Can you tell us a bit about your background and about Simon Kucher & Partners, the organisation you work for?
Simon-Kucher & Partners is a global strategy and marketing consultancy with 23 offices worldwide. The Economist has referred to us as, “The world’s leading pricing consultancy”, and we are experts at finding and optimising revenue sources. We work in all industries and I lead the UK Banking team. Our clients include many well known brands such as HSBC, Barclays and Deutsche Bank.
You’ve recently released a report on mobile payments. Can you outline some of the key findings?
Ben Snowman
Simon-Kucher conducted a customer Discovery Panel survey in July 2011 on mobile payments to see which types of mobile payment are attractive to customers and, importantly, whether they would be willing to pay a fee in order to make payments using their mobiles. Given that it was a Discovery Panel, it was designed to open the debate. As I always say, these panels are indicative, not authoritative. There were two headlines. Firstly, there is a much greater willingness to try mobile payments with customers who have smart phones. Secondly, customers would prefer to pay a fixed fee to load a wallet, then make unlimited payments until the funds had expired. This was the preferred pricing metric for 4 of the 5 mobile payments investigated.
We used an open question pricing methodology with our 316 respondents. The methodology was developed in 1976 and is a recognised and systematic way of identifying pricing corridors. It is not suitable for price setting in the market – rather, it gives a range (or corridor) within which you would start using more robust methods to pin-point price levels. This method serves the purpose of the Discovery Panels perfectly as it does not prejudice results with pre-conceived hypotheses of price levels.
An interesting point is that we, VocaLink and Alcatel Lucient all identify the fact that there is a willingness to pay for mobile payments. This is of no surprise given that companies like PayPal make a living this way (they estimate that they will transact $3bn in mPayments this year). Currently, banks give mobile services away for free and are not tapping into customers’ willingness to pay. Is this a missed revenue opportunity?
What are consumers most excited about in the field of mobile commerce and payments?
If you look at the results of our Discovery Panel, customers are most excited about NFC mobile payments. This is not surprising given the buzz surrounding the Olympics and all the rumours about the latest iPhone that (eventually did not) have NFC capabilities. However, 2012 will probably be the year when mobile NFC becomes a mass offering, giving customers exactly what excites them most.
What is your view on the future of mobile technology in financial services?
Mobile banking can be split into three areas: 1) informational services, 2) transactional services and 3) interactive services. In terms of app-based mobile banking, informational services are around and serving basic customer needs. We have research to demonstrate that these core services are the most important from a mobile banking offering. Transactional services are in the midst of developing – payments is the obvious choice of service here. Interactive services, however, are only just starting to emerge. These would include location based confirmations for transactions eg. when a payment goes out of an account, an alert flashes and the customer is requested to confirm that the transaction is legitimate. Some of the factors that would trigger the alert would be location of payee and payer, value of the transaction, history of similar transactions etc. Our research shows that fraud and security are the top concerns of customers and there is a clear opportunity to address this need using technology. Mobile brings location into the game and people expect multi-way, frequent interactions with brands. The technology is out there, it’s just not reached the customer yet…but that’s just a matter of time.
What is your view on who is finally going to impose themselves on the mobile wallet and payments space out of the major players?
You can’t mention mobile wallets without mentioning PayPal. You can’t talk about the UK mobile banking market without mentioning Monitise and RBS. But there is a big distinction between mobile banking and mobile payments and the industry is still finding its feet. The telecoms companies are actively moving into this space, post-Payment Services Directive and O2 has selected Mobinetic to build their wallet. The big banks are still suffering, reputationally, from the backlash of the credit crisis and there is an opportunity for a new brand to become the equivalent of PayPal for banking. This is where a brand like MoBank could make real headway into the UK market – and possibly overseas too.
To find out more go to www.simonkucher.com, click here for access to Simon Kucher’s global benchmark on pricing in consumer payments or here for access to Simon Kucher’s white papers. You can click here for Simon Kucher’s Mobile Payment Report.
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