper receipts, that most of the time people are just annoyed to receive because they're not really useful. So what if we could really turn the receipt into more of a publishing medium, into something that lives on and something that is actually clickable and useable, and something that just exposes the various end points of the transaction. That's exciting."
I agree and the full interview is worth a read / listen.
The thing is that Square is good for the American markets, but it is very last century because it focuses upon a card's magnetic stripe and signature for authentication. That's the way Americans pay for things but other markets have moved away from this as it is so insecure.
For example, watching the video of how you might pay using Square, the idea of fraud pops into my head with big alert signs, probably because it would make it easy to access a person's credit card using Square. In particular, a signature based upon scratching away with my fingernail ...
This is why so many other markets, most recently Canada, has moved over to a Chip and PIN world, leaving America languishing in the past.
That is why Square has a limited market.
Now then, if Mr. Dorsey can take the Xiring terminal and build that into Square, he could be onto something. For example, here's Barclays guidance video for online secure payments (2:50 is critical point here, the Xiring terminal):
Or maybe it's just something as simple as combining Square with text message alerts to the credit card holder every time a Square payment is made.
Nothing like simple solutions to complex problems, aren't there?
As if to support my contention that a NEW bank should focus upon offering the world's best remote channel banking, the Payments Council released the following press release today:
"It is just 12 years since internet banking began, but its popularity has grown so much that, in the first half of 2009, 22 million adults used internet banking on their main current account.
"This means that for the first time ever more than 50 per cent of regular internet users (41.4 million) are banking online.
"The number of people banking over the telephone has declined to 14.5 million from a high of 16.1 million in 2005, as many of us have found it more convenient to switch from banking over the phone to the internet.
"Last year 26.8 million adults used at least one of online or phone banking.
"The most popular tasks that people who bank online carry out on their main current account are checking account balances and checking statements, used by 95 per cent and 83 per cent of users respectively.
"Phone banking still remains a popular way for people to enquire about their account, with more than six in ten phone banking customers using the service in this manner, compared with less than two in ten people doing this who bank online."
I've been noticing more and more apps for providing information about our environment.
Known as augmented reality - rather than artificial reality where you go into a completely fictitious world - the use of such services is increasing rapidly.
A good example is the SkyMap app on the Google Android mobile:
Simply holding up your mobile to the night sky gives you a view of all the constellations, all noted and indexed.
It is not a far cry from here to having everything noted and indexed, as demonstrated by this great little educational film form Rocket Boom:
This is where things get interesting as you could have all sorts of new bank apps, such as find your bank app - like the find the Tube app, but simply to find your nearest bank branch in a strange town.
Alternatively, and I don't know if you caught it, but Holly mentions using facial
recognition on the iPhone augmented reality app to register the user.
So check your account app gives you a 3D view of your banking details ... and also checks you out at the same time to ensure you are who you say you are ... wonderful.
Oh yes, and within a few months, we're sure to see all of this in your next pair of sunglasses (this gets interesting after about a minute):
Brilliant ... if only we had some sun!
Postnote: and if you really want to get funky, howsabout this for your next laptop?
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