Why Asking About Google Bank Is The Wrong Question

Oliwia Berdak

"When will Google launch a bank and what will it look like?" is a question I frequently hear from our banking clients. Google’s activities in digital wallets and payments, as well as its reputation as one of the most disruptive firms in the market, have obviously left many banking executives worried. Unfortunately, they’re asking the wrong question.

I’ll leave aside the issue of whether Google or perhaps Apple or Amazon should be the focus of this increased attention. Each of these players has its unique strengths and growth plans, and some of these correlate more or less closely with financial services. That’s not what makes the question so wrong. As I write in my new report, it’s the assumptions that are faulty here; assumptions that reveal precisely the type of legacy mindset that makes many retail banks so vulnerable to disruption.

Many retail financial firms still haven’t grasped the full potential of digital disruption. They think that new competitors will use their digital might to beat them at their own game, be that through more efficient processes, brilliant algorithms or better user experience. While these three things do matter, what matters most is the purpose which they serve. As I have written elsewhere, digital disruptors like Google are disruptive because they don’t play by the rules.  Instead, they use digital technologies to deliver better or entirely new ways of meeting customer needs, often bypassing regulation and re-defining a given industry in the process.

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Forrester’s 2014 Australian Mobile Banking Functionality Benchmark: It’s All Happening Down Under!

Stephen Walker

As part of this year’s Global Mobile Banking Functionality Benchmark we reviewed the mobile banking apps of the big four in Australia: Australia and New Zealand (ANZ), Commonwealth Bank of Australia, National Australia Bank (NAB) and Westpac. The dedicated Australian report, 2014 Australian Mobile Banking Functionality Benchmark, available here, provides the detail on where these banks do well, where they could improve, and what we think you could learn. We find that leading Australian banks are: 

(1)    Rapidly improving their mobile services. Yes, this is now true of many banks around the world, but it's especially true in Australia. Following our reviews, CommBank announced updates to its app that would move the bank from 64 out of 100 to 69 out of 100, and up from 10th place globally, based on our reviews of 32 banks across 11 countries, to joint 6th. Westpac has already migrated 1.2 million customers to its new web based platform, which would move the bank from 62 to 77 out of 100, and 2nd place overall in our global reviews, up from 12th. These are dramatic positional swings in a very short period of time.  

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US Cross-Channel Sales To Grow As More Consumers Use Their Phones For Research In Retail Stores

Sucharita  Mulpuru

Cross-channel sales -- also known as web-influenced sales or transactions that touch a digital medium, but are not completed on the Internet -- are now more than four times larger than online sales alone and will reach $1.8 trillion by 2018. This is according to Forrester's just released five-year US cross-channel retail sales forecast. Offline sales -- primarily web-influenced offline sales -- will comprise nearly 75% of the $475 billion in US retail growth anticipated between 2014 and 2018. This growth in cross-channel sales can be attributed to US online consumers increasingly using their phones in retail stores to research products online. Retailers would be wise to see this growing trend as the new normal; if this is the first you’ve heard about your customers’ in-store mobile behavior, you’re already late to the game.

Despite frequent in-store research on the mobile device, the number of actual mobile transactions remains low. Consumers are more interested in using their phone in the “pre-shop” phase, be it searching for a product’s location, comparing prices, or checking online inventory. Many retailers, such as Target, have found it worthwhile to invest more in mobile services that meet customers’ needs in their pre-shop context rather than at the point of sale. Target has helped customers find specific items in its stores via its mobile app: A customer can create a shopping list within the app, which then maps that list onto the floor map of the customer’s Target store location, guiding them through the aisles from one item to the next.

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Financial Consequences For Obese Employees In Singapore: Another New Business Model Enabled By Mobile

Julie Ask

I showed up at a business meeting in Singapore today and each member of the company within the meeting was wearing a Jawbone. I thought, "Wow, that's unusual ... and statistically very unlikely." Turns out, the company gave the devices to the employees. And ... added some teeth to the program. Approximately one week's compensation each month is linked to the employee's BMI. The formula is a bit more complicated than that, but that is the general idea. 

This offers one powerful example of the new business models that mobile enables. (See my research report from this winter that outlines the possiblities.) 

Despite the links between wellness and productivity at work, there are many reasons why this model wouldn't fly in the US - at least at a public company. Studies show that healthy employees are more productive, have higher energy levels, etc. However, there are always nuances, pre-existing conditions and laws in the US that protect employees from employers increasing or decreasing compensation based on their perceived health. Genetics come into play. Healthy - fresh, organic, slow cooked, local -  foods can be expensive and beyond the research of the average family in the US. 

Insurance companies in the US are piloting programs to reward members for good behavior (e.g., exercise, eating healthy foods, sleeping well). Rewarding members with discounts on premiums or vouchers for goods is very different though that linking compensation to an employee's BMI. 

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Amazon Fire: Winning In Its Customers' Mobile Sales Moments

Julie Ask

I had the opportunity and privilege to get an early look at the new Amazon Fire phone. It delights in many ways, but I’ll focus on the shopping experience enabled through Firefly.

For those who may not remember, Amazon put a dedicated physical button on the left hand side of the phone that launches directly into image recognition. If the image is recognized, then a web-based mCommerce experience launches. The user can then buy the product or it on a wish list, among other things. From there, the experience is more ‘traditional Amazon.’ The ‘new’ is the image, email, URL, etc. recognition.

Why is selling mobile phones important for Amazon? mCommerce in the US alone will add up to nearly $100M by the end of 2014. The new battleground for retailers is in the mobile moment – the point in time and space when a consumer pulls out her phone to get something she needs immediately and in context. Amazon’s FireFly service facilitates two core types of mobile sales moments:

  • Impulse Sales Moments – these are often flash sales (e.g., WTSO.com, SteepAndCheap, etc.) or spontaneous purchases (e.g., Groupon). The opportunity for Amazon here is in minimizing the friction between consumers seeing something they want, and enabling them to buy it before they forget about it, or find it later in a store nearby.
  • Replenishment Sales Moments – the phone (or something like an Amazon Dash) is with me when I realize a shampoo bottle or milk is empty or I need more toothpaste.
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Yahoo! Acquires Flurry: Inexpensive Audience Acquisition For Yahoo!

Julie Ask

Today Yahoo! announced its acquisition of mobile analytics and ad platform, Flurry. TechCrunch and Kara Swisher on re/code both reported the deal, with a $300M minimum price and $1 billion on the upper end. According to the press release, Flurry sees app activity from 1.4 billion devices monthly and 5.5 billion app sessions per day.

A little math: 1.4 billion devices does not equal one billion active users. However, a user could have one or many apps on his phone with the Flurry software embedded. Apps do not tend to have exclusive arrangements with one mobile analytics provider – let alone the free ones. They tend to have one or more. The code is small and there aren’t many compelling reasons to limit the number of buyers for your inventory unless there is unique value. It becomes hard to compare to the price tags of Viber ($900M) or WhatsApp ($17B to $19B). This is as much a play for audience as it is analytics. Flurry’s scale makes it interesting as an acquisition more so than what they do.

What does the acquisition mean?

No doubt, it’s a huge financial payoff for Flurry and its investors. When we interviewed Flurry a year or so ago for our research, they had 150 employees. 2014 will be known as a year of phenomenal mobile exit events – especially for those companies buying audience. It’s a good time to sell. A few thoughts:

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Financial Services Are Hot – Who Would Have Thought?

Oliwia Berdak

Not a day passes without more millions pouring into start-ups bent on disrupting retail financial services. Yesterday it was the payments start-up Zooz with US$12 million, today it’s the peer-to-peer lending platform Funding Circle with US$65 million. Venture capitalists have obviously sniffed an opportunity in an industry characterized by high margins, underserved customers, and accumulated inefficiencies.

The economics of start-ups are ruthless, and you shouldn’t expect many of these upstarts to survive or expand beyond their narrow niche. Still, don’t miss the wood for the trees. As my colleague Bill Doyle and I write in our new report on digital disruption hitting retail financial services, conditions are now ripe for financial services to join the music and publishing industries in experiencing the power of the digital punch.

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Can Huawei’s Honor Write A New Brilliant Canto?

Vanessa Zeng

On June 24, I attended the launch event for the new flagship of Huawei’s Honor product family, the Honor 6, in Beijing. As one of the world’s largest telecom equipment manufacturer, Huawei has been cultivating a mobile phone business in the past few years, and became the third largest smartphone vendor in the world at the end of 2013. Until now, Huawei’s mobile phone business has mainly followed a B2B2C business model: selling its devices via mobile network operators. Huawei launched Honor in December 2013 as an independently operated Internet brand that aims to adapt quickly to changes in the age of the mobile Internet and provide high-performance products at reasonable prices. As a former member of the mobile phone fraternity, I was impressed by Huawei’s technical leadership at the two-hour launch event — but behind the revelry, I noted that Huawei faces a few dilemmas:

  • A confused brand proposition. Huawei’s speakers spent a lot of time talking about the Honor 6’s technology framework and chipset, but didn’t mention what consumers can get from those technical advantages. The Honor 6 is a high-performance product with powerful functionality — high-speed LTE Cat6, an octacore Kirin 920 processor, long battery life, a powerful camera, innovative features, and a fancy Emotion UI — that retails for just RMB 1,999 (usually the price of a mid/low-end smartphone in China). Honor 6 is marketed as “the world’s fastest 4G smartphone”, but the promotional video suggests that the phone’s target audience is the young struggling working class. The brand message is inconsistent with the product positioning.
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Few Insurers Are Currently Proud Of Their Mobile Offerings, And Rightly So

Oliwia Berdak

Have you ever had the pleasure of making the acquaintance of Maxwell the Pig? Maxwell is a likeable if slightly assuming animated pig. At times he can be a bit dismissive of those who aren’t as digitally savvy as he is.

Maxwell is also a celebrity, featuring in a number of videos promoting Geico’s mobile insurance offerings.  In one he bewilders a policeman with his digital insurance ID, in another he demonstrates how time and space have been obviated by the convenience and ubiquity of mobile insurance. Talk of the mobile moment!

Even if you don’t know Maxwell, perhaps you know other such celebrities? I thought not. That’s because there aren’t many companies that are willing to advertise their mobile insurance services as proudly as Geico is doing. For my new report, I surveyed the mobile offerings of more than 30 insurance companies in developed economies. The results clearly show that plenty remains to be done, both in terms of customer adoption and what’s on offer.

The big US insurers such as Geico and Progressive are leading the pack, offering a growing range of mobile functionality that lets customers get quotes, file and track claims, locate a repair shop, pay bills, and save documents simply by taking pictures with their smartphones. Offering functionality that makes it easy for customers to achieve their insurance-related aims seems like the basics, but a lot of companies still haven’t got it right.

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Mobile App Innovation Has Paused

Julie Ask

Why? eBusiness pros are pursuing too many one-off initiatives without tight collaboration with their Technology counterparts. And, they are doing too little to build infrastructure to support future mobile services - and mobile moments. Check out our full report "Developers Are The St. Bernard For Mobile Projects."