MOBILE PAYMENTS: Adapting the FedEx model to money movement

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MOBILE PAYMENTS: Adapting the FedEx model to money movement

By John Ginovsky

Fiserv recently reported that the number of accounts supported by its Mobiliti platform is growing an average of 10% each month, reflecting the increasing consumer demand for mobile banking and payments technology. It also says that more than 1,600 financial institutions use Popmoney, the company's person-to-person (P2P) system.

ABA Banking Journal Tech Topics talked with Steve Shaw, vice president of strategic marketing in Fiserv's Electronic Banking Division about the connection between banks and mobile payments. (Fiserv is endorsed by ABA's Corporation for American Banking.)

Tech Topics: When it comes to mobile, what trends are you seeing related to banking?

Steve Shaw: Consumers are flocking to mobile devices. One of the things that we're seeing is that more and more of them are mobbing toward transactional capabilities, namely mobile payments...There are certain things happening in phases. You're starting to see P2P. You're definitely seeing bill pay. As they become more comfortable with those kinds of basic transactions they then can move on to more complex transactions, eventually getting to merchant payments.

Tech Topics: It has been said that financial institutions have an advantage in delivering integrated mobile banking services. It's one thing to have an advantage, but how does a bank take advantage of that? Also, in payments, in the whole feeding chain, where does the bank stand? There are merchants, providers, telephone companies-where does the bank fit in with all that?

Shaw: Financial institutions have the relationship with the consumer right now. They have their credit card, their debit card, their DDA. That's where the money is. The money has to move from that account in some way. The reason the money is there is because consumers trust their bank or credit union more than a telephone company, more than a PayPal, or somebody else, to handle that money. They are in a unique opportunity to take advantage of that relationship and be at the hub of where that mobile payment is going...The challenge, and opportunity, for financial institutions is to deliver a service, a solution, with a great customer experience, to enable that user to want to initiate that transaction, and have that experience through their financial institution vs. a nonfinancial institution. If they don't deliver that experience, the consumers will go elsewhere.

Tech Topics: There are all sorts of wallets being developed. Every other week something comes out. Google, Amazon, Apple, who knows. What aspects of an electronic wallet, a mobile wallet, are going to make it stand out from the crowd? Again, what is the tie-in to the bank?

Shaw: You're right. Every single week there's something new coming out. I think there is a lot of buzz and a lot of momentum going on there. Where the rubber is going to meet the road is the technology. Can it deliver on its promise? Can it actually execute a reliable, secure, and compliant transaction that gets the money from destination A to destination B quickly, seamlessly, and with confirmation? What's going to be the successful one is the one that hits on that vision...The financial institutions are in a unique position. They've built networks and rails and wires and cables to move money over years and years and years. They have that equity, if you will, to make those transactions successful. If they do it the right way, consumers will leverage those technologies. It is an opportunity for the banks to create their own wallet and enable consumers to go in and have different options for moving money, but do that all within [the bank's] site or app where they have the financial institution's brand right on the smart phone or tablet.

Tech Topics: There's a big difference, though, from the bank's point of view, moving money from one business to another business over a wire or ACH or even armored car. But when you get down to Joe and Jane Smith out there with their cell phones, which are also wallets, it's a different mindset, I would imagine. What does a bank have to do to get a grip around that new market, of the consumer money transfer business?

Shaw: A consumer isn't going to care how it's done. He'll say, I just need to get money to Joe to pay for football tickets this weekend. Consumers don't want to be confused with the terminology and all of that stuff. I think right now financial institutions need to get their arms around the consumer mindset of money movement...We like to call it the FedEx model of money movement. You go into FedEx and you need to send a package, maybe next day, or five-day ground, or whatever. You don't know if it's going by boat or plane or car or bicycle. You don't care. That package gets there at the time you need it to get there and you trust FedEx to do that. So if financial institutions can get that mindset of creating a mechanism to send money, either immediately, real time, next day, same day, three to five days, whatever, the consumers don't care. They will be willing to pay for speed and convenience.

Tech Topics: There are different types of mobile payments in whole different categories, requiring different infrastructures and different systems. Yet they are related to each other, and are expected to be interoperable. Also, P2P once was huge a while ago but now you don't hear about it as much anymore. Yet, Fiserv has talked about accelerated P2P adoption coming soon. Can you comment on these points?

Shaw: There are different types of mobile payments and some of them have different systems and platforms and connection points, networks, and rails that they will have to run on to reach their destination. It can be a complex situation. That's why it has taken a while for our industry to deliver this integrated money movement experience. There is a lot of wiring and plumbing with that, making that work and providing a seamless menu of options for a consumer. Having the interoperability, being able to actually have the ability to make that work, is key...

On the P2P side, you're right, a while ago we had a wave of momentum and news and all kinds of things going. We think there will be a good growth in P2P. But there needs to be the groundwork laid, of a network that connects financial institutions and consumers together. We feel we've done a good job at Fiserv of building that up...I think there's some marketing that needs to get done, some awareness, and some use cases that need to be played out. We're in the early stages but feel very confident that this is something that will see some good growth over the next couple of years.

http://newsroom.fiserv.com/releasedetail.cfm?ReleaseID=707546

About the Author

John Ginovsky is contributing editor of ABA Banking Journal and editor of the publication's TechTopics e-newsletter. For more than two decades he has written about the commercial banking industry. In particular, he's specialized in the technological side of banking and how it relates to the actual business of banking. He previously was senior editor for Community Banker magazine (which merged with ABA Banking Journal) and was a staff writer for ABA's Bankers News. You can email him at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it