• Banks send security codes to customers to confirm identity or transactions
• Service providers send booking confirmations and reminders
• Utilities send bill reminders and confirmations

It’s time for organisations to remove this from their cost base, the SMS is going the way of the dodo.

As more services like iMessage, WhatsApp and gChat become more ubiquitous, the reality is, the majority of your customer base are not using SMS to send and receive messages. They are using these web based services to communicate. But whenever a business messages them, they still use that prehistoric SMS technology… Strange.

So why aren’t businesses doing the same?

What if instead of paying subscription fees to SMS gateways and paying for individual messages, Businesses could access iMessage or WhatsApp (for Business) and send messages at little to no cost?

Admittedly these platforms are not too friendly for Business, but there’s no reason why they can’t be.

So C’mon Apple, where’s iMessage for Business?

These start-ups are able to move quick and agile way, not bogged down by multiple-decade old legacy banking systems, giving them a clear advantage in transforming and innovating in the banking world.

This post examines 3 emerging start-ups that are making inroads up the banking and payments industry: Pygg, Square and WePay.

Person to Person Payments

The Pygg Experience

Pygg is a service that allows people to transfer funds with a using twitter.

For example, if we were at lunch and I didn’t have cash and my friend Steve kindly paid, I could make a payment by tweeting:

@Pygg pay @StephenColman $20

As I’ve identified myself with Pygg and linked my twitter account, it takes $20 from my Pygg balance, and transfers it to Steve. I can then check my balance:

@Pygg account balance

If I then decide I want to withdraw some money to my bank account, I tweet:

@Pygg collect $50

Simple, quick and easy.

The Traditional Bank Experience

Comparing this situation of transferring funds via traditional Internet Banking, the process would involve logging in, navigating, selecting accounts, entering account details and descriptions – a clunky and frustrating process.

And this means that I don’t need to know my friends BSB/Sort/Routing Code and Account Number, I just need to know their twitter ID (or potentially other social networks in the future).

Whilst there are a few issues that could arise with security, I believe as a micro payment service, this is near perfect, I can’t wait to see Pygg’s future growth.

Business Payments

The Square Experience

Probably not a surprise to see Square pop up in this post. Square is a service that allows anyone to accept credit cards, anywhere, by plugging a free credit card reader into your phone or tablet device:

Square was born out Twitter co-founder Jack Dorsey’s frustration that an artist friend was not able to accept credit card payments (and was losing potential sales) due to the costs and equipment required to become a credit card merchant.

To solve this, Dorsey and the Square team built a card reader that was cheap to manufacture and could be used on a variety of different devices. He also ensured that Square’s interchange rate for every transaction was a reasonable and highly competitive 2.75%.

Square means that merchants are able to order or pickup a square card reader (for free), download an application and accept payments within minutes. Merchants can also email a receipt for the transaction within seconds.

The Traditional Bank Experience

Comparing the Square experience to the hoops that most businesses need to jump through to be able to accept credit cards, it is apparent that Square has a clear advantage.

Most banks today ask businesses to apply for a merchant account, purchase or rent hardware and potentially pay ongoing costs. Most terminals also lack mobility meaning businesses that are on the move are not able to accept payments easily.

Square is growing rapidly, currently processing about $4m of payments a day.

Group Payments and Collection

The WePay Experience

WePay makes it easy to collect and manage money online. It allows people to collect funds off friends, sell tickets, accept donations and create online stores, all without needing an online payment portal.

WePay also allows groups to create an “account” that holds all of the funds that are collected so it is held in a central point that everyone can keep track on.

Finally WePay allows people to order a “WePay Prepaid Visa” that is loaded up with the funds they have collected. Perfect for groups collecting funds who want to spend their cash.

The Traditional Bank Experience

Collecting funds as a group today means sharing account details and keeping track of who and who hasn’t paid, it might also mean creating a specific account for funds to be stored.

Setting up a store or accepting donations is more problematic -  credit card gateways and technical solutions required.

WePay makes it easy to do this and is growing is continually growing it’s offering.

Currently, there are only a handful of phones that have NFC chips in them but with the with anticipated arrival of the (rumoured) NFC enabled iPhone 5 and constant stream of NFC-equiped Android devices, the adoption  and penetration of NFC amongst consumers is going to grow rapidly over the coming years.

There have already been a number of experiments and trials around payments going on around the world, such as ANZ in Australia, Google Wallet and start-ups like Brett King’s movenbank.

Whilst being able to pay via NFC will be massive, sometimes I feel like I overlook the other opportunities it has to replace most of the plastic that sits within my wallet.

I went through my wallet the other day and thought about what an NFC equipped phone (alongside willing businesses) could do:

Medicare and Health Insurance Cards

In Australia, we all have Medicare cards to carry and quite a few people have private health insurance cards. The only time these are needed is when you are dealing with health services, but are important to have within wallet at all times. If health services are willing to adopt, these cards could be migrated to NFC-equipped phones.

Public Transport

Be it a paper based or already chipped card, most people are still carrying some sort of public transport card. Another candidate to be held within your phone.

Loyalty Cards

There is a loyalty card for almost everywhere, and often wallets are overrun by these tattered cards. A simple tap of a phone could easily replace a loyalty card and at the same time give businesses much better analytics into their customers and loyalty.

Security Access

Each day, lots of us face security card readers throughout the day, swiping our security cards to enter and exit buildings and car parks. Doing this by tapping your phone means no more forgetting your security pass at home and lining up for a temporary pass.

One off access

Plane, sports and concert tickets, so easy to lose, and so painful when you do, so why not just tap your phone to enter a gig, catch a game of footy or jump on a flight?

So whats left?

After I took all of the above cards out of my wallet, I was left with my ID and some cash. No more loyalty cards, insurance, transport or security cards in sight.

Identification is something I left out above, and I’m not really sure why, maybe it doesn’t quite feel right, or safe, but as we evolve, I think this could quite easily change.

I wonder, one day, will my licence and passport be stored on my phone too?

Most of today’s Customer Relationship Management (CRM) systems provide business an overview of things like value and loyalty over time, often categorising them in customer segments that can enable an employee to treat them differently or trigger different offers.

Take frequent flyer programs. At a high level, airlines use status points as a measure of customer loyalty and value to the business. Over time, the more loyal the customer is, the more rewards they will receive (upgrades, lounge etc.). Whilst this system works well at providing an illustration of ongoing customer value, it fails to take into account the level of social influence its customers have.

Let’s say a flight is delayed and the airline decides to give all of its Platinum and Gold flyers a food voucher to compensate. A highly influential blogger, a Bronze flyer is also inconvenienced by this, but is not compensated due to their level of status. The first thing they do is jump on twitter and tell their followers about their poor experience, and in turn the message is amplified as it becomes retweeted by their follower’s followers. A simple tweet can quickly hit the stream of 10,000s of potential and existing customers.

This situation could have been quickly avoided if the airline had awareness of the level of social influence that this blogger had.

Enter Klout

Klout is a service that measures influence based on an individual’s ability to drive action.

Klout uses 3 measures to determine a “Klout Score“
- True Reach – the number of people someone influences
- Amplification - how much someone influences others
- Network – the level of influence of the people within someone’s True Reach.

The Klout Score uses data from networks such as Twitter, Facebook, LinkedIn, and Foursquare to determine this score.

Klout also is able to determine
- what an individual is influential about
- who they influence
- the type of influencer they are

Connecting Klout and CRM

So what if when a customer is brought up in a CRM system, their Klout score is displayed next to all of the existing metrics? It would give the business another layer to make decisions on. It might mean rewarding a certain customer or making sure a complaint is resolved with priority.

Take the airline example above, it could be possible to generate an average level of influence for all of the customers on the plane, meaning that when a decision needs to be made on whether to delay Plane A or Plane B, social influence might just be the deciding factor.

It would also enable businesses to better understand customer through the use of social influence score as a search criteria.

Using Klout to identify and engage your advocates

As well as using Klout to avoid situations such as the example above, it can also help to identify your true advocates that have a high level of influence and followers.

For example, Audi used Klout to identify influencers in design, luxury, technology and the automobile industry and engaged with them to coincide with the launch of the new A8 by giving them an early test drive. They targeted 217 influencers and we able to reach 3.1 million people.

Disney used Klout to identify influential parents to spread the word on an upcoming movie by allowing their kids to have an early screening of the movie. They targeted 412 influencers for 15k+ tweets and 39.8m impressions.

It’s not all about influence… but… 

Whilst I don’t think that social influence should be the only driver of decision making for business, I do think it is critical to understand it and have awareness of it when making decisions and interacting with customers.

It was the first time I didn’t use Tripadvisor or a Lonelyplanet-esque guide to decide where and what to do and yet I felt like I immersed myself in the “real” New York and San Francisco experience, not the Intrepid or Lonely Planet experience that most people have.

Foursquare – Drinking like a Local

Without a doubt many people reading this blog are users or have used location based services such as foursquare, Gowalla or Facebook places. Before this trip, I was a foursquare user but I wouldn’t of called myself a massive fan, more so an expirement to understand where this sort of technology was going. Whilst there was some benefit (a tip here or there) it wasn’t really changing my life.

Enter NYC, the home of Foursquare. It was littered with tips and swarms of people everywhere. It was easy to understand where people were, what to order or places that were plain dodgy. To add to this, the latest release of foursquare (3.0) had a new recommendation engine (called explore) that overlaid both my friends and foursquare data to enhance the experience.

And then we hit Austin, TX for SXSW 2011, it was like Foursquare was on steroids.

Finding where the happening parties were each night was as simple as logging into foursquare and looking for venues that were trending, with awesome results.

Yelp – Eating Like a Local

Yelp, an app that recommended places to eat (that isn’t yet in Australia) found all the places to eat around me, showed me all the reviews and gave me a really good way of seeing what I was going to eat. Apart from visual appeal, this service also provided timely, crowd sourced information. This meant that I was reading reviews from last week, not last year:

Yelp on the iPad

AirBnB – Living like a local
Using a service called airbnb, we were able to stay in an apartment in NYC amongst the locals. This meant our accommodation wasn’t the usual sterile hotel environment situated in the tourist area, it was an awesome NYC apartment on the 2nd floor of a Meatpacking District apartment block at a very reasonable price.

And even better, some airbnb accommodation allows you to stay with locals in their home (something I’m definitely keen to try next time). Here’s a quick video that tells you more about how airbnb works:

For those unfamiliar with Service Design, wikipedia defines it as:

• Location for 2nd factor authentication
• Location to help detect fraud
• Location to be more logical

Foursquare – Fraud Detector and Protector

Imagine a world where when signing up for a bank account you added the bank as a friend on foursquare. You might ask “Why would I want to add my bank to foursquare?“

Here’s a few reasons why:
Each time you make a transaction on a debit or credit card, authentication systems run checks to detect potential fraudulent transactions. These systems are pretty good at spotting dodgy transactions, but sometimes they get it wrong - either missing when fraud occurs, or detecting legitimate transactions as fraud. Location data would significantly enrich the accuracy and ability to do this.

Using location data for 2nd factor authentication 

Today, many banks harness 2nd factor authentication such as SMS messages or RSA tokens to validate transactions. Unfortunately, fraudsters are getting smarter in the way they can counteract these technologies.

Imagine a world tomorrow, when completing a transaction above a set limit, you would receive push notification requesting you to validate the purchase by checking into your current location.

For example:
- You make a purchase for an LCD television at JB HiFi Melbourne CBD
- The transaction is over your limit of $1000
- You receive a push notification asking you to validate that it is an authentic transaction
- You check into JB HiFi Melbourne CBD on Foursquare
- Your bank sees this (cross checks with the merchant location) and your transaction is approved

Taking this to the next level might involve a service like Google Latitude to constantly cross check a customer’s location against transactions being made, which allows for a more passive approach.

Using location data to help detect fraud

It’s Saturday night and you’ve just sat down (and checked in) for a meal at your favourite Melbourne restaurant. A few minutes later, a transaction on your account occurs 15km away at a suburban petrol station.

Today, it is unlikely that a fraud system would pick this up as suspicious, but with the addition of geolocation data about you, basic logic says that it is impossible (or very unlikely) you would be transacting 15 kilometres away within minutes, which could set off alarm bells for fraudulent transactions.

Whilst the above example is overly simplified , it does illustrate how leveraging the power of location data could begin to enhance the way fraud is detected.

Using location data to be more logical

You’ve just touched down in New York City for a holiday (and checked into JFK via foursquare). Oops.. you forgot to tell your bank that you’re going overseas…

Seeking caffeine after a long trip, you hit up Starbucks in SoHo

Today, your bank might call you validate the transaction, and don’t get me wrong, it’s great they are on the ball. What’s not so great, is the $7 a minute mobile charge you pay to speak to Australia or when your roaming is broken and they can’t get through (resulting in a temporary hold on your card)

Using location data, your bank could use logic to either use your JFK/Starbucks check-in as evidence and know the transaction was legitimate.

Just the beginning…

The above 3 examples are just some of the ways that location based service could be leveraged by banks, the opportunities are seemingly endless.

Note: Whilst I have used Foursquare in all of the examples above, I acknowledge there are heaps of location-based apps out there. Foursquare was used purely to bring this idea to life.

Interactions with @Telstra and @Optus via social media were fast, convenient and their retrospective social media teams always went above and beyond to assist my queries. They did so without sounding like a robot and actually understood how to interact on social media.

My view of Telco customer service was beginning to change. Or was it?

There soon came a need where I needed to use to a more traditional channel and after a few calls to the contact centre coupled with a few in store visits, my view of telco customer service was back where we started. Channel inconsistency was where the customer experience began to fall to pieces. In store and contact centre  experiences were slow, inconvenient and after battling various IVR’s sometimes I did feel like I was dealing with a robot.

So what did this tell me?

If I want to get something done (in a timely and easy manner), social media is the channel to use. But what does this say about the overall customer experience and channel consistency? What happens when a few more 1000 (yet alone 10s of thousands) customers begin to learn about this channel? Will the same level of awesome customer service remain when social media is a more mainstream channel or will it turn into another call centre and IVR experience?

Whilst I love that Telcos are adopting social media as a channel for customers to interact with, if the customer experience once a customer contacts the call centre or walks into a store is so distant to the experience on social media channels, the overall customer experience does not improve. In fact, it was almost more frustrating that I could get such good service on one channel and yet such poor customer service on the other. Is this doing more damage than good sometimes?

To be fair, it would be hard to match the customer experience that social media delivers in comparison to more “traditional” interaction channels. Why? The magnitude of customers, the complexity of old processes and the multitude legacy systems that staff in these channels battle with, just to name a few.

Cross-channel (in)consistency isn’t exactly a new thing, but with new channels emerging every day, the cross channel experience is becoming more and more important. It’s time to break down the experience gap so it doesn’t matter which channel a customer is using, the experience is (relatively) the same.

This is definitely not a stab at the telcos either, it would be great to see more Australian companies take the lead of the Australian Telcos and do such an ace job of serving via these channels.

Just because the social media presence (or any other emerging customer service channel) you are providing is awesome don’t assume that it’s OK to ignore improving your other channels.

A good Customer experience is about a holistic end to end view of the world, not a channel specific experience.