I finished my last essay on telco wallets saying; …. the automatic role of a telco renting a secure place on the SIM for digital payment transactions will be disappearing. However only by investing user friendly and functional wallets, banks will be able to dominate this new area. Failing to deliver that, they may face the same technological disruption very soon!
I am sure you were not expecting those lines not to lead the next phase of what we do at BBVA right?
In December 3rd 2013, we launched a a digital wallet aptly called BBVA Wallet in Spain. True, it is directed to the current mobile banking users of BBVA Spain of close to a million customers, yet I believe it’s still a big success to reach 150 thousand users in 4 months swith no advertisements.
Better yet, almost all the customers actively use it every day several times. And the best part is that they do recommend it to their friends.
I believe this is only the beginning to reach much bigger numbers in Spain and of course in other geographies we operate. These numbers in an era of much talked wallets which don’t deliver value to the customers and therefore remain in pilot phases most of the time, provided us much needed momentum to invest more in digital banking.
Let me first repeat my two firm beliefs:
1. The cash will and need to disappear, and
2. mobile smart devices will be key to this replacement.
I don’t want to go into the evolution of smart and mobile phone numbers globally here. You can- always get some stats about it easily.
What I would like to have your attention is that while in developed nations smart phones provide additional value to being connected all the time, in most of the developing world, smart phones are the only devices of the masses to surf the internet and explore the world. Reason? Simple; per capita income and lack of other infrastructures. Most people can’t or don’t want to pay for a desk and laptop and in some cases (mostly in Africa) even if they wanted and could, they dont have access to DSL infrastructure.
So, are you planning to do something digital? Design it as an app for mobile devices! Forget desktop!
Same for banking. Let’s start with the more daily life of the banking; payment systems.
How can we provide more value to our cardholders and retailers in a more digital world? What are the functions or features we need to put on our wallet apps to replace physical wallets and cards?
Our answers are: Convenience, security, more functions and promotions.
1) Convenience: Well, easy to say and a bit more difficult to do in banking. Security is important in banking. Yet if we know our customers, we can do a good job. And we must, as no customer will change her spending behavior just because we offered a digital wallet.
If you are you, we recognize you: How did we achieve this at BBVA Wallet? By opening it easily to our current internet customers without additional hassle. If you are a BBVA internet banking user, download the wallet app, and verify yourself with the normal way of authentication you use while logging in to BBVA, and you are in. That’s it.
Wallet is populated automatically: The other thing we did was to upload all the existing cards of a user automatically. All the physical debit and credit cards that a BBVA cardholder has in her wallet appear at the digital wallet in an instant….Both front and back sides just like the plastic cards. The customer doesn’t need to do anything extra.
2) Security: We created a system called push messages. The moment we as the issuer authorize a transaction when the cardholder uses the plastic card, we send a push message with a virtual picture of the receipt. That message appearing on the large phone screen instantly delivers a very key security feeling: “if my card is used without my knowledge, I will learn it immediately.’”
A virtual card: We also enabled customers to create an instant card to be used in internet purchases. There is still a large segment of customers who are not happy to enter their regular card numbers into web sites to buy goods, so this function provides additional piece of mind. Users of BBVA wallet can do this in almost one click.
3) Additional functionality: If we want to replace cash, we also need to be better than cash. That means delivering more functionality to the user.
NFC: As a bank, we are a firm believer of acquiring retailer transactions. We believe in chip and PIN and we believe in contactless. Because all of these deliver cardholders a value that cash can not. Fast, secure and digital. So it is no surprise that we have offered the choice to cardholders to ask for a sticker that enables any phone to be able to pay. NFC or not. Needless to say we have already developed HCE protocol and waiting for payment schemes to implement it.
Geotagging: People with smart phones use the map function a lot. Therefore we have decided to offer geotagging with each transaction push message for cardholders to track transactions. Not every acquirer provides the commercial name of a retailer properly so sometimes cardholders find it hard to relate to a transaction they made just because they can not recognize a merchant’s name. Seeing it on the map takes this hesitation out.
Copy of the receipt: A lot of people use the mobile device as a camera. So we enabled users to take a picture of the physical receipt coming out of the POS terminal and link it to their transactions. So later on when they receive the monthly statement, that picture will appear next to the transaction again making it easy for the cardholder to remember the particular merchant and purchase.
Financing: Many Spaniards, like their counterparts living in Eurozone, dont use the cards to revolve unlike British and Americans. Yet these are hard times for the people living in Europe and Spain. Unemployment is painful. So we decided to offer financing option both with each transaction and with the statement. Wallet functionality makes it very easy for a cardholder to split a transaction with a reasonable interest rate if she chooses to do so.
4) Promotions: We believe both the retailers and cardholders are our customers and payment systems of a bank should be able to provide value to both sides. We can and must become a bridge between those two parts of a transaction. Therefore we have reorganized around this principal and working with retailers to offer promotions to our wallet customers. We want to help our merchants to generate more sales while delivering meaningful promotions to our cardholders. In March, only after 3 months of introducing BBVA wallet, we have started with up to 5% discount at gasoline sales at Repsol stations. This is a clear value proposition to anybody who drives. You will see us investing in CRM, data mining, and big data analysis to find the best matches between our cardholders and merchants. In an era of many banks moving out acquiring or seeing as a commodity business, we at BBVA are firm believers of this business. And this will position us better and better in the future.
Replacing cash is not an easy task. And of course we are not naive to believe that it can be achieved only through banks and banking. Governments and Central banks will have to play a key role.
Yet, our job is to lead this transformation as commercial banks. To lead means coming out with innovative solutions that deliver more value than traditional products and cash. Digitization is a big threat to many industries and banks. We at BBVA however see it as an opportunity to serve our customers better.
We embrace and lead digital banking. Download the BBVA wallet now and start your wallet’s digital revolution!