On a recent project we did looking at mobile and money we found a great quote from US economist Paul Volcker
The only useful thing the banks have invented in the last 20 years is the ATM
For all the advances in online banking and mobile banking, essentially it’s the old paper statement made available on a screen. And whilst it’s now possible to pay someone using their phone number, you don’t get the impression any of the banks really wants to innovate. Most banks look at tech as a way of reducing costs rather than driving new services or innovating with products.
But tech doesn’t always deliver in the way people want. The ATM led to people reducing bank visits and online/ mobile banking has eaten away at brand visits too. A few years ago people went to their bank branch twice a week. Now it’s likely to be twice a year or less. New research shows the era of the traditional bank branch is dead.
One of the best thinkers on banking is Brett King and his presentation at the Wired conference on money is well worth watching. His start up Moven is one of the most interesting start ups in banking – but the whole FinTech movment is massive – Accenture estimate there is almost £3bn invested in these start ups.
Talking with VCs about why there is the focus on FinTech reminds us of the Butch Cassidy quote; When asked why he robbed banks.
Because that’s where the money is.
The payment industry is a $500 billion industry (or larger, depending on how you measure it). That means banks and payment companies charge $500B per year in fees to provide a service that mostly involves moving bits around the Internet. There are other services they provide like credit, security, and dispute resolution, but in any reasonable analysis these services should cost dramatically less than they currently do. The payment industry should be at least an order of magnitude smaller than it is today
Just like every other sector digital is transforming the money industry and smart people are reimagining the business. If the incumbents don’t step up, they will be stepped over.
Google & the Future
One of the many things that came out of Google I/O the other week was Material Design which – just like Swift from the Apple WWDC – didn’t seem that big a deal at the time. But on reflection these are significant changes to how digital experiences are designed and built. This is a deep dive into the implications of Material Design.
Just as the web is evolving from a text medium to a visual one, so will apps move from flat pages to something more like motion graphics.
And if you want more on where Google is going watch this long interview with Larry & Sergey. Lots about the benefits of long term thinking versus the short horizon most companies have and some thoughts on how society will have to change as robots take over more and more jobs.
In one of our talks on GAFA & Vertical Stacks this week we had a great new example of the intense competition in GAFA – Google are taking on Amazon in the grocery home delivery market
Why would Google get into that space? Simple. Ads and Delivery.
On the ads they know many people go directly to Amazon when looking for a product, which impacts their search sales. So the more product they sell, the more search revenue they are likely to get.
But more importantly, grocery brands are amongst the biggest spenders on TV and if Google can link advertising with actual sales – measured by their grocery deliveries – they open up that market. Imagine how powerful the sales case for YouTube is when you can show the effect on sales through people seeing different frequency or sequence of ads.
And delivery is going to be key in ecommerce. Having vans driving around making grocery deliveries is a convenient tool for Google to deliver other goods – as is Uber. And we can expect driverless cars to be an ingredient too.
But Google isn’t neglecting the day job and Jason Spero talks here about their latest mobile ad innovations.
Samsung & China
Talking about GAFA we were asked if we think anyone can threaten their dominance? We have always felt the answer was probably no, as the other big players (Microsoft, eBay, Twitter etc) tend to have a narrower focus.
But we are rethinking this as we watch the Chinese BAT (Baidu, Alibaba & Tencent) grow. They are only really active in China right now, but as the latest Samsung financial results show China is a big enough market to impact global performance.
One of the biggest factors in Samsung troubles is Xiaomi – the Chinese device manufacturer. New data from Flurry shows that their user base is very mobile savvy – spending 8% more time using apps than iPhone users in China
Xiaomi are spreading out across Asia – with a launch in India imminent – and if they continue to attract the most mobile savvy users they represent a significant threat to Apple as well as Samsung.
As and when BAT follow and start to look outside China they could threaten the GAFA dominance – especially in emerging markets. The size of BAT is already impressive – but bear in mind that vast majority of their revenue is from China where only around an third of the population have internet access. When the whole country catches up with big cities and has levels similar to the West these 3 companies could be 2 or 3 times bigger.
newTV – the 7% switch
The Sunday Times chose a new TV show called Extant for its pick of the day for yesterday. And if you have been watching the World Cup you will have seen lots of ads for it. A SciFi thriller it looks like the latest attempt to capture viewers who liked Lost and XFiles etc.
The unusual thing is that it isn’t on ITV or the BBC. Or one of the SKY channels. It’s on Amazon Prime
Most people accept our premise that TV is changing and the newTV ecology is being watched by most. But with the traditional TV industry in good health, many feel there is little to worry about
If you don’t have the time to read the whole thing look at chart 65. This makes the point any media planner knows – the last few points of a TV spend are inefficient as they just deliver frequency rather than extra reach. Smart planners are always looking for the elusive light viewer and already that is driving much of the investment in online video.
But this deck makes the point that taking the ‘inefficient’ 7% and switching it to digital would double the digital market. And it wouldn’t be that good for traditional TV businesses margins.
Of course the digital experience needs to improve – right now there are two many ads and the balance needs to be improved – this research says there are 1 minute of ads for each 2 minutes of content.
There is a lot of money in flux – and those that make the moves quicker and smarter than the other brands in their sector can get real competitive advantage.
The whole world of Programmatic is moving very quickly and we suspect there is an element of emperors new clothes here; do brands and agencies really understand how this works and what the pros and cons are for them? This interview with GroupM top buyer shows the market is still evolving and his comments tend to make sense
One of the key issues around Digital Transformation is whether you need a Chief Digital Officer or not. Smart Fix friend Peter Kim (who has just gone to Cheil as Chief Digital Officer) has written a good report on how best to approach this
Last week we mentioned Google Wave as a product that Google tried and failed with – but probably learnt loads. This is a link to the Google wave homage to Pulp Fiction that actually works
Finally As more and more companies gather more and more data on consumers, the issue of ethics and responsibility is becoming more prominent. I just signed yet another 80+ page Ts&Cs for iTunes – I have no idea what I have agreed to and whilst I don’t worry that Apple is about to do evil, I do believe people are starting to get concerned. A story about the NSA may not get much traction with people yet we find consumers don’t like retargeting and when they realize that there data is being used to drive this they find it a little creepy. They don’t see being stalked by a brand as acceptable. This good article argues that GAFA etc need to act responsibly