Banking Services for the Under Banked

The under banked are not a traditionally a good target for banks. They do not typically have large bank accounts for the banks to make money off of savings accounts. They typically do not have large incomes to support high value loans. They may also not be a good credit risk for the bank’s credit card business. But wireless carrier economics are different. Carriers can leverage a service that nominally increases a customer's charge over a large customer base to increase revenues substantially. Carriers also are looking for services that reduces churn, especially for prepaid customers where churn is high. Banking services create stickiness as people tend to have long relationships with their financial institution. Prepaid wireless carriers are in a position to offer banking services to the under banked population as there is a high correlation between prepaid customers and the unbanked.

Making a Solution Possible

A company Vesta (www.trustvesta.com) has been in the prepaid top up business for years offering a turnkey prepaid top up solutions for a number of carriers around the world including Verizon, AT&T, Boost, Telcel, China Mobile, Vodafone and Telefonica. Vesta is offering a new turn- key financial solution that allows customers to pay their bills and make electronic payments. The customer puts money into a mobile wallet account run by the carrier, Vesta, and a program manager like Fiserv for example. These funds can come from a Green Dot Card, a prepaid card from Visa, MasterCard or others, cash at a retail store, or via direct deposit. The customer is charged $3 for inputting cash into the mobile wallet account. The customer is given an application on their smartphone which they can use to pay bills or transfer money from the phone; and a card which they can use like any prepaid card. The carrier, Vesta and the program manager share in the transaction fee from the merchant or electronic bill pay. The program manager is an accredited financial institution, takes care of the storage of funds, and makes money off of the float.

What has really changed the equation and made this opportunity possible is smartphones, which are getting cheaper and growing in popularity with prepaid customers; along with application stores and easy downloads. A small computer and usable applications are in the hands of people who did not have this access before.






Vesta Smartphone Application

Benefits to the Customer

The benefits to the customer are the convenience of electronic bill payment, electronic money transferring, lower cost money remittance (Vesta works with various money remittance companies in various parts of the world), as well as and maybe more importantly, a good record of income and spending.

Limitation and Potential Opportunities

Currently this is only being offered on Android phones 2.2 and 2.3, and will be offered on the 4.0 Ice Cream Sandwich version of Android 30 days after launch. Android is where the main intersection of smartphones users and prepaid users exist.

At this point in time, creating interest bearing is a small factor because the rates are low. But this could be a good way for people feel good about this service. The unbanked do not typically get interest on their money and would see this as being very attractive especially as interest rates go up.

Other opportunities in the space include:

• Cash back on purchase like PerkStreet Financial (www.perkstreet.com) offers. People in the under banked group will see that as a highly attractive feature.
• Tax preparation with automatic rebates: The under banked typically have simple returns that can be done by imputing the W-2 by the camera on a smartphone. The carrier can advise clients on how to save money on taxes via an easy to use application.
• Offering discounted coupons to merchant stores.


Win Win Scenario

This is a service which will be most attractive to carriers that focus on prepaid services in the US and international carriers everywhere else because of their high % of prepaid customers. This service is not a standard telecom service so carriers will have to promote and put their trusted brand name behind this product. The service has the hallmarks of a good product in that economically it adds revenues for carriers with the additional benefits of increased loyalty. For customer’s it saves time, creates more control around their finances, and offers potential cost savings. This can be a win-win for both parties, the hallmark of any good business transaction.

Geo Social: No longer at a loss for words

Geo Social is now starting to become mainstream. Many companies are popping up to allow people to make connections with who they know in their town (www.foound.com) and when they travel (www.ajungo.com). This is due primarily to three main factors: the penetration of smartphones to the mass market so the majority of the people in the market have a geo-sensing device that provides a rich experience; the overall popularity of Facebook so that many people with smartphones can be connected; and the ability of linking to Facebook to applications thus having readymade content at any application developers disposal.

Geo Social will take the next step in allowing people to know each other in the room via a wireless network connection and a social networking connection. This capability will probably be used in certain situations like business conferences and in dating situations where people do not know each other and will want to make some type of connection. This will move Geo Social from a community communications tool to a personal identifier and information source.

Geo Social will perform the function of knowing people's interests and characteristics before you actually meet them. It will a good conversation starter in a business situation when people are looking to make small talk and build a bond, in a dating situation where it is always more interesting to talk about something in common, or simply a way for people to exchange ideas about a topic they are passionate about. This evolution of making social interaction more efficient started with Facebook and will continue with geo social because it has value in creating more efficient conversation and it makes people more comfortable as they are able break the ice and start a meaningful conversation.

Privacy concerns do exist, and they become more impactful because the geo targeted person is at a physical location. Geo Social connecting needs to done in certain situation and should be turned off when the person leaves the particular area. In addition the same rules apply in providing content on social networks in terms of how you want to be perceived and known about. This may differ depending on the situation. LinkedIn for business situations and Facebook for social situations. People do in fact have different personas in different situations.

Some small companies are working on these types of solutions, but the larger social networks like Facebook and LinkedIn can use this to understand how people connect based on location, who people are interested in connecting with in a face to face meeting, and what common interests’ people have. Geo Social makes social networking more valuable to the user and provides a way to provide more targeted and higher CPA advertisements simply because it can help start a conversation.

Mobile Devices from Investors and Innovators Viewpoints

Connolly Bove Lodge & Hutz, a nationwide law firm which specializes in corporate development and intellectual property (www.cblh.com) put together a very informative mobile device forum which consisted of two panels on mobile device investment and mobile device innovation. The panels were made up of investors, executives from start ups, leaders from successful mobile applications companies, an IP executive from RIM. The panelists included:

Bob Moul, Philly Startup Leaders, President
Philip Moyer, Safeguard Scientific, Technology Group Managing Director
Saul Richter, Emerald Stage 2 Ventures, Managing Partner
Chuck Sacco, Mobile Monday Mid-Atlantic, President
Jonathan Darcy, RIM, Director of Licensing
Scott Snyder, Ph.D., Mobiquity, President, Chief Strategy Office and Co-Founder
Scott Wasserman, appRenaissance, Founder and President

The discussion revolved around what is shaping the mobile market, and where to put investment dollars and build businesses. The exchange of ideas took many interesting turns but revolved around the user experience, and the flood of data that comes from ubiquitous computing. The general takeaway is that companies need to fundamentally rethink the way they are interacting with customers, and be able to effectively manage and profit from the size and speed of data.

The two shoulders of tablet demographics will make tablets mainstream:

The panelist in the Investment Panel exposed the idea that there are three generations using electronics: the younger generation, the PC generation, and the older generation. The younger generation is likely to use a tablet for content creation and viewing, the PC generation feels most comfortable creating content on a PC, and the older generation which had not really taken to the PC is in love with the tablet. The tablet’s appeal for non-technical people is very strong and that group includes Doctors. One panelist stated that 70% of doctors use iPads.

The appeal of the tablet to younger generations and to people who were disinterested in the PC will also bleed over to the PC generation in different degrees. I believe the tablet will be a near universal device because of its ease of use, intimacy, universal application capability, and mobility. In the US we have a TV in every room, well in less than 10 years we will have a tablet in everyone’s hands.

There are still hurdles to overcome with the universal use of tablets. The same study from Spyglass Consulting Group that found 70% of Doctors own iPads stated that very few use them at their practice. One of the main reasons is that applications are not transferrable to the iPad. The full utilization of this tremendous user experience via mobile devices (Tablets and Smartphones) is being held back by the lack of integration to and responsiveness from mature backend systems and databases. These two worlds are going to have coalesce and the panelist believed standardization and efficiency between these two worlds needs to happen.


HTML 5 Tug of War:

The panelist brought up that there are two competing groups in the mobile space. One group is the browser based companies like Google, Facebook, and Amazon who are promoting the use of HTML 5 because it allows for the universality of service across devices and allows them to be the center of the user experience as they are in the PC world. One of the examples given was that the Kindle Fire is primarily a browser based device.

Then there are the device centric companies that introduce interfaces that make the device both more usable and more relevant. These newer interfaces and capabilities only work with the native application. Device companies need to continue to innovate and bring useful and enjoyable interfaces to the customer. One of the panelist believed that for the time being the device will be the most relevant piece of the consumer experience. This is certainly proving out in Apple’s explosive growth.

The carriers were discussed in passing do not have a major stake these ecosystems, which was a far cry from what the discussion may have been 5 years ago. The carriers are a pipe and the customer appeal characteristics have to do with quality of service, and customer service. However the carriers, I believe are more likely to support the device centric view of the world because it allows them product differentiation.

The panelist from the innovations panel believe that HTML 5 in its current state was good for brochure wear but companies that needed to provide a better user experience should look to native applications. As businesses evaluate different mobile options, it really depends how the company wants to engage with customers and the customer wants to engage with a company. Both HMTL 5 and native applications may be needed to engage the customer on their terms.

Big Data is a Game Changer:

To the panelist data is paramount trend and doing predictive analytics is an area that will highly impact business. The precision that some companies like Target can use information is astounding and in one case the panelist stated Target knew a girl was pregnant before her Father did. www.nytimes.com/2012/02/19/magazine/shopping-habits.htm?_r=1&scp=3&sq=Target%20Shopping&st=cse

This can provide tremendous marketing advantages. In addition the number of devices is growing and can throw off 200 or more indicators of the person’s interaction with the device and the user’s environment. The current need for data analytics to remain competitive, the explosion of the devices, and the capability of those devices are driving cloud economics. The current data flood has already outgrown existing database capabilities according to one panelist. We live in a world of high data capacity and traffic demands will only grow. Cisco predicts that by 2013 the annual traffic on the Internet will be 667 exabytes.

Cloud computing with its scalability of storage and processing power, and flexibility via virtualization are the back office systems of this century. The panelists believe that providing the connectors between the devices and cloud are a key area of opportunity. These connectors will allow legacy databases to react with devices users that are expecting instantaneous feedback.

Other key points on mobile devices:

Human Interaction:

Human interaction changes with mobile devices. This can lead to both better customer responsiveness in stores, and in our personal lives less direct personal interaction. One panelist stated that each generation must deal with the predominate technology of their generation.

We live in an App World:

The moderator for the Mobile Device Innovation panel stated that they choose a dog kennel company because they could watch their dog on their iPad while they were vacation. Use of a smartphone and tablet are clearly differentiators for business and this trend will only get stronger.

Privacy is lurking as a defining issue:

People do not have full control over the data that is being collected on them, and this data may impact their lives and how companies want to interact with you. One of the attendees brought up if people had control over their data, they might be able to use it for sale or barter. This is essentially what Facebook is doing via advertising, and users are getting community and engagement in return.

Is Social the new .Com?

One of the panelists brought up this point in reference to articles that question Facebook’s revenue capability. This point was in contrast to some member of the innovation panel that highlighted the value of Facebook in developing applications and the power that Facebook had in creating interest in applications. Clearly social networks have value. Monetizing that value is the challenge. Giving social network users the needed benefits will keep the personal information exchange open provided the user feels they have appropriate control of the information. The monetizing of social networks is likely to be around allowing businesses to foster better, more comprehensive and efficient relationships with their customers.

I wanted to thank Connolly Bove Lodge and Hutz LLP and the panelists for putting on this informative event. It gave a great overview of the mobile and data markets.

T-Mobile: Back to the Future with a Twist

T-Mobile announced its 4th quarter earnings and it plans to make adjustments after the AT&T merger failed. Needless to say they have their work cut out for them, but they did make some positive adjustments and will have to think creatively about how they are going to succeed without the iPhone.

T-Mobile did what they had to do on the network side:

They announced a plan to adopt LTE in the AWS bands in 2013 in order to be competitive with the other players in terms of throughput and customer experience. They will have 50% of the covered POPs with 20 MHz and will likely need more spectrum in the future. T-Mobile may benefit as they have in the past by rolling out technology late when the prices have come down and the technology is more efficient due to lessons learned or advancements.

T-Mobile is also shifting some of its HSPA+ capacity to its PCS spectrum to gain more international traffic. The company also plans to work with various worldwide alliances to offer attractive worldwide roaming plans to customers.

The good news about the break up was that T-Mobile is receiving a break- up fee from AT&T of which they are using part of for a $4 Billion to upgrade their networks. If they are able to hold their position and grow their business additional funding is likely to be required for network capacity and additional spectrum.

No iPhone Issues Still Exists

The iPhone continues to be a halo product which carriers can use to create excitement among customers. Despite its high price the iPhone has penetrated the mid- tier market which is T-Mobile’s bread and butter. One of the reasons T-Mobile has had flat to declining subscriber numbers in 2011 is that they do not have an iPhone. They will have to deal with this issue in creative ways. One of the ways is to promote the Windows 7/Nokia phone as an attractive alternative to the iPhone. This can be done via better integration with mobile web services and the phone for consumers, and better integration, control and faster application development using .Net for the enterprise. T-Mobile will need to be a primary distribution channel for Windows 7; and on the flip side Microsoft and Nokia need a supportive distribution outlet for their product in the US.

Still Squeezed in the Value Play:

T-Mobile is still squeezed between a rock and hard place in terms of value from companies like Metro PCS, Leap, and Tracfone who offering attractive deals which are often better than T-Mobile’s. On the higher end they face competition from companies like Verizon for better network coverage and all three of its larger competitors who have the iPhone. T-Mobile continues to offer service at a competitive rate and tries to out advertise its lower end competitors. They also provide value at the fringes for people whose iPhone contract has run out or to international carriers looking for better rates than AT&T.

Business Market is Needed but Not Gotten.

T-Mobile has always lagged the other carriers in enterprise adoption. T-Mobile competed by offering lower service charges and better customer relationships than their competitors. This focus on the business market was put on hold during the AT&T merger negotiations because of the service uncertainty and the need to continue to maintain a subscriber base as the merger approval process continued. It was a much more straight forward proposition to focus on their strength in the consumer market. T-Mobile has reinvigorated it enterprise effort by hiring 1,000 new sales people. T-Mobile success in this market will go hand in hand with convincing enterprises that the Window Phone 7 is a better enterprise choice than the iPhone.

Summary:

T-Mobile continues to be a patchwork of strategies in order to get revenues and stay afloat in the competitive US market. The good news is that T-Mobile still has a good reputation among consumers. They will make some network adjustments to remain competitive and gain additional revenues. If they can gain the iPhone then they will be in much better shape, but this is not likely to occur until they prove they have long- term staying power. That long term staying power is likely to depend on how efficiently they are able to rollout their network plans and how capable they are in promoting the Windows/Nokia phone as a strong alternative to the iPhone.

Antennas are a key part of the LTE Transformation

One of the major themes of CES 2012 was the rollout of LTE handsets:

• Verizon announced three new devices the Motorola Droid 4, Droid Razr Maxx and LG Spectrum, a mini-tablet and a pair of mobile hotspots that run on the their network which covers 200 million POPs (Covered Population).

• AT&T announced 7 new devices and a tablet including the Nokia Lumia 900 and the HTC Titan II, the first Windows Mobile OS LTE devices, and a number of Samsung LTE devices with the Android operating system.

• Sprint announced it will have the Samsung Galaxy Nexus smartphone and the LG Viper running on their LTE network they plan to rollout later this year. Sprint and Clearwire’s move to LTE has effectively ended WiMAX as a major wireless technology.

LTE in 2012 will become a major wireless technology in the US. This driven by Verizon’s need for a faster, more cost effective broadband solution, and the need for the other player to match Verizon’s service and to use a technology that will be the worldwide standard. But the rest of the world is not moving as fast as the US. What is going to help make LTE grow as a technology that is adopted around the world?

Certainly, less expense handsets, and more carrier network rollouts in other regions of the world. The US carriers are doing their part to bring down the cost of LTE handsets by creating volume. However, most of these handsets only work in a limited frequency range and thus only work on the carrier’s network and in country. In fact a consumer needs to buy a new LTE phone if they move from Verizon to AT&T and vice versa due to the different frequency capabilities of the phone and the difference frequencies the network operators run LTE on.

A couple of antenna manufacturers, SkyCross and Ethertronics have developed antenna solutions that allow for multi frequency LTE device usage:

• At CES SkyCross announced its VersiTune-LTE tunable antenna module which supports up to 12 frequency bands and optimizes MIMO (Multi input multi output).

• In 2011 Ethertronics announced its EtherSmart LTE 1.0 product line which allows for tuning across 13+ frequency bands.

Not all frequency bands are going to be used in a single device and will be subject to carrier discretion in terms of what frequencies their networks run on, who their roaming partners are and what are relevant regional frequencies for LTE. But these capabilities open up the possibility for global roaming with LTE and provide:

• An incentive for operators to invest in LTE networks in their home country to gain roaming revenues.

• A solution for operators to work together to provide worldwide service packages like Verizon and Vodafone.

• A desire for business people and consumers to push for LTE services which run faster than existing networks.

• A desire of countries to upgrade their services so they are not seen as technologically behind.

Antennas are one step in the solution, the chip makers like Qualcomm need to provide multi frequency LTE capabilities on their chips sets but this is more of an evolution if the market incentives are in place to make this happen. The antenna solutions have started the ball rolling in what can be a true ubiquitous worldwide standard for wireless communication by the end of this decade. The implications of this will be profound on many levels.

Mobeam: What's it mean?

This week Mobeam, www.mobeam.com, announced a deal with P&G to provide the light beam transmissions from smartphones that can be read on the standard point of sale barcode laser scanners. This technology will allow for multiple coupons to be read at the point of sales instantaneously; allowing for control of coupon redemption; and the ability to know individual users, and the time and place of purchase. The coupons can come from scanned QR codes, mobile and internet web sites, or emails and other electronic messages. P&G can integrate this with their eSAVER.com web site and allow people to redeem coupons with their phones. It certainly puts more power back in the hands of brands and could potentially do this for retailers, or newspapers who want to offer coupon wallets on mobile phones.

According to Mobeam all of the major handset manufacturers are installing the Mobeam software into their phones as a way to make the phone more valuable to the consumer. They are doing this on all new smartphones starting in 2012 so the use of this capability will take a coupon of years to become a mainstream behavior.

Right now the company is focusing on low hanging fruit. According to the Mobeam press release the coupon market is a $3.7 Billion annual market with 300 million coupons scanned each year in North America. www.mobeam.com/uncategorized/mobeam-partners-with-procter-gamble-to-reinvent-the-coupon/

The other interesting aspect of this technology is that it can be used for ticket entrance into sports arenas and also be used for payments. This brings up the point of what will be the primary point of sale payment method for mobile phones. Will it be NFC, light transmission, magnetic strip readers (like Square), photo credit card scanners (like Jumio) or mobile web purchasing (like Paypal)? It is really going to depend on:

• Ease of use
• Security
• The existing cost to upgrade existing equipment

Clearly the technology which gets a strong foothold in the market will have a momentum advantage.

My prediction is that we will see a variety of these different technologies in handsets and working on different applications depending on: the payment, redemption or access situation; the need for secure access; and the need to upgrade existing POS or access equipment

There are many different air interface technologies like Wi-Fi, Bluetooth, and ZigBee. Each has some overlap, but serves different applications and devices better. This is likely to the case for payment, access and redemption capabilities on a handset. However, the gating factor in adoption will be how easy it is for consumers to use.

Social Mobile Media

A couple of weeks ago I went to the Social Media Plus conference in Philadelphia. www.socialmediaplus.com. It was an excellent conference which covered a lot of material from Facebook to search engine optimization, how businesses can utilize social media, and it had a number of case studies which highlighted business applications. Some of the ways social media is being used by businesses include:

Brand Marketing: The social media channels are where the eyeballs are, especially young eyeballs. Facebook is the leader with 800 million Facebook users and Twitter has over 250 million messages per day. Social media is where brands are both displayed and talked about. For some companies the Facebook page is like another web page.

Public Relations: Social media is used to highlight the benefits of brands and companies as well as protect brand and company image. The speed at which information flows over social media makes it a requirement to spread positive news and to react quickly and accurately to negative news.

Customer Interaction: Social Media is a two- way street where customer expect to interact with companies to deal with product issues, and to talk about the benefits and drawbacks of products. People use social media to follow and share the content they care about. Companies can use this interaction to build support from users who will be advocates of the company via social media or word of month. In addition, companies can use social media to broadcast solutions for product issues as well as learn about how people are using or want to use products.

Drive Leads and Sales: This is often a more subtle art and science proposition than interacting with customers and it requires planning, monitoring and execution. It is going to require understanding the people the company is advertising to on social media, creating a community of trusted people who are ready to accept your message, understanding the social media is interactive multichannel forum that needs to be measured; and moving people through a purchase funnel with social media, search and a good landing page.

Employment Acquisition and Dismissal: Many companies, by some counts 80% of large companies, use LinkedIn to find prospective workers. Other companies monitor social media sites when deciding who to hire. Companies will also fire employees for what they say on social media so an employee social media policy needs to be in place.

What does this mean for mobile?

There are a large number of mobile users with smartphone who access all types of social media. It is estimated that 350 million people use Facebook on their mobile device. Mobile search traffic is generally much smaller that PC traffic so it may not be a strong candidate for search engine optimization, but this will depend on the business. However, mobile traffic is growing and it has a number of implications:

Mobile Increases Reach: Mobile allows more people in developing countries and in lower economic demographics of society to have access to social networking. Mobile is also the Internet device of choice for younger demographics. This can have and already has an effect on the political process and how candidates are viewed. It is not inconceivable that someday people can vote via their Facebook page just like they click a like button. In addition, brands and companies can reach out to more people that they have not had communications with before.

Mobile Blurs the Line Between On and Off Work: Often people act more impulsively when they communicate with a mobile phone or forget they are representing the company when they are away from work. Often the way people communicate when they are away from work is with a mobile phone. Companies need to be careful to inform employees that the Internet on the mobile phone is the same Internet on the PC.

The Mobile Phone is a Camera with Instant Upload: The phone can be used to take pictures that can put a company in a bad light and these can be quickly uploaded to social media where they can move very quickly across the Internet. This requires companies to monitor and have a plan in place to deal with negative issues that arise from broadcasting on social media.

Mobile is a Local Search Channel: 20% of Google searches are local and 40% of those are on a mobile phone. People use the mobile phone to find business locations, look up ratings, see what their friends liked or recommended. It is important that brands review various social sites to judge ratings and make adjustments or comments. In addition, companies need to make an evaluation to determine if social shopping sites like Foursquare can help them. Lastly and probably most important companies need to have a mobile landing page that is easy to use and gives customers the information and communication channel they need.

Mobile is used for instantaneous information retrieval and communication or when a PC or Tablet is not available: The phone is often used in place of a PC if a small amount of information is required or if a PC is not available especially in a search context. People also use a mobile phone for quick communications like that on Twitter and SMS. It is important that companies have a good search engine optimization and a mobile landing page so they can effectively funnel traffic into a sale.

Both social media and mobile are fast becoming fabrics of our interactions and daily lives. Companies need to understand and use social media and mobile to create the best selling and communication environments for their customers.