My new business bank

Last year I wrote about the lack of innovation in business banking and someone must have been listening! Last week my Tide Business MasterCard arrived.

Tide is technically a prepaid account but operates like a business bank account with a sort code, account number, direct debits, Business MasterCard and many other trappings of business banking (you won’t get an overdraft because it’s a prepaid account). The big difference is that the whole customer experience is app centric. From sign up to daily use, the app is how you manage the account.

Sign up was easy via the iOS app with identity verification based on taking a photo of driving licence or passport plus background electronic checks. Charges are reasonable; there are no monthly fees, MasterCard transactions are free and other transactions incur small charges.

MasterCard transactions appear instantly in the app with none of the delays associated with legacy bank apps. All transactions are categorised and card transactions can have comments and attachments added to them. I would like to see more transaction metadata, along the lines of Monzo.

The app has a tab called Toolbox which so far contains two interesting features you don’t see in a legacy bank app – invoicing and API access. Invoicing lets you create simple invoices for billing your customers and API access is for developers to add third party apps. The Toolbox tab will be one to watch to see what else appears here.

Another nice feature is no FX loading or surcharging on foreign currency transactions (similar to Monzo) which makes card transactions in other currencies much cheaper than those with the usual suspects.

Tide is still in beta so there are a few rough edges – I’ve had a couple of card validation problems and card transactions coded as continuous payment authority are not yet supported. However any problems are easily resolved via an instant messenger interface in the app. Overall it’s a great start and another reason for the legacy banks to be very afraid of the future.

I won’t be closing my legacy business bank account yet but the day of reckoning for legacy banks is getting ever closer.

Originally published on DisruptiveViews.

Who’s going to pay for bank branches?

The relentless decline in the number of bank branches in the UK and elsewhere features regularly in the press. In May 2016 BBC News stated that 600 branches had closed in the previous year. It’s no surprise that customers are using apps and online for managing their banking and using branches less and less; it’s more convenient, it’s immediate and the service is often better.

So who still uses bank branches? The declining number of people who don’t have smartphones or computers, retailers who still handle cash, customers when the bank insists on a personal appearance, e.g. to open an account. I only ever use a bank branch when it is impossible to complete the task in app or online, like when someone inconveniently send me a cheque.

So what does the future hold for bank branches? For some banks, especially the new digital banks, it’s no branches. Another model that works well for Handelsbanken is small branches without counters that deliver a personal service without the overheads of traditional full service branches. Where new banks want to offer a limited counter service, some of them are looking at using Post Office branches.

The challenge for the legacy banks is how to pay for the overheads of their branch networks when only certain groups of customers are using them. Subsidising the cost from non branch using customers risks making those customers’ products uncompetitive against new branchless challengers. Loading the costs onto branch using customers will in many cases hit the less well off, as the branch closure programme already does.

My view is that the banks are avoiding tough decisions and ‘banking’ on the decline of cash and the increase in smartphone and online usage to solve the problem over time. This will eventually allow them to close many more branches and run all branch based activity through a small number of branches. It will be interesting to see which legacy bank is the first to accelerate branch closures to get to a much smaller network and accept the loss of some customer segments.

Originally published on DisruptiveViews.

Where’s my new business bank?

One of the tasks on my to do list is to look for a new SME business bank for day-to-day transactions. Currently I use one of the legacy banks and its products and service are, well, legacy. It’s lacking in both service and innovation and offers a dreadful mobile app.

What I want is a bank I can rely on, with a decent app that lets me open an account and manage everything from my iPhone and iPad. I’m not interested in switching to another legacy bank; that just feels like rearranging the deck chairs on the Titanic.

In consumer banking there is some activity with a number of new digital banks launching current accounts soon. However business banking has been very quiet; although a recent conversation with an acquaintance eluded to something interesting and innovative in this space but unfortunately not imminently.

One ‘bank’ that caught my eye is Holvi. The team there is doing some interesting things in other European markets and plans to launch in the UK soon. Holvi is technically a prepay account but operates like a bank. In addition to payments, Holvi provides invoicing and business reporting – no more wading through a pile of receipts each month. The account comes with a business MasterCard for everyday spending.

A key area for banks to fix is customer sign up which needs to be close to friction and frustration free. My recent experience of having to fill in a long signature mandate form and then put in a branch appearance armed with passport and driving licence is not the future. The work that Veriff is doing with face comparison algorithms to create a simple identity verification process is a useful pointer to a customer centric process that simplifies and speeds up customer acquisition.

The ideas are out there – it just needs people to start pulling them together in the UK.

Originally published on Disruptive Views.

The opportunity for ‘new’ banks (and don’t try doing business on a bank holiday)

There’s lots of talk about how big the opportunity is for new banks to do banking differently but what really matters is the experience for customers day-to-day.

My colleagues at Disruptive Views have first hand experience of the pain and obstructionism in opening a new business account with a legacy bank. Recently I was reminded how bad customer service can be, from another legacy bank; and this is one that likes to think of itself as a challenger (the only thing that’s challenging about this bank is using them!).

An elderly relative had asked me for some help with a bank account because they wanted to transfer some funds to another bank. They had phoned the bank to discuss this and the result was two letters with instructions to set up online banking. Presumably this was the bank’s suggested way to transfer funds from the account. It wasn’t what my relative wanted but as it seemed a way to resolve the problem they duly set up online banking and made the payment to the other bank. All seemed well and the transaction was confirmed, however a couple of minutes later they were presented with a bland message stating the account was now locked and to call the online help team. Puzzled they duly called the number, experienced the ‘standard banking telephone wait time’ and eventually spoke to an advisor. The advisor took them through security which consisted of asking for their name and date of birth (bit worrying that one) and then stated the account was now locked for fraud checking. Frustrating but it’s good the banks try to keep an eye on these things.

So presumably the fraud team were actively on the case and the account would be unlocked shortly? But no, they don’t work on bank holidays (well why would they, it’s a bank holiday). Apparently they would look at it by the end of the next day and if they needed any further information they would be in touch. I shared my ‘disappointment’ at the slow response times and was asked if we’d like to register a complaint, except that the complaints people don’t work on bank holidays either. Anyway, the next morning the account was mysteriously unlocked with no communication from the bank and the transaction was completed.

One thing that struck me about the whole experience; the most secure part of the process, using online banking, was the bit that caused the problem. The least secure bit; the phone conversation, was what apparently resolved it. The whole experience left me with an uneasy feeling about doing business with that bank and their overall level of (in)competence.

So yes, there’s a huge opportunity for new banks that can get the customer experience right.

This post first appeared on Disruptive Views.

Is paying with contactless too easy?

Earlier this week BBC News wrote a piece on contactless payments under the title “Will paying with contactless cards make us less healthy?”. The contention here is that paying with contactless is so simple and without any visibility of ‘real’ cash it’s too easy to spend more, especially on unhealthy snacks. I can see the argument although disagree with it from my personal perspective. Yes, contactless payment is simple with less friction than cash or indeed chip and PIN but it doesn’t make me spend more.

However my contactless payments (almost) always have one key difference compared to standard contactless payment using cards – a mobile handset. When I make contactless payments I always get an immediate notification to my Apple Watch (via my iPhone) either because I’ve used Apple Pay or because I’ve used Mondo. Both payment methods give me instant visibility of what I’ve paid but without the friction of using cash.

Contactless payment by card is a transitory step on the way to paying by mobile handset. Whilst mobile payments like Apple Pay and Android Pay are still niche they will continue to grow (Apple Pay launched across Singapore’s major banks this week). The security and information that mobile payments provide to users will ensure their eventual success. As I outlined recently, it’s all about giving consumers control over their money.

This post first appeared on Disruptive Views.

Context and immediacy in payments

I’m always interested in trying out new stuff, especially when it’s related to payments. Earlier this year I jumped on the Mondo Alpha launch as I wanted to see just how different their payment experience would be. If the UK digital challenger banks want to make an impact they will have to do things very differently to the legacy banks. Being nice to customers is great but it isn’t going to change banking. I fully expected to use Mondo a bit, see how it worked and then go back to using my usual cards. However, much to my amazement, I’m still using Mondo (and using it more than ever) four months later. Why has Mondo caught my imagination? They’re not a full bank yet, they only have one product, they don’t (yet) support Apple Pay. There are many aspects of the Mondo experience I love. On my recent trip to Copenhagen I used Mondo for all my DKK expenditure because Mondo doesn’t add the usual 2.75% ‘fee’ on non GBP transactions.Transaction Detail Dark

However Mondo’s real stickiness for me is down to two factors – context and immediacy. When I make a card payment – contactless, chip and PIN or online – I get instant notification of what I’ve spent and where on my Apple Watch via iOS notifications. This doesn’t sound revolutionary but how many payment providers do that for every transaction and include merchant, geolocation and category data when you view the transaction in an app? Consumers have been conditioned by the legacy banks not to expect immediate visibility or additional data for transactions. Apparently it’s acceptable to wait a couple of days for a payment to appear on your account! Mondo has turned that model on its head and despite the constraints of card scheme payment rails, manages to deliver a rich transaction experience to customers. Payments isn’t just about convenience, it’s about information and control and even in beta Mondo is delivering that to customers.

This post first appeared on Disruptive Views.

Friction and frustration in payments – the state of UK contactless

There’s been a lot of comment recently about the success of contactless payments in the UK. I’m a big fan of contactless payments, especially when they’re secured and tracked using Apple Pay. Contactless takes some of the friction out of paying and delivers a simpler consumer experience. However despite the growth in contactless, the reality is a myriad of inconsistencies across retailers, especially where contactless involves mobile handset payments like Apple Pay. My recent research indicates that consumers are still presented with a confusing and inconsistent experience when using contactless payments.

Amex Apple PayFor the average consumer it’s impossible to know which contactless payment methods work where. For example, Waitrose supports American Express via card contactless, Apple Pay handset and Apple Pay Watch. However go to Boots and Amex card contactless works fine but neither Apple Pay handset or Watch works – presumably an acquirer or hardware issue. Pret a Manger Amex card contactless and Apple Pay handset are fine but Watch fails. Elsewhere, some stores accept Amex Chip and PIN but not contactless.

Apple Pay transactions do not need to be limited by the £30 transaction limit as the handset is covered by Consumer Device Cardholder Verification Method. However the only evidence in store I’ve seen where this limit does not apply is in Apple’s own stores. To prove this I paid for a MacBook Pro with my Apple Watch last year (an expensive experiment!). Other stores that have lifted the limit seem to keep it a closely guarded secret!

To further add to consumer confusion, Tesco has now launched its own handset based payment method PayQwiq which uses an app generated QR code to pay with a pre-loaded credit or debit card. I really don’t want retailer specific payment apps as well as generic ones – this just adds to payment friction.

Payment methods must be ubiquitous and consumers not be expected to think about what will and will not work. The payment industry must work to create consistency across retailers so consumers can pay with certainty.

Originally published on Disruptive Views.

Contactless payments (and more) with Kerv

Recently I caught up with the team behind Kerv, the contactless payment ring. Kerv has taken an innovative approach to contactless payments by creating a product that is both convenient and robust. Consumer interest in Kerv has been huge – the Kickstarter campaign was over-subscribed and preorders have been significant.

Initially I will admit I was a little sceptical; could a ring really deliver a better contactless payment experience than the alternatives? I’ve used the bPay wristband; it works from a payments perspective but it always felt bulky and uncomfortable. I’m a big fan of Apple Pay but the Kerv ring use case is different to Apple Pay. For example, I’ve never found using Apple Pay on the tube convenient. Trying to use an iPhone or Apple Watch to pay at peak times is awkward and I don’t want to risk bashing them in the rush to get through the barriers. Using an iPhone in wet or dirty conditions is not something I want to do with a £600 bit of kit.PayingWithKerv

The unique quality of the Kerv ring is that it’s always ready for payment – no fiddling around with phones or wallets – it’s on your hand. Plus it’s tough, waterproof and never needs charging. You can even go swimming in it! Manufacturing the ring out of zirconia technical ceramic not only gives it strength but delivers a product with a high quality feel to it and I can’t help but be impressed that the Kerv team has incorporated an NFC antenna into something the size of a ring. As part of delivering a smooth consumer experience, Kerv will use a companion app and website for managing the account and viewing transactions.

But Kerv isn’t just about payments. NFC contactless technology has applications beyond payments and the unique form factor of the ring lends itself to exploiting many of these, including door entry security and exchanging personal details. The Kerv website gives a sneak preview of where Kerv is going.

Originally published on Disruptive Views.

A week with Mondo

Last week the nice people at Mondo signed me up for the alpha of their new payments product. Mondo is one of the new generation of companies applying for UK banking licences who aim to fundamentally change the way we bank.

Mondo iconWhat makes Mondo different from other ‘digital challengers’ is that rather that wait for their banking licence application to be approved and then launch a product on an unsuspecting public, they have launched their ‘banking’ app in parallel with their licence application. Mondo wants to use customer feedback to help build and evolve their product before they formally launch as a bank. Mondo has done this by launching a prepaid account with a contactless MasterCard via the prepaid card issuer Wirecard Card Solutions under Wirecard’s emoney licence. When Mondo’s banking licence is approved and they become a ‘real’ bank they will provide their own bank accounts and issue their own cards.

Mondo notificationMondo’s aim is to put consumers in control of their spending using the power of their iPhone (Android et al is coming later). All transactions appear instantly in the app whether it’s a debit card top up to add funds to the Mondo account, an ATM cash withdrawal, a contactless transaction, a chip and PIN transaction or an online transaction. Transaction data includes merchant details, geolocation details, plus historical spend data for that merchant. There’s also the option to add extra data including a note and a copy of the receipt to each transaction.

Mondo cardAlthough the app is currently in alpha it works amazingly well. As soon as I make a purchase I receive a push notification on my iPhone or Apple Watch with confirmation of the transaction details. Over the past few days as I’ve used the app, additional features have been unlocked – a nice way to introduce the user to more functionality. Despite being an early release the app is considerably more engaging than legacy bank apps. A neat feature is the ability to ‘freeze’ my card temporarily so it can’t be used; great for people who mislay their cards and then find them again. When I freeze my card the app image of the card is covered in ice and the button underneath offers to defrost it!

Mondo defrostSomething else that appeals to me is the ability to add funds to my account using Apple Pay, making topping up friction free. If you haven’t yet paid in app using Apple Pay, you really haven’t seen the future!

Mondo is definitely one to watch and if they keep up their momentum the legacy players need to be looking over their collective shoulders; it’s not looking good for them!

Originally published on Disruptive Views.

Apple Watch six months on

Apple WatchRecently I realised I’d been wearing my Apple Watch for six months and it gave me cause to reflect on how it had fitted into my daily routine. When my Apple Watch arrived six months ago I hadn’t worn a watch for several years; I’d got into the habit of checking my iPhone for the time and using my Fitbit for fitness tracking.

However as phones get bigger it’s increasingly inconvenient to check the time on a phone so it’s back to a watch. The Apple Watch is a controversial gadget with both supporters and detractors. For me it’s the obvious extension to the iPhone and more useful than I expected.

So what makes the Apple Watch so useful?

As someone who (curiously) finds payments interesting Apple Pay is of course my favourite app! Whilst Apple Pay adoption is apparently low I still believe its time will come. Changing consumer behaviour is usually a slow burn and payments is no exception. Whilst using Apple Pay can be a bit hit and miss, especially with Amex cards or older POS terminals, it’s a big improvement on a contactless card, both from a security and a transaction information perspective.

Apart from Apple Pay, of the standard Apple Watch apps the most useful ones to me are Maps, Messages, Activity and Apple Pay. Maps is a top app; pull up directions on your iPhone and then follow them on your Watch. More secure, more convenient.

However there’s some great innovation tucked away in third party apps:

Using my Apple Watch to get cash from an ATM without a card is a neat trick thanks to NatWest Get Cash. The NatWest app generates a code that can be used to get cash from any NatWest ATM.

Tapping my Watch to unlock my Mac using MacID is a timesaver over typing in a long password.

Weather app Dark Sky makes use of a complication to warn you when rain is imminent.

Day One lets you note your location with a tap so you can add a geolocated note later.

It’s still early days for the Apple Watch but already it’s apparent how it will contribute to the impact of wearables on consumer behaviour.