Banks Gear Up (or not) for Upcoming Apple Pay Release

By Jim Bruene on October 14, 2014 7:42 PM | Comments

image If all goes well, some time within the next week Apple Pay will be up and running. Short-term it won't cause a ripple in market share or consumer behavior (see previous post), but long-term it is likely to be seen as an important mobile-payments milestone.

Regardless, I look forward to using it. But with only a couple contactless terminals in my usual Seattle haunts, I guess I'll be buying lots of coffee at Peet's and Tully's while I test it.

But I digress.

imageThe subject for today is what banks are and aren't doing to ride on Apple's mobile coattails. There has been little FI marketing so far, other than PayPal's NY Times full-pager poking fun at it (15 Sep 2014, see inset). And some media buys from Visa and MasterCard.

Eleven financial institutions were named at the official Apple Pay launch Sept 9. Six major launch partners below and 5 "coming soon" issuers (see note 1).

The big six have been almost silent since the first week when four of the six issued press releases, emailed customers (note 2) and/or posted promos on their websites.

Issuers may now be gearing up their marketing machines, which were caught relatively unaware last month due to Apple-prescribed secrecy, for an pre-holiday Apple Pay push. However, I would not be surprised if major issuers, who've already seen contactless card usage fizzle, take a wait-and-see approach for the remainder of 2014.

In any event, it will be interesting to watch. 

_________________________________

Apple Pay FI launch partner marketing to date
_________________________________

American Express 
   Press release: No
   Email: None reported
   Website promotion: None reported
   Website site search: Nothing listed

Bank of America
   Press release: No
   Email: One reported by The Financial Brand (link) though I did not receive
   Website promotion: Nothing now, but promo reported at launch by Jim Marous in The Financial Brand
   Website site search: Links to landing page (link)

Capital One
   Press release: link
   Email: One sent to my consumer account (12 Sep)
   Website promotion: None reported
   Website site search: Nothing

Chase
   Press release: Quoted in Apple's official release (link)
   Email: One reported by MediaLogic (link) though I did not receive
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand
   Website site search: Nothing

Citibank
   Press release: link
   Email: None reported
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand
   Website site search: Nothing

Wells Fargo
   Press release: link
   Email: Two sent to my consumer account (11 Sep and 19 Sep)
   Website promotion: Nothing now, but promo reported at launch by The Financial Brand

   Website site search: Nothing

______________________________

Second wave issuers
______________________________

Perhaps because they are smaller and must try harder, three of the six next-wave Apple Pay issuers (note 1) have promos running on their websites today:

Barclaycard homepage (one of three promos in rotation)

image

PNC Bank homepage (in lower left corner)

image

US Bank homepage (one of 3 promos in rotation)

image 

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Notes:
1. The 5 other issuers mentioned at the Apple launch were: Barclays, Navy Federal Credit Union, PNC, US Bank, USAA. Yesterday, Arvest Bank announced it was supporting the system as well.
2. Despite having 10 card accounts (4 business and 6 personal) across the six launch partners, I have only received emails from two (Wells Fargo on Sep 11 & 19 and Capital One on Sep 12).

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Categories: Apple, Mobile Payments

Launching: "Final" Credit Card with Integrated Disposable Card Numbers Captures Imagination of Product Hunt Geeks

By Jim Bruene on October 9, 2014 6:38 PM | Comments

imageProduct Hunt is the newest website catering to tech enthusiasts. Each day 40 to 50 new products or new product features are featured on the site. Anyone that has registered is allowed to upvote any of the submissions and a continually updated leaderboard surfaces the hottest products of the day. Then at midnight, the whole thing resets, and 40 to 50 more products get their 24 hours of fame.

I've been following it for a few months and have seen that while there are only 2 or 3 fintech entries per week, they tend to be popular (which could be a function of their scarcity). But rarely, if ever, do they climb to the top. And this week, not one, but two companies have dominated their day on Product Hunt.

On Tuesday, the Plastc Card (yes spell check, no "i") had 545 votes, almost 200 more than runner up Student Developer Pack. Plastc is similar to Coin, a computerized credit card that can hold multiple mag stripe cards in a single piece of plastic, planning to ship to pre-order backers in the first half of next year. Plastc holds more cards, has an e-Ink display, and at $169, costs more than three times the pre-order price of Coin.

On Wednesday, fintech ruled the Hunt again, with new security-minded credit card, Final, gaining more than 900 upvotes, 600 more than the next closest newcomer, Clearbit. I believe it's the record for a financial product, eclipsing Plastc's from the day before.

image What is Final?
Final is a standard mag-stripe (and chip) credit card with a companion mobile app and desktop dashboard. The card is upping the security ante by incorporating easy-to-use disposable (aka temporary) card numbers for ecommerce (card not present). It allows users to designate a unique number for every online merchant, that way it's easy to shut that merchant off, if you don't want them to be able to charge your card again. Users can also set transaction limits by merchants to make sure there are no overcharges.

Final also plans to offer advanced controls for brick and mortar purchases. Purchases could be allowed at only certain merchant categories for example. And Final's card will be able to be tethered to your smartphone allowing chip-and-pin purchases only only when the two are in close proximity to each other. 

The card management app features PFM features not unlike what Moven and Simple offer today. But there is more emphasis on fraud controls and ridding yourself of "gray charges" ala BillGuard (see inset). In fact, the best way to think of Final is a credit card version of a Moven/BillGuard mashup. It is to credit cards what Simple was to checking accounts. A winning combination of good design, consumer advocacy and a bit of tech flair.

The startup is still looking for a credit card issuer partner (attention Capital One, this could be your 360 credit card), so pricing is not available. However, CEO Matt Rothstein told me yesterday that they plan to make the card fee free. In fact, they are looking at the business as much more than just a security play. They are focused on consumer advocacy and helping consumers reign in their spending (see first screenshot).

Final Thoughts 
Final is part of the current batch at TechStars Boulder and is pitching at its Demo Day today. The company has 2,200 people on its waitlist (Update: As of noon Pacific on 10 Oct, the number has jumped to more than 21,000). Not a bad first-24-hours out of stealth. There is clearly consumer demand for more card controls, to avoid outright fraud, fight merchant overcharges and reign in overspending.

imageMost of the newcomers that have gone down this path have used prepaid debit cards and/or account aggregation. We haven't seen an ambitious startup credit card play since well before the 2008 meltdown. Final will benefit from substantially higher interchange (albeit shared with its partner), but will also have to deal with rejecting the credit applications from a significant portion of its waitlist. That will not be easy to explain to the early adopter crowd, who will likely take their case to social media (note 1).   

But overall, I'm a big fan of what they are trying to do, and expect to be following Final for a long time, unless they get swooped up by a large issuer right out of the gate.

----------------------------------

Final desktop card management area: Transaction view (9 Oct 2014)
Notes: 
A.) Current balance and monthly goal dominate top of page. 
B.) Customer service, and a log of recent inquiries, appears in right sidebar
   

image 

Final desktop card management area: Budget view

image

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Note:
1. I'd advise having a prepaid card backup to mitigate the rejected applicant backlash.

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The Conference Journey: Why We Started FinDEVr (and Finovate)

By Jim Bruene on September 17, 2014 4:56 PM | Comments

image I just stopped by the Green Lake (Seattle) coffee shop where Eric Mattson and I first hatched the plans for Finovate seven years ago. At that time, we were so focused on selling enough tickets to pay the Midtown Manhattan-sized bills, we had few thoughts on the long-term plan. 

Fast forward seven years.

A week from today we'll be in NYC for the eighth time hosting the largest Finovate ever, closing in on the 1,500 mark for the first time (much appreciated everyone!!!). Thanks to a surging local fintech community, the NYC event is even outselling the San Francisco area one for the first time since 2011.

Why did we create Finovate?

While I'd like to say we were hoping to bring the fintech community together to foster innovation (which I think has happened), but it wasn't quite that ambitious at the start. I'd always been a conference fanboy, going to 4 or 5 per year to speak and/or cover in our publications. But in 2007, one of my favorites cancelled. Looking to fill that void, we created the event that I would most want to attend.

One day. One track. Rapid fire. New products. In NYC. And the ability to speak directly to the speakers afterwards. And thankfully, others shared the affinity for that format.

imageSo, why did we start FinDEVr?

There is so much emphasis on strategy and the big picture these days, that the tools and technical underpinnings to get from here to there can be lost in the noise (case in point, the 1,121 articles on Apple Pay last week). And as the programmable web (APIs, SDKs, etc) weaves its way into financial services, it's harder than ever to keep up.

So, we created the event that I would have wanted to go to back when I was an engineer. One that focuses on how to BUILD the new services that eventually show up on the Finovate stage and in bank/CU/financial apps.

Whether FinDEVr attracts the fintech developer community in the same way Finovate has struck a chord with fintech execs remains to be seen. We already have 50% more attendees signed up for FinDEVr (Sep 30/Oct 1) than we had at the first Finovate, so it's off to a promising start (see details below).

Check back with me in 7 years and I'll let you know if it was the right move. 

-----------------------

You can still be part of the inaugural FinDEVr in San Francisco's Mission Bay area. Event registration is open for a few more days. And if you'd like to bring your whole team, please email (sanfran@findevr.com) and we can work something out. 

There is no where else where you can meet the dev folk at Yodlee Interactive, TD Ameritrade, MasterCard, Visa, PayPal/Braintree, Forte, Intuit, and Google. Plus Avoka, EVO Payments, Eshtapay, Financial Apps, InComm, Xignite, Xero and 40 others all in the same place and in just two days (see full list here).

image

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Categories: Finovate

FinovateFall 2014 -- Less than 50 tickets left! Don't miss out!

By Eric Mattson on September 16, 2014 7:28 PM | Comments

btn3_ov.pngFinovateFall 2014 is next week and it's official that the event will be the largest Finovate to date! Over 1,300 tickets have already been sold and we have less than 50 remaining!

If you're interested in attending to see the future of fintech debut live on stage via our fast-paced demo-only format, please get your ticket as soon as possible to lock in your seat.

As usual, the auditorium is going to be packed a potent blend of innovative bank execs, fintech entrepreneurs, venture capitalists, press, and industry analysts. In case you're curious, below is a small sample of the great organizations already committed to attend:

  • Accenture
  • Adobe
  • American Express
  • Ameriprise
  • Bain Capital
  • Bank of America
  • Bank of Ireland
  • Bank of Montreal
  • Barclays
  • BBVA Compass
  • BlackRock
  • C1 Bank
  • Capital One
  • CIBC
  • Citi
  • Citi Ventures
  • CFPB
  • DBS Bank
  • Deliotte Consulting
  • Discover
  • Equifax
  • Everbank
  • Experian
  • Fidelity
  • FIS Global
  • Forbes
  • Fortune
  • FTV Capital
  • Gartner
  • Goldman Sachs
  • IBM
  • Intuit
  • Jack Henry
  • JP Morgan Chase
  • KPMG
  • Liberty Mutual
  • MassMutual
  • MasterCard
  • MACU
  • New York Life
  • Nordea
  • Oliver Wyman
  • Paypal
  • Polaris Partners
  • Primerica
  • PwC
  • QED Investors
  • RBC
  • Regions Bank
  • Rockland Trust
  • Route 66 Ventures
  • S&P Capital IQ
  • Santander
  • SAP
  • Saxo Bank
  • Sberbank VC
  • Scottrade
  • Silicon Valley Bank
  • SixThirty
  • Societe Generale
  • Sony
  • Swedbank
  • Tangerine Bank
  • TD Ameritrade
  • The Huffington Post
  • The Principal
  • Umpqua Bank
  • USAA
  • Venrock
  • Visa
  • Wells Fargo
  • World Bank
  • Xignite
  • Yankee Group
  • Zions Bank

We'll see you in New York in September (or in San Francisco for FinDEVr)!

FinovateFall 2014 is sponsored by: The Bancorp, CapitalSource, Financial Technology Partners, Greater St. Louis Financial Forum, Hudson Cook LLP, Life.SREDA, UK Trade & Investment, Visa, Xignite & Zions Direct

FinovateFall 2014 is partners with: Aite, ABA, Bank Innovators Council, BankersHub, Bobsguide, California Bankers Association, Canada, Celent, Filene Research Institute, Hotwire PR, Javelin Strategy, Mercator, NYPAY, Payment Week, The Paypers, SME Finance Forum, & Visible Banking

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Categories:

Why (Most) Banks Need Not Worry About Apple Pay (Yet)

By Jim Bruene on September 15, 2014 5:04 PM | Comments

image I'll admit to being caught up in the hype. The 48 hours after Tim Cook revealed Apple's long-rumored foray into payments were some of the most exciting times in fintech since the 1995 to 1997 period when most of the online "firsts" happened (see note 1).

And we're seeing more thoughtful fintech posts in the past week than we used to see in an entire year. Thanks especially to Tom Noyes, Cherian Abraham, Brian Roemmele, Celent's Zilvinas Bareisis and finally today from Gonzo's Steve Williams for helping me see beyond the hype.

I can add little that hasn't already been said to the discussion about NFC, payment ecosystems, or the future of mobile payments. Clearly, it marks a turning point for mobile payments and improved U.S. security, and the play-out will be fun to watch.

The one area I haven't seen covered: What does all this mean for the 10,000 U.S. banks and credit unions not on the 11-name list at launch (note 2)?

So here's my take on the impact of Apple Pay on small- and medium-sized FIs over various time horizons: 

In the short term (2014): ZERO

In the medium term (2015-2016): ZERO

In the long run (2017+): Something, but impossible to quantify at this point
                                     (it could even be net positive)

Here's why bank/CU execs (outside the top-20 credit-card issuers) should not lose sleep over what Apple is doing:

1. Apple Pay (in the physical world) can only be used at contactless terminals
Supposedly, there are 220,000 contactless terminals in the United States. But if you've ever tried to use one, you know that 200,000 of them are either not working or are buried behind beef jerky on the counter. This will change rapidly as merchants upgrade during the next few years.

2. It's complicated to use (at first)
First, you need an iPhone 6, then you need to figure out how to use Apple's Passbook program, log in to iTunes or take a picture of your card, successfully authorize it, enable TouchID and so on. Millions of early adopters will figure all that out, but then they won't be able to find a working contactless terminal (see #1) and then they'll forget all about it.

3. The number of your customers that care enough to move deposit accounts for NFC payments is near zero (for now)
Let's do the math. Assume that a year from now there are 5 million Apple Pay active users (making at least one transaction per week) or 2.5% of U.S adults. If you have 20,000 customers, that means 500 will be active users of Apple Pay. Most will be happy to use their existing Capital One, Citi, and other rewards credit cards for the transactions. Very few will care that your debit card doesn't work on the system. Let's say it's around 25%. That means you have something like 125 customers who are disappointed with your mobile payment capabilities. If they like you otherwise, how many will move their checking account to get an Apple Pay-enabled version? While the number is probably zero, let's say it's 5% to 10%. That means you could lose 6 to 12 customers. Using the 80/20 rule, only one or two of them are profitable. Will it hurt to lose two profitable customers? Sure, but it's not going to be on your top-10 or top-25 list of worries.   

4. There are ways to mitigate any lost wallet share to Apple-Pay issuers
Even if my math in #3 is way off, or you are concerned that you will take a material hit to the bottom line, or you just want to be part of Apple Pay, easy routes will undoubtably be built to get your cards enabled into Apple Pay. Maybe not in 2014 (or even 2015), but certainly within the next couple years. And even if I'm wrong and you are locked out of the iPhone indefinitely, you can create an Apple Pay poaching program where your customers make their charges on a bigco bank card, then you automatically pay those charges off and essentially transfer them to your customer's checking account.

So my final advice. If you have an employer (or spouse) that's been reluctant to fund your iThings, now is the perfect time to do an upgrade (just don't show them this post).

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Chase homepage shown to existing customers (15 Sep 2014)
Note: All three links on bottom of page go to the iPhone6 "Apple Pay" features page at Apple.com which leads with Chase (link)

image 

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Notes:
1. Or perhaps 1999 when Paypal/X.com made P2P payments happen or even 2005/2006 when Zopa/Prosper/LendingClub launched consumer credit exchanges.
2. See Apple Pay launch event clip here, complete with transcript.

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