Mobile-Financial.com Interviews M-Com Head of Marketing
Mobile-Financial interviews M-Com's Head of Marketing, Serge van Dam
Link to Original Interview in Mobile-Financial.com
Wednesday, December 2, 2009
In Mobile-Financial.com's interview with Serge, M-Com's Mobile Banking Solutions and why customers gravitate towards the M-Com platform for Mobile Banking are discussed with Editor Brent Ho-Young
Mobile-Financial.com recently interviewed Serge van Dam, Head of Marketing at M-Com. M-Com is an international mobile banking and payments solution provider with banking customers across Asia Pacific, the Middle East and North America.
M-Com has been servicing banks with mobile banking solutions for close to a decade and is in the midst of dozens of mobile banking rollouts that will go live next year in both developed and developing regions throughout the world. This includes Scotiabank in Canada which has partnered with M-Com to launch mobile banking for its customers in the spring of 2010.
Mobile-Financial.com: M-Com has developed mobile banking solutions for almost a decade. Would you please provide a background on M-Com and its experience in the mobile banking space?
We started in payments actually, so we were a bit ahead of our time. So we built our platform, because we thought mobile payments were here for sure. We started in 2001, and we thought by 2002 mobile payments would be everywhere so we missed the mark a little. Notwithstanding that, we spent a solid 2 or 3 years engineering a mobile payments platform. So, we went live in May 2002 with our first mobile payment service with Bank of New Zealand which is part of National Australian Bank, which is one of the largest banks in the world.
I think we were a bit ahead of our time because neither consumers nor mobile devices were ready for the service. Notwithstanding that we had built a good service, which was basically card service from a mobile phone. Then we realized we were a bit too early so we talked to the banks and said you know, if you don't want to do mobile payments now, what do you want to do? And the response was to let people do text banking, you know, send alerts and find out their balance. So we built SMS functionality on top of the services platform and signed up three of New Zealand's four largest banks and moved on from there.
By that stage we understood market demand and that banks were going to use the mobile channel. We realized pretty early on that banking customers didn't go for mobile payments because they didn't trust the channel or the transactions.
So we decided very early on – 2003, maybe 2004 – that the best way to get customers used to mobile banking was through mobile alerts to get them habituated to the channel, and over time they'll start doing what is basically known as high-risk transactions i.e. payments. That is very important in the trajectory of a bank, to firstly engage customers in things they are more comfortable in, which are typically non-transactional activities, get all the infrastructure in place, and by that I mean reporting, diagnostics, environmental, and customer care tools so that the customers have a confidence in the channel, and then over time migrate them to payments. This is exactly how it's working out.
If I look at some of our customers who offer both mobile banking and mobile payments, mobile payments are growing disproportionately to mobile banking because as consumers started off their mobile banking, they are slowly going "Ah, I can pay my bills", and as they get more comfortable they start doing more transactions, which generates more money for banks.
So our original failure was that consumers weren't ready in 2002 and 2003 and the insights we got out of that was that both banks and consumers would start off with the low-risk stuff first, gain confidence in that, and then move on to mobile payments. At which point, both M-Com and the banks would be ready with a mobile payments platform.
Mobile-Financial.com: What are the options for a bank looking for financial services through M-Com?
We have three. I will call them deployment models. The first one we call 'Enterprise'. Basically big banks go "I want to buy a platform for my entire mobile channel and evolve and extend it over time".
The second model is "Out of the Box". We call it "Fast Track" in the US, "Push Play" in some other markets, and some of our partners may rebrand it something else. But it's really an out of the box offering for retail banks – it allows the banks to get off the ground quickly.
Lastly, we have an ASP service, which we never run – it's always run by a partner. So in the US it's Fiserv, in New Zealand it's Paymark, in Egypt it's Fawry, in Australia it will be First Data.
The out of box model can be in-house or hosted by someone else. The pricing model can either be per user per month or perpetually licensed, depending on what the bank wants to do. In the Enterprise model, which the bank always deploys in-house, they pay us an enterprise perpetual license, with typical software and maintenance support fees.
Mobile-Financial.com: So a small credit union would probably go with your out-of-box service, while a larger bank would deploy the Enterprise solution with customized features and services?
Exactly. In the US, the top 20 or 30 banks are the ones we target with Enterprise. The next 200 are – well, we call it Fast Track here, but Out of the Box, really. And the next, all the Credit Unions and Community banks would be ASP. And it's similar in Canada.
Mobile-Financial.com: You mentioned customers getting comfortable with the channel. What are the things that a bank can provide to customers to ensure that they are familiar and comfortable with mobile banking?
Good question. I don't think there's an answer to that. It depends on the segment. I had a great conversation with one of the UK banks about this. They've done a lot of segmentation and interviewed thousands of their customers and there were some differences. For example, me as a consumer, I probably wouldn't use text banking; I don't want to know about my balance, I have enough money not to worry about that. But what I do worry about is a payment failure or when there's a bill due, and I want to know about those things. Or when someone creates a new payee in my online banking because it creates a security risk right, and I want to know about those things. So for me, alerting is much more valuable.
If I had the same income that I used to have when I was in university or my first job and living week-to week, checking my balance would've been a lot more useful. And if I'd had an iPhone – which didn't exist when I went to University – it would mean I would no longer have to do online banking, I'd have a streamlined, optimized experience on my iPhone, in which case it makes sense as well. Again, I think it depends on the segments, but I don't think there's any right answer.
Banks are a bit naïve if they think that there is a right answer, when it depends on the segments. And the thing is, you want to focus on the segments that are most likely to adopt it, and make sure that they get confidence in the channel so you can then migrate them into payments. And confidence is important and not just about security; I don't have an iPhone, so offering me an iPhone application is of no use to me whatsoever. So banks need to think about that and go, well that's not going to help migrate Serge to mobile payments, and think about going somewhere else with me. So this isn't a one size fits all to creating that confidence; it's about making sure you meet the need for each of those segments.
So then a bank will say (to a consumer), "Ok, we've got you comfortable with these alerts or your whatever, now we're going to show you what else you can do on your phone." Then you go, ah, the previous service worked well for me, and the bank seems pretty confident in the risk – let's do it.
Mobile-Financial.com: I believe that M-Com recently announced that it provides consumers with over 50 types of mobile banking related alerts. Would you please provide details on the types of alerts that the M-Com platform can provide?
We segment alerts into four areas primarily. Scheduled Alerts which are time-based; Threshold Alerts which are based on a threshold of value in an account; Event Based Alerts and Security Alerts which can be similar but we separate them because customers separate them in their minds.
Scheduled Alerts would be I want to know every Tuesday whether my salary has gone through. A Threshold Alert would be let me know if my balance is below a thousand or I've gone into overdraft. An Event Based Alert would be someone has paid money into my account, and a Security Based Alert would be someone has created a new payee in my account, or something similar – someone changed my password, my credit card was used overseas, etc.
So if you look at those segments you can come up with 10 or 20 scenarios based on those. And then there's the concept of what's known, in the US anyway, as actionable alerts. We learned this the hard way in 2004. For example, we send you an alert to say you've got an overdraft, but the first thing is you want to do something about it. So then it was about creating a mechanism so that the consumer can actually do something about it.
Mobile-Financial.com: So with M-Com, if a bank chooses "Out of the Box" they get alerting functions, account presentment. What other services do they receive?
Out of Box basically includes SMS, browser, Blackberry and iPhone applications via access modes. And transactionally it includes the usual banking stuff – bill presentment and payment, ATM and branch location and a series of structured alerts. That's the Out of the Box, and they can get into a lot more payment models if they take custom; they can take P-to-P, remittance and all that stuff. The other thing is that they can do business banking, banking in other languages, all that sort of stuff if they buy into the Enterprise model.
Mobile-Financial.com: Is there a migration path from the M-Com Out of the Box solution to the M-Com Enterprise solution?
Absolutely. We expect a significant number of our banks to do this. For example, if you are bank number 30 or 40 in the US, we expect they'll migrate to Enterprise over time. They'll run it for a year and a half, get a good level of adoption and then go, "ok we're serious about the channel now and we want to customize the experience and we want to do some funky stuff".
Mobile-Financial.com: In terms of the payments, can you tell me some of your thought processes in terms of –are you talking about proximity payments, contactless payments, or more remote payments? Or does M-Com provide the ability to go both areas.
We divide payments into four areas. Basically if you take the perspective of a consumer, what a consumer cares about is not the payment instrument, what they really care about is "Who am I paying". And there are four entities that a consumer pays: they pay other people, so that can be domestic or international – which is an important distinction because of the regulations and compliance requirements; they pay bills including prepaid top up, utility bills that sort of stuff; they pay merchants at the point of sale be it McDonalds, and they pay persons remotely, (for example) PayPal, Google etc.
So, I guess the question is what does M-Com support? We support all four of those models and are proven under all four. There are some constraints and opportunities and differences in terms of pros and cons. I think every country is going to evolve differently, with their starting point. I mean, in the US bill payment is the starting point of mobile payment. In New Zealand it's certainly person-to-person payments. Then in developing markets you've top up and P-to-P being important. In markets like Philippines or higher remittance markets, remittance becomes very high in the priorities. So each market will evolve differently.
So, the answer is we support all of those, and we are proven in all of those because we've done them all, starting with merchant payments in 2002, bill payments in 2004. We did our first P-to-P in 2006, international remittance with Western Union earlier this year. And the point of sale stuff we did last year with one of the banks and a number of merchants in New Zealand.
The key thing, in the point we mentioned earlier – consumers are going to look for an integrated experience. They want to enrol once. They want to not have different processes for support and changing processes or cancelling services. They want to basically have an integrated experience, so it's pretty important for banks to buy solutions that let them upgrade.
Mobile-Financial.com: What's the most popular payment model in the developed world that M-Com delivers?
That depends on the country to be honest. In the US it's absolutely bill presentment and payment. In New Zealand it's absolutely person-to-person payments. In terms of what we are doing in Canada, it's P-to-P and international remittance. In terms of the UK, the project we are going to do includes bill payment as the starting point. So I say P-to-P or bill payment. In the developing world it's more like top up, then P-to-P.
Mobile-Financial.com: And are you popular in the developing world?
Absolutely – particularly in South East Asia and the Middle East. And later this year we are planning to enter the Latin American market. We are deployed in Thailand and Egypt. We just won our first deal in Cambodia and we're working on a couple others. And then we've got a number of our international Tier 1 customers that are taking us to other countries. We are also the platform for a number of international banks, so they're going to roll out our solutions to a number of countries where they operate.
Mobile-Financial.com: If there's one question and answer that M-Com provides that convinces a customer they should go with M-Com, what would be that question you get asked and answer you provide?
The cliché answer is "how will I make money from the mobile channel?" That is something that we can show them better than anybody. I think that's the question we have the categorically best answer for, but that's not the product answer. I mean, it is a product in that we can show them how we get them to payments, how it's an integrated platform, how they can do stuff in multiple countries, how to set up segments, and we can show them all that from a product perspective. So I think that's the ideal question but it's not product-centric.
Mobile-Financial.com: Do you have a product-centric view?
The ideal thing for a bank to say to me is "we take the mobile channel seriously; we want to have a single vendor and a single product across the mobile channel in the long-term for this bank".
It's actually a problem statement, not a question – these are the things we want. And that's actually the ideal position for us; we are an integrated platform, offering all access modes, integrated payments, integrated alerts, obviously all the back-office banking stuff and customer care you need, all the diagnostic tools, all the security management – all plugged in natively.
And so, yes, it's more expensive than some of our competition, and we accept that, and hopefully our customers do too. If their agenda is having a single platform across the banking enterprise for the long term, to minimize cost-to-serve, and have a single customer view, and have the maximum yield in terms of ROI, I think we're better positioned than anybody else.