Trouble for banks as customers connect with contactless!
It’s hardly been a vintage year for the UK’s banking sector. Think back to the consumer survey that showed only 54% of us have any faith in our bank – and it looks like they might have taken their eye off the ball yet again. Banks are finally starting to wake up to the technological advances happening to the way we pay and are getting more than a little jittery about the competition. Yep, I’m talking all things Apple Pay.
Tech companies are invading the banks’ all too protected racket on our hard earned readies and the financial sector is going to have to respond in a big way. A survey by software firm Temenos found that 58% of senior bankers are anticipating increasing their IT budget next year – and when they start to increase budgets you know they’re worried. Quite right too.
Apple Pay was launched in the UK this summer and is already accepted at over 250,000 locations. Not only does the technology remove the need to rifle through bags and pockets for your credit or debit card, but the way card details are stored – using a system called tokenisation – is said to be the most secure payment out there.
Security is one thing that really gets today’s consumers going – a big shout out to Talk Talk who are probably still far too busy trying to restore some kind of reputation to be reading this – and so a payment system that doesn’t store account information in the cloud or on a server is big news. In fact, the security of Apple Pay is probably a bigger draw than its convenience.
Although banks have to sign up to allow their customers to use Apple Pay and they will obviously benefit from us all spending more money, they’re just starting to wise up that they are still missing a trick. Rumour has it that Apple take a 0.15% cut from each purchase and with £2.32billion of contactless payment in the UK for 2014, that’s a sizeable pot of cash-up-for-grabs.
It’s too early to tell how Apple Pay’s doing in the UK but if we take figures from the US, where it was launched a whole year ago we can see that the future might be looking very rosy indeed. According to a survey by Phoenix Marketing International, 79% of US users said that they’d completely replaced the use of contactless plastic credit and debit cards with Apple Pay. So what can banks do about it?
Their main worry is that tech companies are accessing lucrative aspects of the banking industry without having to offer the highly regulated services that come at a significant cost – and in that, banks might have a problem. But it’s not just tech companies that are creaming off their profits.
This year, new bank Atom got the go ahead from the Bank of England and are embracing these new market forces wholeheartedly. A mobile-only bank, Atom are planning to offer a full range of banking services that customers can access from their smart phone or iPad. Simple, uncomplicated and without the ridiculously high levels of bureaucracy that cripple the traditional banking sector.
Maybe Atom will pave the way for its older counterparts – you can certainly bet that all eyes will be on them to see which services are taken up by consumers. Arrange a mortgage while you wait for the bus in the morning? Why not?
It all goes to show how fast paced consumer life is. I have a friend who works for a local independent cinema that doesn’t offer contactless payment and she’s regularly faced with outraged customers who have to go through the process of entering their pin number – something that takes all of two seconds.
So what can your business do about it? Maybe like my friend’s place of work you’re putting off going contactless because of the cost of upgrading – but do you really know what your customers want? Maybe they’d prefer a small hike in price to be rewarded with convenience. How will you know if you never ask? You know where I’m going with this one don’t you???
If there’s one thing my years’ of experience as a consumer research consultant have shown me is that it never makes good business sense to second-guess your customers. You need to find out what your business looks like from their eyes – anything else is as useless as a chocolate teapot. Without the reassurance of knowing you at least have some kind of chocolate ready to munch if the need strikes.
The Monachie Project is all about your customers. Our emotive user experience research shows you what your business looks like from the eyes of your most important asset. We’re talking about seeing every touchpoint in your business from the perspective of your consumers.
Remember that whatever your line of work is, moving a business from good to great is always going to be more about contact than contactless – so make sure you’re getting it right by getting in touch with the experts. Just like Apple have figured out, it’s the type of connection you make that matters.