Connected Consumer Report 2012

the Leading edge Forum
as part of CSCs office of innovation, the leading Edge forum (lEf) is a global community whose programs help participants realize business benefits from the use of advanced it more rapidly. the lEf works to spot key emerging business and technology trends before others, and identify specific practices for exploiting these trends for business advantage. the lEf draws from a global network of thought leaders and leading practitioners, proven field practices, and a powerful body of research. lEf technology Programs give Ctos and senior technologists the opportunity to explore the most pressing technology issues, examine state-of-the-art practices, and leverage CSCs technology experts, alliance programs and events. the reports and papers produced under the lEf are intended to provoke conversations in the marketplace about the potential for innovation when applying technology to advance organizational performance. Visit csc.com/lef. the lEf Executive Programme is a premium, fee-based program that helps Cios and senior business executives develop into next-generation leaders by using technology for competitive advantage in wholly new ways. members direct the research agenda, interact with a network of world-class experts, and access topical conferences, study tours, information exchanges and advisory services. Visit lef.csc.com. In this ongoing series of reports Paul GuStafSon Director, Leading Edge Forum, Technology Programs Paul Gustafson is an accomplished technologist and proven leader in emerging technologies, applied research and strategy. Paul brings vision and leadership to a portfolio of lEf programs and directs the technology research agenda. astute at recognizing how technology trends inter-relate and impact business, Paul applies his insights to client strategy, CSC research, leadership development and innovation strategy. pgustafs@csc.com
LEF TEchnoLogy Program LEadErshiP

William Koff Vice President and Chief Technology Officer, Office of Innovation a leader in CSCs technology community, Bill Koff provides vision and direction to CSC and its clients on critical information technology trends, technology innovation and strategic investments in leading edge technology. Bill plays a key role in guiding CSC research, innovation, technology leadership and alliance partner activities, and in certifying CSCs Centers of Excellence and innovation Centers. wkoff@csc.com
csc in FinanciaL sErvicEs

CSC is a global leader in providing technology-enabled business solutions and services. CSC offers it and business process outsourcing, emerging services such as cloud computing and cybersecurity protection, and a variety of other it and professional services to the commercial and government markets. the company is headquartered in falls Church, Virginia, and has approximately 98,000 employees with operations in north america, Europe, and the asia-Pacific region, including india and australia. more than 1,200 major banking, insurance, investment and wealth management, and securities firms rely on CSCs global financial services team to turn their ambitions into realities. With a track record of delivering software, consulting, and it and business process outsourcing and services at scale, CSC brings a deep understanding of the financial services business and a collaborative culture to one of the industrys most engaged client communities. our clients rely on the experience, ingenuity and leadership of more than 10,000 CSC employees focused on financial services. for more information, visit csc.com/financialservices.
about technology directions, the LEF looks at the role of innovation in the marketplace both now and in the years to come. By studying technologys current realities and anticipating its future shape, these reports provide organizations with the necessary balance between tactical decision-making and strategic planning. Connected Consumer and the future of financial Services has been produced in collaboration with CSCs Financial Services Group. Its mission is to provide critical business solutions, consulting and outsourcing services to leading financial services firms around the world, and to help them plan for business and technology change.
c s c LE a d i n g E d g E Fo rUm
Connected Consumer and the Future of Financial Services
ConneCted ConSumer and the Future oF FinanCiaL SerViCeS

ContEntS 2 4 17 26 36 46 51 57 Connected Consumer mobile micro media mining Digitally Powerful, Digitally Visible notes acknowledgments
You can access this report via the lEf RSS feed (csc.com/lefpodcast) or the lEf website (csc.com/connectedconsumer)
CSC LEA DIN G EDGE FORU M
ConneCted
Consumer
Financial services firms have always connected consumers, whether for pooling risk or converting one persons savings to anothers mortgage. Today, however, consumers are connecting directly to each other on a massive scale using new technologies. This is driving radical change in the financial services industry. Until shortly after the mid-20th century, consumer connection was based on locality: local bank branches, local insurance agents, local moneylenders. It was community network. Then financial firms built corporate network, and consumers connected nationally with contact centers through letters and calls to central processing offices. This was corporate power as centralized institutions expanded, globalized, drove global brands and reaped economies of scale. The consumer voice became a whisper as financial firms built customer management systems in an attempt to return to personal service in the form of an Integrated Voice Response system. The first phase, community network, lasted millennia; the second phase, corporate network, lasted decades as technology transformed a paper-based industry into a digital industry. Ironically, enabled the the technology corporate that
consumer network and the connected consumers who form it. That is what this report is about. A consequence of the World Wide Web is that a consumers hunger for hard-to-access financial knowledge has been replaced with a thirst for interpretation and opinion. Today, everything financial that any consumer could ever want to know about finance (within reason) is available to those with Internet access. Just as the immediate reaction upon news of a medical condition is to google it (the bane of primary care physicians), so a financial consumers first port of call for information about mutual funds, bank services and insurance claims is the Web. Knowledge is not necessarily power, but the ability to make informed choices and influence others is. There is a revolution in the power of the financial consumer because of consumers connection to others.
Money Matters
Setting the stage is a pyramid of consumer financial needs; the consumer network affects every level. (See Figure 1.) The base of the pyramid is something so basic that it would be surprising to many higher-income con-
network
Figure 1. PyraMid of financial needs
sowed the seeds of the greatest challenge to it. Well before the credit crunch indeed, shortly before the millennium the world entered a third phase: consumer network. The five-sevenths of the world with digital mobile devices and the two-sevenths with Internet access have used tools from telecommunications and technology firms to challenge traditional financial models. Consumers have not destroyed the corporate network, but they have challenged its supremacy. Every financial services firm should understand the implications of the
Source: CSC
C S C LE A D I N G E D G E FO RUM
sumers: a safe place to store cash. The pyramid of financial needs extends from basic subsistence to building wealth for the longer term through sophisticated investments such as pensions and mutual funds. To understand how the consumer network plays against the pyramid, this report explores four themes.
This is about much more than grumpy customers letting off steam. New media are in some cases breaking apart previously established financial models. Peer-to-peer payments are transforming the payments industry. If you are chinese, think Alipay; if American, think PayPal. Peer-to-peer lending has not yet transformed the consumer lending industry, but it has created an entirely new model that needs exploring. The Web is transforming everything that consumers know and think about financial services, from the role of the branch to bankers bonuses. The role of new MedIA (the Internet) is the third theme, focusing on how consumer connectedness is empowering consumers like never before. Have you ever mined unstructured data? If youve ever done an Internet search, you have. The brilliance of the Internet is not so much that it contains a large chunk of the worlds knowledge as that it is instantly accessible via the Web. Googles genius was to make the mining of unstructured data so simple, convenient and accessible that mining the worlds knowledge has become commonplace. However, as people live more of their lives digitally, they become digitally visible. This creates opportunities and risks for financial firms and sets up a tension between the financial firm seeking to structure, organize and control its relevant digital world, and the consumer finding, contributing and driving unstructured connections with other consumers, in part to shine a spotlight on the very firms that are seeking to understand them. MINING, the fourth theme, focuses on the technologies that are making sense of the worlds financial information for consumers, and some of the new data-driven insights. Mobile, micro, media and mining are driving a revolution in payments, the underpinning tool of economic activity; the people who consume financial services and how they consume them; the players in the financial services market who are becoming part financial firm, part technology firm; and the power of financial services consumers. The value of any publication since the Web matured is less about telling people what they could not find out (a problem Sir Tim berners-Lee, Google and others elegantly solved) and more about distilling, making accessible and finding patterns in what they may find it is useful to know. This report provokes financial firms and their suppliers to question how a revolution in consumer power will affect them, challenges consumers to expand their role in financial services, and provides a structure in which to explore the answers.
ThE JOURNEy
The start of the journey the technology that is most transformative for the most people, including hundreds of millions of the worlds poorest and billions of the worlds middle- and higher-income consumers is digital mobile devices. It is true that mobile financial services pre-date the Internet and mobile phones by, oh, about 2,700 years, with the Lydian Lion being, if not the first, then the earliest, extant coin. The first commercial cell phones were launched
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in the early 1980s; some 30 years later, there are over six billion cellular subscriptions. While the Lydians might argue that using mobile phones for payments is a retrograde step since at least their mobile money didnt break if dropped, digital mobile technology phones, cards and tablets is transforming both the payments that underpin all consumer economic activity and the financial processes, such as insurance claims, through which firms manage financial services. MobILe is the first theme, focusing on the revolution in payments and processes that mobility is driving. The financial services industry grew up to serve the wealthy that is, those who had capital that required a return, a venture that required capital, or assets that required insurance against potential loss. The poor were left behind. even today, hundreds of millions of individuals lack access to the basic financial services of savings, credit and insurance. enter microfinance, which has existed since friends, family and local moneylenders began providing services long before the Lydian Lion. but institutionalized microfinancial services, at scale, are a comparatively recent phenomenon. Microfinance, coupled with technology, is playing a critical role in transforming the lives of hundreds of millions, not just in low-income countries but in the wealthiest countries in the world. MIcro is the second theme, focusing on the revolution in financial inclusion as technology breaks down the barriers to financial access and transforms the economics of financial provision. Social media and the connectedness of consumers through the Internet amplify the voice of the individual consumer.
Mobile
Always on, always on us and secure
Todays mobile devices are profoundly altering financial services by providing anytime, anywhere, anyone access. Mobile technology is seductive, and as consumers have latched on, the demand for financial services using these devices has skyrocketed, with far-reaching effects. Mobility streamlines the distribution chain of financial services. It brings access to new, previously excluded customers. It improves current financial products and services and creates new ones. And it offers financial services firms new ways and a new imperative for engaging with customers. This chapter explores the impact of mobile financial services on both consumers and providers. For consumers, its about money and making frictionless payments. For providers, its about streamlined processes, reduced costs and a better customer experience. For everyone, its about continuing the evolution from institution-centric to individual-centric financial services. services can be with people all the time, accessed via a mobile device that may turn out to be the most secure platform yet for consumer financial services.
MONEy AND PAyMENtS MORPh
today a broad range of banking, insurance and other financial services can be with people all the time, accessed via a mobile device that may turn out to be the most secure platform yet for consumer financial services.
You need look no further than the bank, and its history, to witness this transformation. The ATM set the expectation that banks should provide services to consumers where they need them (you need cash at the supermarket, not the bank). With the Internet, expectations broadened to include banking in the home. Now with mobile phones, tablets and cards in everyones pockets, banks (and banking) are expected to follow people wherever they go. Today a broad range of banking, insurance and other financial
Since the invention of coins in the second millennium BC, money has been mobile. The journey of money continues to this day: from physical coins and cash to checks, electronic transmissions, and now digital mobile money. E-commerce put in motion many of the newer models people have today for electronic payment, like PayPal and e-wallets. With the mobile apps revolution in full swing, there are growing expectations that mobile cash will follow. In some countries, like Kenya and India, mobile money services are already common. Cash itself is even taking on new forms as digital currency that leverages the Internets design. (See the Media chapter.) This means that your wallet, and how and when you use it, is changing.
this means that your wallet, and how and when you use it, is changing.
WAllET MAKEovEr. on the face of it, the relevance of physical currency appears to be shrinking as cash is subsumed into
cards and e-wallets. This has been happening for some time, but the explosive force of mobile devices is accelerating the process. As smartphones have become ubiquitous in developed markets, they have triggered new payment and loyalty strategies. Early movers like Starbucks have melded their loyalty and value cards into a mobile app that includes a customized e-wallet, streamlining the customer experience while also putting a customer name to each card. (See Figure 2.) Expect every loyalty card to do the same.
Figure 3. Google Wallet works wherever Citi MasterCard is accepted, or uses the Google Prepaid Card, which can be funded with any credit card. Google Wallet uses near-field communication. Source: Google
(MasterCard) and V.me (Visa).2 A group of retailers including Walmart and Target is also pursuing an e-wallet initiative.3 The e-wallet is an app that essentially replaces whats in your wallet. It can store credit cards, loyalty cards, gift cards, insurance cards, promotions and even train tickets. An e-wallet speeds transactions and arguably makes them safer (a wallet you can lock, says Google4). E-wallet software can reside on a laptop or desktop computer, but it is conventionally thought of as a phone app, since the phone is always with you in your pocket or purse, like your wallet. Because many mobile e-wallets have been designed for near-field communication (NFC), a technology still emerging in most developed markets, e-wallets have yet to take off, though they are expected to.
Figure 2. Starbucks mobile app digitizes loyalty, value and credit cards so customers can use them to pay with their phones.
In developing markets, e-wallets based on SMS are simpler but thriving. The ubiquity of basic SMS-equipped feature phones in these markets requires a different form of mobile money service than a smartphone-based service. Thus offerings like M-PESA in Kenya emerged, in which
That e-wallet, though, only works at Starbucks. Credit card companies want an e-wallet that works just about anywhere. These companies are lining up to ensure they are as visible in the e-wallet as they are in the leather wallet. Major initiatives include Google Wallet, shown in Figure 3 (Google/ MasterCard currently, Visa/Discover/American Express announced); Isis (MasterCard/Visa/Discover/American Express); Serve (American Express); PayPass Wallet Services
consumers deposit cash with a certified mobile money agent who converts the cash to electronic money stored on the phone. The consumer can then pay bills, make purchases, transfer money to a family member or friend, receive money, and perform a variety of other activities. If the consumer wants cash again, he simply visits the nearest mobile money agent to cash out. Major players in both the e-wallet and mobile money markets, like Obopay, expect all financial services will move to mobile over time.
Cards of
the future
Just as your mobile phone has become smarter, your credit card is becoming smarter too. Todays cards boast chips and even tiny screen displays and mini keyboards. Currently these displays are used for dynamic passwords, but one day they may show bank balances and more.5 MasterCard has demonstrated a card that shows a one-time password to be used for online purchases, adding a new level of security to protect against stolen credit card numbers. Eventually you may have one super card that replaces all your cards because the magnetic stripe dated but dominant could essentially become programmable.6 Carry one card and program it at checkout to be your desired card. Or, press a button to use regular credit or spend reward points (Citis 2G card does this).7 As your card becomes a computer, it claims its rightful place among mobile devices like smartphones and tablets. Its hallmark advantage is its size tiny and light. There will be a spectrum of mobile devices with overlapping functionality, but certain devices will be uniquely suited to certain jobs.
This credit card includes a display for one-time passwords. Source: MasterCard
Ironically, the smaller cards will continue to be popular for larger sums at checkout. Smartphones will be for paying smaller sums with an e-wallet or taking a picture in a hard-to-reach place, like a chimney for a homeowners insurance claim. Tablets will do the heavy lifting for complex business processes like claims processing, sales, portfolio management and advisory services.
In the future, as financial services applications are designed for the mobile platform first rather than last, the small screen will play a big role. This has been the case since the advent of mobile phones, but the sheer power of small devices including cards, the ubiquity of the Internet, and the breadth of mobile processes now make those screens even more important.
Under the hood. one of the keys to mobile money adoption is the technology behind the transaction primarily SMS, cameras, phone add-ons, nFC and Qr. the mobile phone has evolved from transmitting voice to transmitting data. early in this evolution, text messaging (SMS) was deemed a viable transport for money. Safaricoms M-PeSA, launched in Kenya in 2007, has leveraged SMS with remarkable success. Since its launch, M-PeSA has reached over 14 million customers8 in four countries, including 9 million in Kenya, or approximately 40 percent of the adult Kenyan population.9 to understand this rapid uptake, it is important to understand that Kenya is a cash-based society, where more adults have mobile phones than bank accounts. M-PeSA was originally developed for borrowers to receive and repay microloans, but during market testing people quickly found other uses, and M-PeSA was repositioned more broadly as a money transfer service with the simple slogan send money home. (See Figure 4.) this is a prime example of consumers realizing the power of their connection and shaping the financial service to suit their needs. Safaricom listened. technologically connected consumers mean that corporate listening starts to become a higher imperative than corporate talking. one U.S. government agency wanted to make payment of visa fees convenient for all applicants regardless of location. the agency, working with CSC, began offering mobile money solutions for visa support services in east Africa. In Kenya people can pay their application fees using M-PeSA or they can pay in person at Kenya Postbank locations. In tanzania, visa applicants can pay using Airtel Money, eliminating a lengthy and expensive trip to the capital, dar es Salaam. In general, mobile payments have become increasingly popular in Africa, spurred on by M-PeSA. M-PeSA has even extended its services to pre-paid credit cards that allow consumers to transfer their credit to a card they can use for traditional card transactions (especially helpful if traveling outside the Safaricom environment, such as overseas). Currently there are 130 SMS-based mobile money services operating worldwide, with 93 more planned. In addition
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Figure 4. M-PeSA is an SMS-based service but is pictured here on a smartphone. how will smartphones transform such services in Africa, and how fast? Source: Oduor Jagero
in Latin America. In particular, Brazils long history of branchless banking, which uses retail agents instead of bank branches, has primed the country for mobile financial services. Indeed, the U.S. government agency is launching expanded visa services in Brazil using Boleto Bancrio, a popular payment service whereby consumers can pay at numerous retail outlets (e.g., supermarkets, post offices) and via online banking. With smartphones, cameras are becoming an important integrated technology for finance. Camera technology provides rich capabilities like sense and scan that are making their way into mobile commerce and mobile payments. Consider the redLaser bar code scanner app by eBay (owner of PayPal), initially designed for price comparisons. redLaser has taken the next logical step in the shopping process, integrating Milo for inventory search and PayPal for payments.11 one of the first merchants to incorporate this multi-channel experience buy online
to Africa and India, significant growth potential exists
and pick up at the store is Toys R Us. The focus on multi-channel retailing is a key part of PayPals Future of Shopping vision.12 If shopping can be seamless, so can depositing a check. There was a collective aha moment when people learned they could use their camera phones to deposit checks.13 Sign the check, take a picture of it, and send it to the bank. No more trips to the ATM, branch or post office. Simple, practical, mobile while extending the lifespan of the check, a payment method many thought was dying. (See Figure 5.)
Figure 6. Squares mobile payments technology turns a smartphone into a credit card processor. Source: Square
NFC phone can both receive and send data (e.g., read a product description and make a payment).
NFC opens the door to many process improvements, not just simple point-of-sale payments.
Figure 5. Depositing checks via camera phone is like having an ATM in your pocket.
Some say 2012 is the year NFC will take off, reaching critical mass in 2015.14 (See Figure 7.) The 2012 Olympics in London is showcasing contactless payments by both smartphone and smart card through Visa, the Olympics
Another straightforward yet innovative move was to turn the smartphone into a credit card reader, enabling small businesses to accept credit cards easily. (See Figure 6.) Yet the real breakthrough in developed markets may come from contactless payments enabled by NFC and QR. NFC is a purpose-built version of RFID that is designed for fast, secure, wireless transactions. It operates over a very short range (a few centimeters) and has bi-directional rather than uni-directional communications, so the
official payments sponsor. Visa is part of the Isis initiative and more recently signed on with Google Wallet. Google Wallet, which launched in the U.S. in September 2011, is also expected to be available at the London Olympics.15 While Japan has been using NFC for years, the technology is just emerging in Europe and the United States. Although global attention at the Olympics will raise NFC awareness, uptake still depends on consumers having and using NFCenabled devices. Currently under five percent of mobile phones worldwide are NFC-enabled. However, that should
The companys latest readers support

Figure 7. NFC TAKES OFF Phones shipped with integrated NFC chipsets (forecasted to 2015)
NFC, magnetic stripe payments, Chip and PIN cards and contactless cards. Ultimately, though, NFC could
replace the mag-stripe card swipe and its static authentication via signature (used in the United States), as well as the more advanced smart card Chip and PIN technology (used in Europe). NFC provides a more secure method of transmitting information directly from the phone to the point-of-sale terminal. The
Source: IHS iSuppli
latest
evolution by
of
NFC
increases
security
combining
the embedded NFC chip with smart card PIN technology and dynamic increase quickly in 2012 as more mobile devices are shipped new with NFC chips. And with the announcement of NFC on a SIM card, NFC functionality could be brought to any mobile phone, notably legacy phones and phones in developing markets such as India, Brazil and across Africa. This would boost NFC adoption worldwide.
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authentication. For example, you could set a minimum dollar amount for when a PIN is required. If your phone is stolen, someone could buy a latte but not a TV.17 Because payment credentials are completely hidden from merchants and onlookers and thus are not easily copied or stolen, NFC is expected to reduce fraud.18 In fact, merchants may pick up the tab for fraud if they dont adapt; liability for card fraud for chip transactions attempted at non-chip-compliant terminals may shift from card issuers to merchants in 2015.19 (This shift of where financial risk lies is a recurring theme in this report.) Chip compliance includes support for NFC devices and Chip and PIN cards. This liability shift encourages merchants to implement the new technology. NFC opens the door to many process improvements, not just simple point-of-sale payments. If NFC takes off, consumers will have an all-in-one smartphone for shopping: It locates stores and products, scans barcodes, shows comparative prices, finds discounts, redeems coupons, applies loyalty card points and best of all pays. While NFC holds many exciting possibilities, it is not the only mobile technology in town. QR (Quick Response)
In addition to consumers having NFC devices, merchants need NFC readers and software. A pioneer in this arena is ViVOtech, which provides NFC software and systems to merchants for payment, loyalty programs, marketing and merchandising. (See Figure 8.) ViVOtech readers are in stores, restaurants, vending machines and taxis worldwide.
Figure 8. NFC powers single-tap coupon redemption, loyalty rewards and secure payment all at once. Source: ViVOtech
codes are becoming ubiquitous. (See Figure 9.) PayPal sees QR codes as one entry point to mobile commerce. Using their phones, consumers can scan a code for a product and be prompted to pay using PayPal. Lev-
elUp is seeking to use QR codes, in collaboration with T-Mobile, to overcome a fundamental challenge of NFC, which is that retailers lack NFC-enabled equipment.
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will play together, but widespread contactless payments seem inevitable.
Another approach is to offer both. MasterCards new mobile wallet app, QkR (quicker), works with both NFC and QR. In a restaurant, for example, consumers could use either technology to read coupons, order and
Faster, Leaner Processes

NFC and QR remind us that consumers have an expectation that processes be mobile (theres an app for that!). The result in financial services, as in other industries, is streamlined processes for the provider and new levels of convenience and capability for the consumer. Customer self-service is a natural. Mobile banking apps for checking balances, viewing transactions, making payments and transfers, and finding ATMs and branches are prevalent. Quicken is the first lender to offer a mobile app for getting a mortgage.22 Insurance apps for reviewing policies, filing claims and obtaining quotes are becoming common. And in an interesting demonstration of reverse innovation, some developing markets provide crop insurance and life insurance via SMS mobile phones.23 Developed markets can learn from developing markets mobile innovations. (See the Micro chapter.) Geicos mobile insurance app GEICO originated for the iPhone in 2009, when it was called GloveBox. The app provides information you need while in the car, including what to do if you are in an accident, and how to find the closest gas stations and towing services. Policy holders
Figure 9. From this QR code, consumers can purchase tickets to Cirque du Soleil using their mobile phone. The QR code bridges the physical and digital worlds, bringing consumers closer to the point of sale. Source: CSC
can pay their bill, view claims, update contact information and view their insurance card. Apps available today enable consumers to initiate the first notification of a loss (the starting point of a claim). USAA pioneered the concept of taking a picture and submitting it for a claim via a mobile device.
pay the bill.21 MasterCard, partnering with Commonwealth Bank of Australia, debuted the app with consumers in Australia in January 2012. NFC/QR is not an either-or debate; there is room for both. Regardless of the growth of NFC, the wider use of QR codes for accessing extensive online information surely means that QR will have a role in the payment value chain (for example, scanning a detailed review of a bottle of wine prior to purchasing it). That said, the world is a long way from knowing exactly how these two relatively new kids on the global payment block
The largest personal lines insurer in the United States, State Farm, is also a bank. Its advanced use of mobile in both insurance and banking is a fascinating example of the different impact mobility has on both industries. For the consumer, mobile has a stronger play in banking than insurance because of the highly transactional nature of banking. As Andrea OConnor, customer experience executive and vice president of State Farm Bank, says, Some people look at their checking account every day but they look at their insurance policy much less frequently. So, the impact of mobile apps on banking is that much greater.
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That said, in insurance State Farm has a portfolio of apps that goes beyond traditional insurance processes.24 For example, the companys Driver Feedback app addresses three of the highest-risk areas for accidents (hard acceleration, hard deceleration and hard swerves) by scoring a drivers driving. Every auto insurer seeks to reduce the cost of claims, and by using always-on-you mobile phones to help improve driving behavior, State Farm recognizes that mobile is not simply about putting insurance processes on mobile devices, but about using technology to affect consumer behaviors that impact insurance. As OConnor says, State Farm currently uses a mobile-first mentality. That doesnt mean that every process must be on mobile, but it means every process must think about the mobile implications first. Its not about transferring processes for the Internet onto mobile. We need to design for the small screen and take advantage of the capabilities of smartphones such as cameras and GPS. State Farm sees a shift: Just a few years ago mobile had to fit within existing processes, but now mobility is an important driver of process reengineering, and existing processes must fit with mobile. Although State Farms apps give them a leg up with young adults, the company is not positioning mobile for a specific demographic. Mobile transcends demographics, says OConnor. Mobile is about behavior. Its about accessing information and transacting business yourself at any time, wherever you are, whatever your age. Employing an agent-plus philosophy, State Farm complements its agents with mobile solutions, enabling agents to take on more complex work as customers do self-service through mobile. An example of this is State Farms MyTime Deposit, part of its Pocket Agent app, that lets customers deposit a check by taking a picture of it. This singularly useful function created a surge of mobile customers. Finding such a function or app is key for any firm to attract new groups of mobile consumers. Driving deep into business processes, CSC provides a Mobile Insurance app for insurers that gives their customers multiple capabilities: review policies and claims, file a claim, and make payments from their smartphone or tablet. (See Figure 10.) CSC also provides FloodConnect Mobile, an app that allows agents to start the process of a flood claim on the spot, critical in a crisis. FloodConnect is
Figure 11. Progressives app shows consumers how to take a picture of their drivers license with their smartphone instead of manually filling out a form on the phone. Using the phones camera streamlines the process. Figure 10. CSCs mobile insurance app, targeted at insurers, lets consumers initiate a claim on the spot. Source: CSC
provided in partnership with the National Flood Insurance Program. (More on mobile claims shortly.) Progressive provides a range of mobile insurance services including Mobile Photo Quoting. Get an insurance quote for your car by taking a picture of your drivers license and cars vehicle identification number (VIN) via your phone and submitting them via the app.25 (See Figure 11.) You can get a quote in minutes rather than painstakingly entering all the data manually. Also, if you are shopping for a new or used car, scan the VIN of up to three
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Mobile ConsuMers
Mobile AsseTs
In the world of mobile, most of the attention has been on consumers, but many consumers most valuable assets are also mobile (cows, cars). The mobility of these assets is where much of their risk lies, so tracking their mobility makes sense to calculate risk at an individual asset level. For cows, RFID tags are being used to track their movement (more about this in the Micro chapter). For cars, Progressives Snapshot program uses a small telematics device plugged into the car that collects data on driver behavior such as how, how much and when a vehicle is driven. By monitoring driving behavior for up to six months, Progressive builds a snapshot of a drivers risk profile, used to calculate insurance premiums. Progressive states that Snapshot will not increase premiums but could deliver savings of up to 30 percent.26
For the insurance of any asset whose risk profile is affected by movement, the use of small devices to calculate risk at an individual asset level will become less a matter of cost, even in lower-income countries where RFID tags remain comparatively expensive, and more a matter of consumer acceptance. With the Internet of things, when a consumer wants to insure those things, the consumer must make a tradeoff between financial security and privacy.
cars to determine which have the lowest and highest car insurance rates. These capabilities reinforce that mobile doesnt necessarily solve new problems as much as solve existing problems in a better way. What may be minor in terms of function is major in terms of convenience and efficiency for the consumer and enterprise alike. Consider mobile claims. Not only can consumers report claims from the scene of an accident (auto or home), but adjusters can expedite the claims process from the scene. For example, CSCs 2Work for Adjusters tablet app lets an insurance loss adjuster take pictures and attach them to a claim with a time stamp. The adjuster can collect additional information from the claimant and automatically gather information such as weather conditions and accident reports. The information is transmitted immediately to the back office to initiate the claims process. In the future, pictures could be geo-coded, and eventually live camera views could be overlaid on archive pictures and engineering designs an augmented reality technique to assess a claim for damage by looking at before and
after images and design details. In the case of a disaster such as an earthquake, archive pictures could be overlaid on live camera views. For the adjuster, the tablet means no briefcase full of paperwork, no camera, no voice recorder, no GPS. On the back end, there is no waiting for third-party information. The adjuster can complete and submit the claims forms while at the site. This lowers the claims processing expense significantly by providing timely data and avoiding inaccuracies and missing data. Further, appointments can be added to the adjusters schedule based on his or her current location, vastly improving efficiency. For life insurance companies, tablets have the potential to serve as both a workstation and an easy-to-read display like handing an electronic clipboard to the customer. An insurer could use a tablet to create illustrations and enter customer data, and hand it to the customer to view the results. Through CSCs 2Work for Brokers tablet app, the customer can ask what-if questions that the agent can answer through
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graphical illustrations immediately. (See Figure 12.) Want to know how an increase in coverage will play out? The agent can simply move a slider on the touch screen to change the dollar amount. Of course, laptops have provided similar services for years, but not as conveniently or compellingly.
go down if it is torn. in addition to the physical drawbacks of cash, the increased use of credit and debit cards has hastened the demise of cash. digital payments are becoming so prevalent that in some countries, such as Sweden, a significant number of businesses can afford to refuse to accept cash.27 Even the Salvation army accepts credit card payments (using android phones and Square to accept them).28 and of course, the Web itself is a non-cash proposition. That said, cash wont disappear. There will always be a need to cash out digital money. Cash economies are still prevalent in emerging markets, and the anonymity of cash has its appeal. Still, as the need for cash dwindles, aTMs might go the way of the airport payphone, at least in developed markets, says Paul gustafson, director of CSCs Leading Edge Forum, Technology Programs. as mobile money spreads, it may even become programmable so you can earmark it for specific people to pay for specific goods or services, such as programming money for your son to spend on college textbooks.
Figure 12. CSCs 2Work for Brokers tablet app lets life insurance brokers present portfolio information visually to customers. Source: CSC
BraNChLESS BaNkiNg. Like cash, banks will not go away completely, but banks (and all financial services firms) will reprioritize their distribution strategy. Mobile will become a primary means of reaching consumers. Branches will be fewer and more specialized, handling more complex
Not only can these devices capture a signature, recorded voice confirmation and other biometric information, they can record the entire interaction with the customer to reduce fraud and ensure that all company policies are followed, says Bob Evans, director of mobile insurance solutions at CSC. Tablet devices have the potential to enrich the customer experience and streamline mobile insurance processes with audio, video, biometrics, location awareness, assisted reality and once-and-done processing.
needs like those of small businesses, for example.29 as banks focus on branchless distribution methods and move to mobile, this opens up new markets. in emerging markets, mobile network operators (MNOs) like Safaricom have stepped into banking territory because of their vast distribution networks. however, since MNOs are not financial institutions, they are frequently prohibited from offering services that reward interest or go beyond simple money transfers. Banks, keenly aware of the MNO encroachment into financial services, are now partnering with MNOs to provide the value-added services that only regulated financial institutions can offer. This includes not only credit and interest-bearing savings products, but investment and insurance products as well. Offering the whole range of financial services on a mobile platform will enable banks to reach new markets. One bank forging ahead is MCB Bank in Pakistan, whose MCB Mobile service received first place in the Mobile Money Transfer global awards in 2010.30
A World in TrAnsiTion
The transformational changes inherent in digital mobile services are impacting the financial services industry and society at large on several fronts. ThE ENd OF CaSh agaiN? does mobile digital money finally signal the beginning of the end of cash? Cash can get dirty, worn and torn; in Peru, the value of a bill can actually
13
SECURE IDENTIFICATION
WHEREVER YOU GO
Your mobile phone or tablet may eventually be the most secure platform for financial services. It may seem counterintuitive, since a handheld device can be more easily lost or stolen than a laptop and does not enjoy the security of the corporate network, but security technology tailored for mobile devices makes it possible. By uniquely authenticating a person to a particular mobile device using biometric data delivered securely from the persons smartphone to a central server, the person and his or her session can be definitively authenticated to perform CSCs ConfidentIDTM Mobile software turns a mobile phone or tablet secure financial service activities. In fact, in the near future biometric authentication will occur right on the phone itself, with only one-time passwords crossing the network.
CSC ConfidentID Mobile Solution Layers
Multi-Factor Out of Band Access and Transactional Authentication
Authenticates all people accessing mobile applications and provides transactional authentication. Uses multiple levels of identification data (PIn/password, biometrics, GPS/location).
Mobile Device Management
Remotely secures mobile devices with wipe and tracking capability. Provides the ability to: Manage and track the mobile device remotely Manage the data that is considered sensitive or part of the extended enterprise Remove sensitive data and applications if the device is lost or stolen Quickly deploy critical data and applications to new or replacement mobile devices
Mobile Application Protection on Device
Encapsulates mobile applications with encryption prior to downloading to prevent application tampering or the injection of malware. Includes processes to certify, manage and deploy mobile applications and data.
Private, Secure Location Mapping
Maps and displays the location of the device (person), creating actionable intelligence for authentication or forensics in the event of fraudulent activity.
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SECURE IDENTIFICATION WHEREVER YOU GO (continued)

into a highly secure device that can use voice, face and palm prints to verify that you are who you say you are. This puts biometrics directly in the hands of consumers for the first time. However, biometric data is not enough to prevent fraudulent access, improper usage or falsification of identity. Nor is biometric data all that is needed to provide a secure mobile computing environment. The ConfidentID Mobile security solution includes additional layers and tools to provide the fully secure mobile environment. These layers are shown in the preceding table. User authentication is the unique feature of the ConfidentID Mobile solution, turning smartphones into efficient, cost-effective biometric devices. Built on Daons IdentityX platform, ConfidentID Mobile takes advantage of the built-in capabilities of smart devices to achieve multifactor authentication without requiring costly biometric equipment or system integration. People establish their identity through a combination of encryption, PIN entry, location-based technology The mobile phone or tablet could become the most secure and effective way for banks to reach out to customers more secure than a teller, a call center rep or a website, says Randy Barker, CSC director of channel solutions for banking and In a world of stolen identities and 24-hour connectedness, mobiles potential to be supremely secure upends the conventional wisdom that an in-person transaction is the safest transaction. With ConfidentID Mobile user authentication, financial services firms can specify different levels of security for different access and transaction scenarios, such as requiring a palm print and GPS entry for transactions over $1,000, or facial recognition when sending money to an offshore account, or a one-time password for accessing a certain application. The authentication data is linked to the devices unique identification number (ESN, SIM card number or other similar smartphone facility), which enables ConfidentID to know that it is Bob using Bobs device. This provides greater identity accuracy than the use of passwords, PINs or public key infrastructure alone. In the past, there has always been an intermediary between the customer and the bank, whether it was a teller, a call center representative, an ATM or the ISP between the customers browser and the banks website. Other than using a username and password, having the customer provide detailed answers to questions regarding his or her financial history, or having the customer show the teller his or her ID, there was no way to authenticate the customer. ConfidentID Mobile changes that by linking multiple forms of personal identification to the mobile device itself by leveraging the ubiquitous features of smartphones. Camera, GPS, voice, data application support and text support turn a smartphone into the most cost-efficient biometric device available. and biometrics such as voice, face and palm image matching. credit services. This changes the nature and future of banking.
FINANCIAl INClUSION. Mobile infrastructure is a platform for innovation and achievement of national development goals. It is being leveraged for a variety of financial services, especially in emerging markets. These markets do not have the fixed infrastructure or the high
premiums needed to support the more labor-intensive distribution model of developed markets. A few years ago, most rural Kenyans had no financial services. Then M-PESA began offering M-KESHO bank accounts. Now Kenyans can transfer money from their M-PESA account
15
Figure 13. Deepening Financial access in Kenya
Note: Banks also include other financial institutions. Source: World Bank staff estimates. The World Bank authorizes the use of this material subject to the terms and conditions on its website, http://www.worldbank.org/terms.
into a formal savings account. The demand was there, lying dormant until mobile money provided the means to satisfy it. (See Figure 13.)
mobile phones a direct conduit to a significant portion of the worlds unbanked.31 With this extraordinary reach, the humble mobile phone has transformed into a ubiquitous data device with the potential to influence economic and social stability worldwide. According to the World Economic Forums Mobile Financial Services Development Report 2011: The mobile phones ability to serve as a universal banking platform can provide stability in the lives of those with very limited means while unlocking new efficiencies in underserved segments of developing economies.32 In both developing and developed economies, mobile is revolutionizing financial services, bringing more services
The humble mobile phone has transformed into a ubiquitous data device with the potential to influence economic and social stability worldwide.
The target market for most SMS-based mobile money services is the unbanked in emerging markets. It is estimated that up to two billion people worldwide do not have a bank account but do have a mobile phone, making
to more people with more convenience. Mobile is at the heart of microfinance, which focuses on slimmer, redefined financial services, especially (if not exclusively) for underserved markets. Micro is next.
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MICRO
Targeting the newly connected majority, not just the easiest to reach
For an African farmer, a payment for bad weather that has destroyed a seasons crops can be a life or death matter. A small amount of insurance can have a big impact. Technology, notably mobile technology, is playing an increasing role in delivering such microinsurance and is driving innovation. Brandon Mathews, head of emerging consumer with Zurich Financial Services, a global insurer, sees broad implications: Consider reverse innovation: As we learn to supply financial services for pennies in low-income countries, that has far-reaching global consequences for financial services elsewhere. Indeed, Kenyans may be nonchalant about the excitement over some of the mobile-to-mobile payment services emerging in the United States and Europe; Kenyas SMS-based M-PESA service has already succeeded in making mobile payments an integral part of Kenyan financial culture. Microinsurance, and other microfinance products like microsavings and microcredit, aim to meet the needs of low-income households with commercially viable products. You can think of rental car insurance as a form of microinsurance a mini policy for a specific situation but unlike rental car drivers, the poor receive few options to protect their assets or income. Yet as these customers are increasingly connected via technology, financial services for them are also coming online. This is important because, as the World Bank states, there is mounting evidence that access to financial products can make a positive difference in the lives of the poor.33 Microfinance may not be where the money is yet, but it is arguably where much of the social value in financial services lies. It is an important part of the worlds financial future. In fact, in some countries regulators are trying to promote financial services instruments to lower-income groups by
The annual gross national income (GNI) per capita for the majority of people worldwide is less than $5,000. Microfinance can address the financial needs of this long tail of income distribution. Data Source: World Bank Figure 14. the long tail of income distribution
Since before the millennium, financial inclusion has been a major policy initiative. However, although the will existed to provide services, the challenge was reaching those in need. Now, the connected consumer exists in almost every country in the world at almost every level of wealth. Creative use of widespread delivery mechanisms such as mobile is enabling microfinance institutions and traditional financial institutions to address this market the long tail shown in Figure 14 at scale.
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mandating that financial firms have a minimum exposure in this segment. Microfinance products must address the needs of the individuals they serve, not merely be a scaled-down version of a traditional complex product. An SMS-based distribution method forces radical simplicity on an industry where insurance and banking firms have historically layered complexity upon complexity in their products. Smartphones offer even more potential, as they bring simplicity and richness
is about very small sums, very low costs are key to making it work. Micropayments helped transform the global music industry and are transforming microfinance today, helping microinsurance, microsavings and microcredit flourish. Mobile technology is not nirvana phones fail, they cost money to buy and subscribe to, they are desirable objects and can be stolen but the remarkable growth of mobile technology reflects the transformative effects it can have on peoples lives.
Microinsurance
smartphones offer even more potential, as they bring simplicity and richness to products.
to products. This chapter describes how newly connected consumers are benefiting from microfinance, and the role of technology in making microfinance mainstream.
Demand for the benefits of microinsurance is high, but unlike payments, the issue is trust in the product. Almost uniquely, insurance is a product that you hope to not use. Its a piece of paper unless you need it, says Mathews of Zurich. That said, microinsurance is growing rapidly, with technology a key factor enabling these new insurance products to reach underserved markets. Governments such as Indias have pushed for microinsurance products to help prevent those living at the poverty line from slipping below it. Insurance companies have been equally keen to expand their reach to billions of new customers. Today, of the top 50 commercial insurance companies, most offer microinsurance products, including eight of the top 10 insurance companies on the Forbes The Global 2000 Insurance list.36 ProTECTInG LIvELIhooD. With so many of the worlds poorest working in agriculture, agricultural insurance is vital. one bad season can ruin years of investment and leave a family destitute, but multi-peril crop insurance is difficult to administer because it is hard to match price to risk and assess losses. The claims process is especially daunting for large numbers of small farmers. MicroEnsures weather index crop insurance leverages
MicropayMents
Micropayments are the foundation and most widespread form of microfinance. They are used by higher-income consumers primarily to purchase digital goods over the Internet, and by lower-income consumers to purchase goods by mobile phone and make remittances. Micropayments are essential for any micro digital product, whether an iTunes song or a financial service such as insurance. Indeed, electronic micropayments pave the way for financial inclusion; ironically, cash can be a barrier, as the Bill & Melinda Gates Foundation reports: Cash is the main barrier to financial inclusion.... Collecting low-value cash deposits and redeeming their savings back into small sums of cash requires a costly infrastructure which few banks are willing to make extensive in low-income or rural areas. But once poor people have access to cost-effective electronic means of payments such as M-PESA, they could, in principle, be profitably marketable subjects by a range of financial institutions.
34
technology to address these challenges. The product protects against crop failure caused by drought or excess rain and enables farmers to access credit to buy quality seeds and fertilizers to maximize output. By linking farms to local weather stations and introducing an automatic payout process via mobile phone, MicroEnsure enables farmers to avoid filing a claim or going through an expensive loss verification process in the event of crop failure.37 With insurance, farmers are more willing to risk the purchase of higher-quality inputs on credit.
Elsewhere, the Gates Foundation reports that while it typically costs banks $1 to $3 for a teller to process a transaction in a branch, it costs M-PESA only 12 to 15 cents. Because micro
35
rFID tags are being used to identify a more mobile asset of the farmer, cattle. In Sri Lanka, one of a number of countries
18
where this has been introduced, insurer SICL has used RFID to reduce fraud and enable cost-effective cattle insurance.38 That said, the cost of the technology remains too high to make this a ubiquitous model, and in SICLs case it is only viable for the highest-value livestock (valued over $455). Microinsurance for farming is more than insurance as peace of mind; this is insurance as life-changer made possible by technology.
Microinsurance for farming is more than insurance as peace of mind; this is insurance as life-changer made possible by technology.
PRoTeCTIng HeaLTH. another key need for the poor is health insurance. Most microinsurance providers offer life insurance and death and disability insurance, which are the easiest and least expensive to administer since the claim events are infrequent. However, because health issues are a common consequence as well as cause of poverty, health insurance is the most pressing need. Families, even in wealthy markets, may spend all they have on healthcare and be left with nothing.
RSBYs use of smart card technology highlights that cards, as well as mobile phones, have a role to play in bringing financial services to the poor, particularly for proving identity.
also be used to gain discounts in pharmacies and other retailers. Just like pre-paid phone cards, each card has a unique number. Customers provide this number to a call center which records their personal details and activates the insurance policy.40 BunDLIng. Bundling microinsurance products provides a level of sophistication that technology makes cost-effective. offering different types of coverage under one policy reduces the cost per service for the provider and reduces risk overall. For example, a policy could cover crop, health and property insurance. By helping improve agricultural inputs, health and income improve; by improving access to medicine, agricultural risk declines; by covering damage to houses, medical risk declines. MoBILe LIFe. as with mobile payments, telecommunica-
In India, technology is transforming health insurance through cards and biometrics. Rashtriya Swasthya Bima Yojana (RSBY) is Indias innovative health insurance scheme that began in 2008.
39
tions providers have inserted themselves into mobile insurance. MTn ghana (MTn is africas largest mobile network operator), in partnership with Hollard Insurance and Microensure, launched the worlds first mobile microinsurance product, mi-Life, in ghana in March 2011.41 mi-Life rides on the SMS-based MTn Mobile Money network, enabling consumers to buy insurance and manage their policy with their phones. By making small premium payments through a device they already use for other payments, consumers have
Individuals are enrolled using mobile
biometric equipment and are issued a smart card in return for a 30-rupee (60-cent) registration fee. The insured uses the smart card to receive a range of treatments. The system, highly automated and highly subsidized, claimed over 27 million active smart cards as of February 2012. CaRDS. RSBYs use of smart card technology highlights that cards, as well as mobile phones, have a role to play in bringing financial services to the poor, particularly for proving identity. Zurichs Insurance and Technology report highlights pre-paid cards used for insurance in Mexico and Bolivia: Sold at kiosks, gas stations and supermarkets, the card offers a tangible insurance product and can
19
Mobile life insurance can be sold directly in a way that would never happen in developed markets.
OvercOming Barriers
tO micrOFinance
Microfinance may be moving into the mainstream, but streams well, rivers can get in the way. Rivers, reliable electricity, roads, bridges and security are all significant barriers to microfinance. One loan officer in Bangladesh wades across a river at low tide in order to meet his clients. If he runs late, he has to stay on that side of the river until the next day, meaning he cannot input data into the banking system by the end of the day, as required. Technology is not the problem; the rising river is. Mobile technology is proving to be the single biggest factor in overcoming the challenges of physical infrastructure. It reduces the need for travel and is often significantly cheaper and faster to deploy than roads and bridges. In addition to physical infrastructure, countries need the necessary financial infrastructure. As well, the state must provide a regulatory framework in which microfinance can thrive, enforce debt repayment, regulate fees and interest rates, support credit rating institutions in assessing borrowers creditworthiness and establish a method of citizen identification. Indeed, until something better comes along, for microfinance to Beyond basic literacy, education is often identified as a barrier to financial access. Microfinance providers may integrate education into their group meetings so clients understand their responsibilities. Mobile phones can play an important role A critical barrier to national identification programs, though, is literacy. Despite rising literacy rates worldwide, there are still hundreds of millions of people who cannot read or write their name or an identification number. Biometric identification, such as facial recognition and fingerprints, can address this. Yet, the phones small screen can be limiting, suggesting tablets may be a better answer. In 2011 India saw the first under-$50 tablet, the Aakash, which sold over a million units in the first two weeks.47 The combination of low-cost tablets being developed in low-income countries, and simple first-generation tablets flowing south and east, holds the promise of introducing low-income individuals to how microinsurance, microsavings and microcredit can transform their lives. Technology can provide a big assist in breaking down barriers to financial inclusion. work, consumers must be individually identifiable, a task uniquely suited to governments and technology. Although political will and corruption remain significant barriers in some countries, India, for one, has moved ahead. The Unique Identification Authority of India (UIDAI) noted that in 2010, 40 percent of Indias rural residents lacked access to bank accounts, rising to over 60 percent in east and northeast India.
42
in education, a prospect that the World Bank is studying.44 Meanwhile, a program called Text2Teach in the Philippines shows a possible way forward by using texting to send teaching materials.45 Text2Teach focuses on childrens schooling but could be applied to financial education. Brandon Mathews, head of emerging consumer with Zurich Financial Services, offers an alternative view: As Vijay Aditya of ekgaon has noted, nobody taught people to use their mobile phones. We need to focus on designing financial services that people can learn through use rather than complicating it. I need cattle insurance? Theres an app for that. Thats the mindset we need.46
The UIDAI
created Aadhaar, a 12-digit unique identification number (UID) linked to demographic and biometric data, to provide an on-ramp to financial services. For example, MasterCard has developed pre-paid debit and credit products based on the Aadhaar platform.
43
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easy access to a financial service previously not available to them. Further, mobile life insurance can be sold directly in a way that would never happen in developed markets. Hollards head of microinsurance claimed premiums of $190 million from microinsurance and sees mobile life insurance as a critical growth strategy.48 A leading life insurer in Southeast Asia is working on providing life insurance to mobile phone subscribers as an add-on service. People will sign up via SMS and then a policy document will be mailed to them. Claims are submitted to an agent, and the agent connects through SMS to the insurer to obtain approval for the claim. Once approval comes, the agent pays the claim to the customer via SMS. CSC is creating the SMS template, the application to handle the SMS transactions, and the associated communication scheme between the application and the mobile service.
Providing the ability for lowincome people, operating on less than $2 a day, to save small sums even 25 cents is a significant opportunity to pull people out of poverty.
enhancing investments in farming inputs by 32-39 percent. the Foundation has awarded grants of $38 million to 18 microfinance institutions (MFIs) to encourage technologyenabled microsavings. MAke It eASY. Microsaving products must make it easy to
InveStMentS. the sophistication of microinsurance is increasing, with investment-linked micro-products being offered by firms in India and Indonesia, where agricultural income is tax free. As bank interest rates fall and stock markets rise, such products may be attractive, though they target cash-rich farmers, not the needy.
put small amounts of cash in. One young man saved money in his motorbikes fuel tank until he had enough money to buy a new bike, at which point he cut open his old bikes fuel tank, took out the money, and bought a new bike. With a bike as a savings account, it was nearly impossible to make withdrawals. But a bike is neither safe nor efficient for savings. Although discouraging withdrawals is one way to maintain savings, people should be able to access their savings in a pinch; it is more important to provide incentives to save rather than disincentives to spend. A mobile phone is a much better savings vehicle than a bike. Leveraging mobile technology for savings is gaining traction in India. Grameen Bank partnered with ICICI Bank to support a not-for-profit MFI in India, Cashpor, to provide mobile savings (the Apna Savings Account). the service overcomes the three big challenges to microsavings: distance to a branch, frequent small deposits, and intimidating bank documentation and processes. Cashpor staff enroll customers using a mobile phone; the phone number acts as the account number. Staff travel to meet clients to take savings deposits, but customers can withdraw money, send remittances and make deposits using their phones. Grameen Bank reports that 80 percent of Cashpors customers have access to a mobile phone and that the prospect of being able to save is encouraging those without phones to purchase them.50 In kenya, microsavings rides on the coattails of the countrys popular M-PeSA mobile money service. M-PeSA
Microsavings
Saving ones way out of poverty is not easy. Choices include illiquid assets (e.g., livestock), entirely liquid cash, or a savings account with some transactional cost (whether direct or indirect). not only is setting aside very small amounts from a tiny income tough when one is already living frugally, but the cost of handling cash means that savings accounts are uneconomic for banks to provide. Almost perversely, the smaller the amount being saved, the greater the portion that disappears into charges. the disincentives to save walking miles to deposit small amounts with forbidding financial institutions that impose hefty charges are huge. Yet, people want to save. the Bill & Melinda Gates Foundation reports that ...we quickly became aware that savings is the most neglected financial service and the one that is in highest demand by poor people.
49
Providing the ability
for low-income people, operating on less than $2 a day, to save small sums even 25 cents is a significant opportunity to pull people out of poverty. the Foundation reports that farmers who were given the option to put aside money toward the next planting season increased productivity,
21
customers can sign up for an M-KESHO savings account using their mobile phones.51 Customers can make deposits and withdrawals on their account, see their balance and mini-statement, and buy personal accident insurance and microcredit. M-KESHO, a collaboration between Equity Bank and Safaricom, delivers important banking services to the poor using mobile technology to reach them. Saving remains hard for anyone on a limited income, not just those in developing markets. Opportunity Fund is a not-for-profit social enterprise offering microsavings and microloans to lower-income individuals in Californias Bay Area.
52
Once again technology unleashes huge demand among lower-income consumers for basic financial services that were previously uneconomic to provide with cash-based payment systems. The use of cards for microsavings in lower-income markets is a neat inversion of the use of cards for credit in higher-income markets. It also highlights that in mobile savings, at least, there are two technology tracks: mobile phones on the one hand, and cards and mobile terminals on the other. MAKE IT GrAnd. Perhaps the grandest global ambition in microsavings is the Financial Access @ Birth (FAB) initiative, which aims to provide a $100 savings account (accessible when the recipient turns 16) to the 50 percent of the worlds population born without access to formal financial services.56 FAB plans to use biometrics, for identification, and mobile banking to implement these low-cost savings accounts. FAB is trying to build commitments of $10 billion per year, to fund $100 for 100 million children. Its premise is that microsavings can be a springboard to financial inclusion and social services (e.g., vaccines, tuition grants, cash transfers for food and housing).57 Whether microsavings will change the world remains to be seen, but technology is improving its chances by increasing its reach and importance.
Opportunity Fund, which claims that
50 percent of Americans say they cannot afford to save, focuses on education and matching funds to instill saving as a habit, emphasizing small regular savings (e.g., $20 per month). Opportunity Fund, though, is not a new technology model the way M-KESHO, exploiting mobile phones, is. Other mobile devices playing a critical role in microsaving, and indeed other forms of microfinance, are terminals and cards. Mobile biometric terminals, such as from Ingenico, overcome the issue of distance by acting as tiny automated branches, enabling deposits to be made locally. These terminals, about the size of an adding machine, use smart cards and manage biometric data (e.g., a fingerprint) on the move. Over 700,000 card holders in Malawi and over 600,000 in Ghana use Ingenico terminals for savings and loans.53 The concept of reaching the rural poor with an automated branch is taken further by Vortex Engineering, which supplies a solar-powered ATM.
54
Microcredit
Microcredit has been the poster child for microfinance, receiving global acclaim when the United nations hailed 2005 as the International Year of Microcredit and the 2006 nobel Peace Prize was awarded to economist Muhammad Yunus and Grameen Bank for microcredit work in Bangladesh. However, across various markets there is a mixed picture. Bangladesh has the highest penetration of microcredit borrowers, at 25 percent of the population; Peru, an upper-middle-income country, has 10 percent.58 Kenya is at 3 percent penetration, surprisingly low given its success with M-PESA.59 The wide variation comes back to the importance of the enabling environment infrastructure, government policies and education. There are various enablers for the growth of microcredit. Coupled with commercial investment is the availability of delivery channels (a large distributor network with significant physical reach). Another prerequisite is core transport and power infrastructure, which tends to precede
Overcoming many of the
infrastructure barriers to ATMs, this model provides a range of financial services to the poor. The companys CEO even envisions the use of these ATMs to process insurance.55
technology unleashes huge demand among lower-income consumers for basic financial services that were previously uneconomic to provide with cash-based payment systems.
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How Mobile PayMents
HelP Microcredit
Erica M. Salinas, CSC For three years in graduate school I studied microfinance. I read Banker to the Poor and wrote papers on group lending models. It was revolutionary, Nobel Prize winning even, and I always wanted to be a part of it. In October 2011 in Nunguni, Kenya, I was. One Tuesday, I accompanied my colleague from FrontlineSMS:Credit on a trip to launch a pilot project for K-Rep Fedha Services (KFS). KFS helps support a number of Financial Service Associations (FSAs) across Kenya. We ventured to their Nunguni FSA and installed the PaymentView software that will allow the FSA to receive loan repayments via M-PESA. We then traveled to a small town that was off of a dirt (mud really) path, that was off a dirt road, that was off the main road. It took us an hour by vehicle to traverse the terrain. In Kalembwani, a group of 12 women met in the small shop shown below Mary, the chairperson (in blue), took notes as their loan officer explained the new payment process. She then came with us as we drove to the nearby M-PESA agent and made her deposit. Her travel time had been reduced from one day round-trip to two hours. Mary has been part of the group for three years. She is a single mother of three and an entrepreneur. With her loans, Mary has All of these loan recipients fully appreciate having financial services. Their loans are improving their lives and those of their families and villages. M-PESA is reducing travel time, costs and risk. To see this in person drove home how powerful microfinance can be. (left). They introduced themselves proudly in their local language of Kamba. We introduced ourselves through an interpreter and explained that we were here to learn about their group and to help them lower the costs associated with making loan payments. I watched amazed as this group of strong, entrepreneurial women counted their payments and accounted for each cent. In this tiny village they were able to gather a monthly payment of $600, which indicated that they hold a very large portfolio. The following day, I was able to enjoy the same experience in another town. Here two groups met at a school. They too counted their funds and eagerly learned about the new payment method. For this group, the M-PESA agent is close enough to walk to. Again, travel time for repayment decreased from one day to less than one hour. The green building in the picture below is the local M-PESA agent in Kiu, Kenya. bought land and built a home and a shop where she sells sodas, bread and other necessities. She is doing well and pays for all of her children to go to school.
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the technology infrastructure (i.e., mobile) that will enable payments. Then, a tipping point must be reached when individuals who need microcredit understand and trust the system. Credit information must also be available (which in turn requires individual identification). In addition to these enablers, microfinance depends on charitable investment. Technology plays an important role in facilitating charitable giving by higher-income individuals; the response to the Haiti earthquake is one example among many. The Internet has become the storefront for organizations that bundle donations or interest-free loans and raise microfinance awareness. Kiva is the major player, providing peer-to-peer lending (typically small sums,
interest rates of 20-50 percent per year, seemingly high but far lower than those of loan sharks.61 The economist notes that applications have increased fivefold since 2007 as a result of the squeeze on bank credit and worsening economic conditions. In the United States, microcredit is further developed, with some 700 institutions lending. There are non-traditional lenders as well, including the new peer-to-peer players (see the Media chapter) and even retailers like Starbucks. In the United States, the Starbucks Create Jobs for USA microlending program leverages the companys physical and online presence and strong brand.62 Individuals donate $5 or more to build a community finance fund; Starbucks has provided seed funding. The Starbucks initiative demonstrates that in high-income countries microcredit is where capital-
The Internet has become the storefront for organizations that bundle gifts or interestfree loans and raise microfinance awareness.
ism and corporate social responsibility meet a powerful combination of forces. In high-income countries focused on microfinance, debit also plays a role. A leader here is Green Dot, which provides a pre-paid debit card to lower-income people in the United States, enabling them to participate in the digital economy. A Green Dot card can be purchased at walgreens or other stores, and even used to add money to PayPal. In a country whose payment infrastructure
like $25) to borrowers worldwide. Another player is the U.K.-based MicroLoan Foundation, which specifically targets microloans for women in sub-Saharan Africa. the global reach of the Internet. Despite the significant progress in microcredit, there is a dark side. The pressure to repay loans has been blamed for suicides. High interest rates and hard-nosed attitudes to collecting payments have been criticized. It is true that a combination of vulnerable consumers, unregulated or barely regulated default practices, and aggressive lenders can be toxic. Striking the right balance between offering credit and levying consequences for default is essential. How governments strike this balance is one of the global challenges for microfinance. New MArKeTS. Microcredit is not just for middle- and low-income countries; it is playing a significant role for lowincome individuals in high-income countries. As noted in the The economist, Britain has seen significant growth in Community Development Finance Institutions that offer
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is geared to cards, Green Dot fulfills a need similar to M-PeSA: enabling electronic payments and broader financial inclusion.
These
organizations are revolutionizing microcredit by harnessing
Providing microfinance in highly regulated markets can be tricky due to stiff compliance requirements. All compliance is driven by the need for protection (whether of shareholder, taxpayer or consumer), but the cost of compliance makes it challenging in wealthy countries to serve those most in need of financial services. Technology can help only so much. Nonetheless, technology has many roles to play in bringing financial services to everyone. It enables individuals to be uniquely identified. Mobile devices can eliminate the distance barrier, reduce fraud and make financial services economic to provide for ever-lower savings and insurance amounts. Networks enable innovative data-driven products such as Microensures automated crop insurance. Micropayments infrastructure enables payments of premiums, claims and microdeposits. The Internet provides a window through
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which organizations can gather funds and raise awareness of the importance of financial inclusion. To date, much of the work in microfinance has been with SMS because SMS is whats in consumers hands. However, smartphones will be in the hands of low-income individuals in large numbers over time, and will be increasingly important across all demographics. The whole concept of smartphone apps has great promise for microfinance,
The whole concept of smartphone apps has great promise for microfinance, providing innovative functionality and ease of use.
providing innovative functionality and ease of use. For example, attach a blood pressure cuff to the smartphone to assess peoples health and better determine the risk of providing health insurance in emerging markets. The simplicity of apps is particularly well-suited for microinsurance, microsavings and microcredit products. The combination of reverse innovation and an app culture could alter traditional macrofinancial products profoundly. Historically, the complexity of financial products was a consequence of competitive differentiation. In the future, consumers patience with financial complexity will shrink, as app culture already demonstrates with games
Microfinance has already enabled tens of millions to make profound changes in their lives. It has the potential, through technology, to do so for hundreds of millions and ultimately billions.
(Angry Birds anyone?). The bank or insurer that rolls out financial Angry Birds may find itself rapidly transforming the market. The financial services industry can play a powerful role in microfinance and alleviating poverty, partly through charity but increasingly through serving the connected emerging consumer in a sustainable commercial model. Microfinance has already enabled tens of millions to make profound changes in their lives. It has the potential, through technology, to do so for hundreds of millions and ultimately billions. Technology is overcoming barriers to distribution and product management, and it is connecting lenders and borrowers in ways unimaginable just 20 years ago. The next chapter, new media, explores how consumers connecting directly to each other are transforming financial services.
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media
From access to activism: amplifying consumer power
New media (think Internet) are transforming how consumers interact, transact and manage their financial world. Todays connected consumers are exercising remarkable levels of clout in financial services, an industry traditionally controlled by corporations. These corporations globally interconnected networks allocate capital, calculate risk and make light-speed decisions that have affected the wealth, homes and livelihoods of billions of consumers for decades. The Asian crisis of the late 1990s and European crisis of the late 2000s with their impacts on jobs, homes, pensions and even entire national social models were products of the power of the corporate network. The consumer network, in contrast, is still emerging but starting to impose its will. Built by the likes of Google, Safaricom, Vodafone, Facebook and Apple, the consumer network is those same billions of consumers, plus new billions needing financial services in Asia, Latin America and Africa. All are using diverse, increasingly connected devices to access financial services, driving new markets and models for micro and other financial services, and transforming processes like payments that historically have required extensive intermediation by banks. Consumers are connecting directly to other consumers to transact business, discuss financial services experiences, and exchange financial advice and opinions. And, they are connecting to financial data directly to conduct their own research and form their own opinions. Search was the entry point, to find
Figure 15. The inTerneT empowerS Financial ServiceS conSUmerS
information and self-educate. From there people began to engage with each other through social media and peer-to-peer (P2P). These capabilities, depicted in Figure 15, differ significantly in how they impact financial services but together drive a revolution in peoples ability to manage money and risk. Social media and P2P are the big disrupters, having transformational effects people are just
Search educates the consumer by giving access to information once available only to financial experts. Social media crowd-regulate the relevance, volume and availability of information, and through social networks provide information and opinion on what financial services consumers need and which firm to buy from. Social networks and peer-to-peer facilitate the financial consumer activist, who can engage directly with consumers anywhere in the world, be it for social causes or transactions. Peer-to-peer enables consumer-to-consumer transactions for payments, loans and even insurance and currency. Source: CSC
beginning to understand.
Social Upheaval
Although the power of search continues to amaze, its what consumers have found and engaged with that has a more profound impact. As with other industries, social media are transforming the consumer financial
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services industry. For financial services firms, social media social networks like Facebook and Twitter, user-generated content sites like YouTube and Flickr, blogs, wikis, mashups and instant messages are about changing the nature of engagement with consumers. IDC predicts that 2012-2013 is when financial services firms will go beyond marketing in their use of social media.63 Indeed, financial services firms are using social media not only for brandbuilding, but also for sales, service and pricing. For consumers, social media are tools to research financial services, express opinions and seek advice. Like search, social media do not change financial services; rather, social media give consumers a way to be learners and activists. Firms may see things rather differently, though. BuILDIng BranD. Financial firms are using social media to build and manage their brands. Firms can monitor social media for positive sentiment and new ideas target influencers with marketing campaigns, ask influencers and others for input on new products, and share important issues with influencers to get the word out.64 Equally important, firms can monitor for negative attacks on the brand, which can snowball in such highly connected environments. Social media are powerful tools for building brand loyalty. Japanese insurer Lifenet took on the significant challenge of selling life insurance directly over the Internet.65 If car insurance must be bought, then life insurance must be sold (to extend an old saying). Selling a product directly over the Internet that has value only after death, or ideally will never be used, is challenging. Lacking proven products, brand, a loyal customer base, operating experience and relationships with third parties, Lifenet has connected to a young, urban demographic through social media to build brand and loyalty (54 percent of its customer base is aged 30-39 versus the industry average of 24 percent).
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Creating resonance and emotional attachment is key in riding [the] wave of social media proliferation.67 Lifenet illustrates three important concepts about social media: The consumer purchasing financial products for the first time is young and immersed in social media. as firms new customer demographic evolves, so the use of social media becomes critical to acquire customers. Even in the life insurance industry, which has the least number of consumer touchpoints of all consumer financial services, emotional attachment to an online brand is both achievable and essential. The use of social media creates the opportunity for additional touchpoints with the consumer. This has been one of the great challenges for financial firm marketers and begs the question, discussed later, of whether marketers are the right employees to be the firms social media voice. The marketing opportunity for greater touchpoints is starting to be grasped, as illustrated by new forms of marketing that are possible only through social media. Commonwealth Bank in australia launched a Facebook Time Vault a 10-day online and offline treasure hunt to celebrate its centenary.68 With prizes available, players had to like the contests tab on Commonwealth Banks Facebook page in order to be eligible to play. Capital One ran a special holiday promotion in 2011 that rewarded card holders with cash-back bonuses based on their Klout score, a measure of a persons influence on social media sites. (See Figure 16.) Capital One gave additional cash bonuses when people signed up their friends to participate in the Klout promotion. Capital One is attempting to align itself with influencers, hoping they will spread the word about Capital One, convey a strong image about the brand and increase their loyalty. This recognizes that social media involve not just reaching people, but reaching the people who influence others. although social media may be a powerful tool for building brand loyalty, social media remain primarily consumer turf; enterprise penetration is slim. The Financial Brand reports that as of 2011 the top 35 banks on Facebook claim nearly nine million fans among them. Of those, 71%
The
companys co-founder, Daisuke Iwase, leverages a lively website and Twitter and Facebook presences. as he puts it,
Creating resonance and emotional attachment is key in riding [the] wave of social media proliferation.
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SaLeS and SeRvICe. Financial services firms can sell products and provide services through social media channels; after all, thats where their customers are. Geico launched a Facebook app called GeICO Shortcuts that allows policyholders to access their insurance information and unlock tokens a fun way of rewarding policyholders for engaging with Geico.72 at the Salesforce.com dreamforce conference in 2011, aXa demonstrated how a customer can take a photo of a crash involving his or her car and initiate first notification of loss through a mobile phone. Later that day, aXa can contact the customer through Facebook to update him or her on the status of the claim. By inserting itself, with the permission of the consumer, into that consumers social environment, a financial services firm can alter the nature of its
Figure 16. Klout measures a persons influence on social media sites like Facebook and Twitter, using a 100-point scale. Financial services firms can market to those with high Klout scores, who in turn may tout that companys brand. Source: Klout
relationship with that consumer, reaching the consumer on his turf and blurring business and personal boundaries. That blurring is already familiar to the millions who do work email at home and home email at work, a blurring of the relationship between individual and employer. doing business on Facebook takes this blurring to a new
belong to the top three.69 The Financial Brand goes on to highlight just how far the jury is still out: The 35 banks in the list claim some 8,817,837 likes out of a combined 1.5 billion customers. That means they are reaching an average of 0.6% of their base.... If you exclude the three top-performing banks from the calculation, the average drops toonly 0.2% of their base.70 Firms experience with social media varies, and rightly so. Social media create digital community and are thus most relevant to firms with a dispersed customer base, likely with a younger demographic. Celent, an analyst firm, concludes about the role of social media for general insurers: Large, geographically diverse, personal lines companies with multiple distribution channels have the most to lose and most to gain from an aggressive social media program. Regional carriers with customized or specialty products must monitor social media in order to protect their brand, but these firms do not stand to gain as much as others in a wider investment in social media.71
level because it blurs the boundary between individual and supplier. aSB Bank in new Zealand has taken this one step further with the creation of a Facebook presence in august 2010, rapidly followed by a Facebook branch.73 (See Figure 17.) From Facebook, a customer can see photos of branch staff tagged as available or unavailable. Customers can click on an available staff member to initiate a chat discussion. The service is available to non-customers also; aSB Bank claims visits from all around the world.
Figure 17. aSB Banks virtual branch on Facebook lets
For the financial services firm, social media are about more than marketing, though. Much more.
consumers chat live with a banking specialist.
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Combining Facebook with banking is not new. As far back as 2008, Fiserv launched MyMoney on Facebook so people could manage their finances from within Facebook.
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The use of a digital community to obtain financial information demands a level of site structure, a baseline of reliable data, a strong brand and a sufficient community to maintain current knowledge. in the u.K., journalist Martin Lewis has created something of an institution with MoneySavingexpert.com. Claiming over 13 million unique users every month, the site addresses many areas of saving including insurance and banking.77 Providing extensive price comparison and a discussion forum for consumers, MoneySavingexpert.com has assumed a powerful role as a consumer advocate. As consumers have engaged, the progression to financial activism was perhaps inevitable. ConSuMer ACTiViSM. Social media amplify the voices of consumers so they can call attention to an issue and ultimately influence the actions of financial services firms. Bank Transfer Day is a good example. organized in 2011 by a single individual on Facebook, Bank Transfer Day sought to encourage people to switch from traditional commercial banks to credit unions. At a macro level, the impact was small 650,000 people joined credit unions between September 29, when Bank of America announced a $5 charge for using debit cards, and the first week of november.78 The imposition of the charge likely ignited more of a shift than Bank Transfer Day. nonetheless, the fact remains that a single individual had a noticeable impact, influencing the financial decisions of thousands. The question is whether Bank Transfer Day represents an isolated social media campaign that gained some traction, or a major trend around consumer activism.
The
service was targeted at credit unions, which are primarily community-focused organizations, thus reinforcing the parallel with digital communities. Adoption was light; it appears to have been ahead of its time. (Fiserv has since evolved its digital offerings, discussed later, and its Facebook presence.) DynAMiC PriCing. With so many consumers buying online, the concept of dynamic pricing based on high volumes of transaction data is now possible. Heres how it works for one car insurer: As customers request quotes online, CSCs VP/MS insurance software calculates the quote. The insurer records whether or not the quote is accepted by the consumer and weighs this against the desirability of the consumer as a risk. if too many desirable consumers are abandoning their quotes and going elsewhere, VP/MS adjusts the pricing for certain rating factors to increase consumer take-up. Conversely, it adjusts prices higher if too many of the wrong sort of risk are accepting quotations (thus affecting the firms desired risk profile). This is nothing less than the dynamic adjustment of rating and pricing structures in order to achieve the desired combination of policy growth, policy retention and profitability. To support this, rating models require access to information regarding take-up, rejections, client experience, client history, book loss ratios and so on. Whether pricing financial services products or hamburgers, dynamic pricing offers a radically enhanced way to take advantage of market data. ConSuMer reSeArCH. Social media are becoming particularly important for financial services like investments and wealth management, which draw on complex information to make judgments that can have a huge range of outcomes. To illustrate, if a person invested his pension in Japanese equities in 1995, his retirement would look very different than had he invested in BriC (Brazil, russia, india, China) economies and natural resources. investment executive reports an investors group poll that says more than 42 percent of Canadians who save and invest use social media to research decision making.75 Another poll, from BMo, finds that nearly two-thirds of Canadian investors take such advice.76
Bank Transfer Day demonstrates a strand of social activism running through social media that challenges big business and particularly big finance.
either way, Bank Transfer Day demonstrates a strand of social activism running through social media that challenges big business and particularly big finance. This was also exemplified by the occupy Wall Street movements,
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which identified a broad target: global capitalism. Again, a comparatively small number of individuals leveraged social media, including Meetup.com, to assemble a larger group, which had the critical mass to take action sufficiently visible and disruptive that it became national news and shaped national debate.79 Indeed, the U.K.s Leader of the Labour Party, the official opposition to the government, and the Archbishop of Canterbury, a religious leader, both engaged in the Occupy debate and thus escalated it.
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introduction of rudimentary checks as early as the first millennium, people had a non-cash mechanism for paying each other. Although western Union introduced money transfers back in 1871, the check was long the dominant non-cash payment method until the comparatively recent arrival of the card. then in 1998 PayPal came on the scene and offered an alternative: online P2P payments. Acquired in 2002 by eBay, PayPal has arguably become the most famous brand among new financial organizations (see Figure 18) and so ubiquitous that it claims over 230 million accounts worldwide.82 even Facebook lets people use PayPal advertisers can purchase Facebook ads and consumers can purchase virtual items for games and applications83 and thus injects e-commerce into the social milieu.
As
was seen with the Arab Spring, social media amplify the voices of activists to the point of institutional transformation. In the financial services world, social media are pressuring firms to rethink not only their social contribution but also how they are engaging with consumers and who is doing the engaging. ALL MArKeterS NOw. weve argued that social media are where some significant and financially attractive consumers are starting to live. But social media activists are alert to marketing pitches and will resist them in favor of more direct information. the trusted participants in social media will be the analysts, back-room research staff, branch staff and claims loss adjusters, released to talk in an authentic voice about their firm and its financial wares. As far back as 2007, the Arthur w. Page Society argued the case for the authentic enterprise, where firms see a blurring [of] the lines between companies inside and outside behaviors and communications.81 that, in turn, demands that firms get their internal social media house in order. In a world where the customer is increasingly living financial life online, how many financial firms will grasp the huge rewards and huge risks of releasing their employees into social media?
P2P Drives Direct caPitalism

Social media tilt the balance of power from corporation toward consumer while strengthening the relationship between corporation and consumer, but they do not trigger new financial business models. However, a different form of consumer interaction on the Internet, peer-to-peer, has the potential be disruptive. P2P links consumer to consumer in a form of direct capitalism that is streamlined and fast. P2P payments have had the most significant impact, P2P lending is on the rise, and P2P insurance and P2P currency have made an appearance. P2P PAyMeNtS. Coins were created sometime before 1700 BC expressly for peer-to-peer payments. with the Others have joined the mix, including Fiserv with ZashPay, Chase with QuickPay and Barclays with Pingit. All are person-to-person payment services that transfer money directly between bank accounts (versus a PayPal account). Convenience is paramount; consumers need just basic information about the recipient, such as name and email address or mobile phone number.
30 Figure 18. PayPal popularized peer-to-peer payments on the web and is rapidly moving its payment services to the physical world.
In a move to bring even broader money movement to consumers, Bank of America, JPMorgan Chase and Wells Fargo have announced a joint service, clearXchange. CXC addresses the interoperability, security and scale necessary to meet the needs of the emerging P2P payments market.84 The service will roll out across the United States, with plans to expand to other financial institutions.85 Digital P2P payments are transforming payment services as surely as coins transformed P2P payments between individuals in person. But where that transformation becomes far more disruptive is when those same functions deployed by one firm are used to create what Simon Wardley, researcher with CSCs Leading Edge Forum Executive Programme, calls a core utility that others use, creating a surrounding ecosystem of companies. What does this mean? It means eBay, using PayPal and other capabilities, creates a utility that others can exploit to manage their own businesses. eBay can then examine and learn from what others produce and further innovate through that learning. The creation of this ecosystem is exactly what eBay and PayPal have done with their X.commerce technology platform. (See Figure 19.)
Digital P2P payments are transforming payment services as surely as coins transformed P2P payments between individuals in person.
X.commerce makes a commodity of the technical process of running a sophisticated business, allowing the merchant to focus on its goods and services rather than its underlying technology. It illustrates what Wardley calls the ILC model (innovate, leverage, commoditize). eBay and PayPal have worked this model brilliantly. They have leveraged their online marketplace and payment innovations to create a commodity for others to exploit. In turn, they will have the digital power and brand presence to exploit further innovations that are created using their commodity. The cycle will continue.
Figure 19. The X.commerce ecosystem provides a single platform for merchants and developers that simplifies the technology aspects of running a business. Developers can create and distribute their applications on the open platform, and merchants can subscribe to these capabilities to fit their needs. Capabilities include P2P payments, shopping carts, inventory management systems, multi-channel sales and marketing modules, social media services, search engine marketing, and shipping services. Source: eBay
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Along the way, there will be competitors. China Daily reported in November 2010 that online payment engine Alipay had overtaken PayPal both in registered users and transaction volume.86 The success of Alipay demonstrates the rapid growth of financial services outside North America and Western Europe and the colossal size of the Asian, and in particular the Chinese, market. In the United States and Europe few have heard of Alipay, but Alipay has aggressive global expansion plans. All P2P financial schemes have one thing in common: They disintermediate traditional providers with large infrastructures and re-intermediate through a thinner organization. P2P does not eliminate the need for a financial services firm to mediate the transaction but uses a slimmer firm. P2P LENDINg. Perhaps payments are unique among consumer financial services in being able to be rendered as P2P commodities. Perhaps consumer banking and insurance are too complex to construct as P2P commodities. The LEFs Wardley identifies three barriers to digital commoditization: requirements, such as customer preferences and technology needs; risks, of the new business model and how it works; and inertia, from companies unwilling to cannibalize their own businesses. P2P payments have overcome all three barriers. But what next? Consider consumer lending.
P2P lending directly links borrower and lender, risk offeror and risk taker, without a traditional intermediary. Lending is a very different financial service from payments. As a lender, the consumer is at significant risk; as a payer, the consumers risk is minimized thanks to digital safeguards embedded in the global payment industry. However, the unpopularity of banks following the 2007 credit crisis, combined with trivial returns from traditional savings, has primed the pump for P2P lenders. They have cast a distinctive, wholesome, more personal and lower-cost identity that has driven many consumers to consider P2P lending. Although still in its infancy, P2P lending is one of the clearest examples of consumer financial power. P2P lending changes the thick mediation model of a traditional bank into a thin, less costly one where the new mediator manages the process of borrowing and lending but does not itself take on risk. Zopa, which claims to have been the first to originate P2P lending in 2005, has arranged over 185 million ($290 million) in P2P loans.87 As mediator, Zopa validates the creditworthiness of the borrower and insulates the lender from exposure to a single risk by divvying up loans to multiple lenders. (See Figure 20.) Zopa and other P2P lenders have addressed two of the barriers to digital commoditization: requirements, by creating the technologies and offering a compelling customer
reasons given by borrowers for choosing a zopa loan
Figure 20. Borrowers say cost and social aspects are the top reasons for choosing Zopa P2P lending. Source: Zopa
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proposition; and inertia, by creating new digital firms. But to be transformative, these lenders need to overcome risk. Risk is at the heart of capitalism whether about Lehmans assets or ones personal savings. Risk is the challenge for digital disrupters as well as the potential savior for traditional institutions. P2P lenders need to convince consumers that the risks of lending directly are manageable. Traditional lenders need to convince consumers that the thick mediation model is the right way for consumers to mitigate risk. The future of P2P lending, and indeed other P2P financial services, rests on who wins this argument. So how are P2P lenders trying to win it?
To get beyond the inevitable anonymity of digital communities, successful social media and P2P financial organizations have defined their communities by interest.
bank branch have always defined their community by place (my branch). To get beyond the inevitable anonymity of digital communities, successful social media and P2P financial organizations have defined their communities by interest. Funding Circle, for example, enables lenders with common interests to combine to support certain types of businesses. The common interest of Zopa and Prosper members is lending and borrowing directly but relatively anonymously. There is enough information to enable people to feel a connection and establish the essential trust on which
Risk is the challenge for digital disrupters as well as the potential savior for traditional institutions.
P2P lending is built on carrot, stick and trust. The carrot is lower interest rates because of the lenders low overheads. The stick is traditional credit collection processes applied by the P2P mediator to borrowers who fail to make payments. The trust is borrowers more responsible attitude from seeing more directly that they are borrowing another individuals money. The question for P2P lending (and perhaps P2P insurance) is whether there is a sufficiently deep well of consumer trust to transform the market. That trust is rooted in the ability of other consumers to pay and the longevity of the P2P platform (e.g., Zopas loans are either three or five years). If sufficient trust exists, then over time credit could be transformed. Operating similarly to Zopa, U.S.-based Prosper started in 2006 and now claims over one million members and over $313 million in loans.88 Zopa and Prosper have been joined by other P2P lenders such as Smava in Germany and CommunityLend in Canada.89 It is noteworthy that these lenders use member to describe their customers. Key to the concept of P2P lending is a direct connection albeit anonymous between lender and borrower, and membership in a community of lenders and borrowers. Local financial services the local
the lender-borrower relationship is built without enabling identification. ZimpleMoney takes a different approach, enabling families and friends to lend to each other. ZimpleMoney enables family-and-friend loans as well as business loans. Related to this, ZimpleAuto enables small auto dealers to make loans directly to their customers, bypassing traditional banks and credit unions, streamlining the process and strengthening customer ties.90 If human connection is important to digital communities and these new forms of direct capitalism, another key element is altruism. ZimpleMoney calls itself a social finance community. Prosper highlights how it allows people to invest in each other in a way that is financially and socially rewarding.91 Funding Circle provides consumers with a direct route to lend to small businesses, calling them the unsung heroes of the economy.92 Zopa claims P2P lending is a smarter, fairer and more human way of doing money.93 Altruism is writ large with P2P lender Kiva, which provides funding for micro-entrepreneurs in lower-income countries through MFIs. Kiva explicitly focuses on the social benefits that lenders create for individuals who do not have access to traditional banks. While less purely
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altruistic than charitable giving, Kiva still presents a noble proposition for lenders because they do not earn interest (although the mfis do). Kiva takes a different approach to anonymity between lender and borrower. Borrowers may share information on the website. lenders are able to select particular cases to lend to, rather than Kiva making that determination; considerable borrower details are provided including a photo, personal information and why the loan is required. the scale of P2P lending has been small loans. if P2P lending is to make a serious dent in consumer lending, it needs to expand its reach in two directions: engage the wealthy in placing significant sums on loan as part of mainstream wealth management portfolios, and grow the size of loans expanding into P2P mortgages (which would require potentially thousands of microloans to make up a single mortgage loan). Whether and when P2P lending will reach a tipping point of mainstream activity remains to be seen. P2P inSuRanCE. if trust is an important element in lending, it is overwhelmingly important in insurance because the consumer needs to trust that a claim will be paid in the event of a crisis, despite the small premium required. the concept of insurance is to pool risk among a sufficiently large group of individuals to cover the potential of an event occurring that results in a claim. the insurer plays an essential role in mediating a sufficiently large group. the need for a large group, coupled with the gap between premium and claim, might appear to eliminate the possibility of P2P insurance. However, friendsurance shows that P2P insurance can work. friendsurance spreads limited risk among a small trusted network of family and friends rather than a large anonymous population.94 this is similar to Zimplemoneys lending model for family and friends. friendsurance depends on the trust of family and friends and limits their exposure to small claims. (See figure 21.) members of an insured circle agree to fund between 20 and 50 each of a claim. Claims greater than that amount are passed to traditional insurers. the friendsurance business model focuses on smaller claims that would generate significant administrative costs for traditional insurers, and aims to reduce fraud through trusted networks of family and friends. With traditional insurance, which excludes small risks, billions of people are effectively self-insured for small risks (i.e., they accept the risk, such as their pet getting sick, and pay the bill themselves). So
34 Figure 21. friendsurance taps networks of friends to cover small insurance risks such as bicycle theft. Source: Friendsurance
an agreement to share those smaller risks among people one trusts makes sense. However, whether consumers are willing to pay claims on a large-enough scale to make the friendsurance model more mainstream is still to be proven. an interesting aspect of friendsurance is that it requires collaboration with traditional insurers. it does not replace the insurer because each trusted network does not have the resources to cope with large claims. instead, friendsurance exploits an underserved market niche that P2P insurance can address. P2P CuRREnCY. Currency is so fundamental that it is easy to forget what it is: a promise to pay. Bitcoin is an experimental P2P currency based on cryptography and open source technology.95 there is no central bank; rather, transactions are run and managed by the network. if the risk to consumers capital is what holds back P2P lending and insurance, then it is the overwhelming factor holding back P2P currency.
currency is so fundamental that it is easy to forget what it is: a promise to pay.

there are two huge trust barriers. first, the success of any currency depends on having someone willing to receive it in return for goods or services. Second, that person must be confident that they in turn can use it with other individuals. Governments have used their ultimately trusted (if not necessarily popular) and ubiquitous brands to overcome both barriers; they have established the trust that a $1 bill has an equivalent value to both payer and payee that the payee can assess against the goods or services,
and they have achieved a ubiquitous acceptance within a country that the currency can be used. its interesting to see what happens when this trust breaks down. Cash is still preferred by many people, despite the availability of digital money. But cash is really just paper, and in rough environments it can get torn, dirty, worn and even lose value. the trust equation in P2P currency is different but equally hard to overcome. Bitcoins challenge for people is to overcome the entrenched view that a bitcoin should have a certain common value (e.g., a dollar equates to a burger), and to believe that there is a sufficient number of people willing to accept bitcoins. thus the barrier to P2P currency is one of emotion rather than technology. Canadas exploration of a government-backed digital currency, mintChip, could be a way to address this barrier.96 Yet to date, digital currency has not been readily accepted, despite having been the first P2P creation almost two decades ago. DigiCashs e-cash digital payment system was created by David Chaum back in 1993, born of the idea that the days of cash are numbered. its too expensive, too cumbersome and too old-fashioned.
97
Bitcoin may not transform currency, but it may transform how the trust and risk that underpin financial services are calculated.
part of firms customer engagement models and consumers information and reference bases, and will be the digital ground on which brands rise and fall. P2P financial services have been the most radical aspect of the internet. However, beyond payments, the jury is out on how disruptive P2P will be for financial services. at the heart of this future is the ability of P2P players to mollify consumers fear about the risk to their capital. arguably, existing traditional brands stand the best chance of using their brand to build the trust required for direct capitalism, but whether they are willing to cannibalize their existing models remains to be seen. across the media domain, the pace of consumer adoption is a function of many things: price, cachet, utility, and above all, simplicity. models that are hard to understand will not be understood, and models that are hard to use will not be used. the building of community and emotional attachment to that community through innovative marketing is paramount for firms seeking to engage consumers. But consumers have made it clear they will not be targets; firms need to tread carefully in social media because they are treading on consumer turf. Social medias strand of social activism appears to be strengthening, and consumers are looking for firms to be good. Consumer-as-activist models using social networks and P2P financial services are in their early days. only digital payments have yet reached a tipping point, profoundly altering the payments industry. the consequences of more financially educated consumers engaging with financial activists about everything financial are profound profound for consumers and profound for financial firms sales and marketing efforts, customer service and engagement, and product design. the consumer is growing in power through connection. for financial firms considering new media strategies, the winners will be those who participate thoughtfully rather than observe from the sidelines.
DigiCash was an
idea ahead of its time though; Bitcoin may be too far out as well. Perhaps currency is so fundamental that it can never be digitized without the nation-state behind it. money issued and underwritten by sovereigns in diverse currencies is at the heart of capitalism, and life without it is almost unimaginable. Citizens trust currencies because they trust the nation-state that issues them. Bitcoin and digital cash raise the question: Can you have currency without sovereignty? that is an intriguing question, although it seems the trust barrier is too high. (thats where something like mintChip may come in.) However, and perhaps more importantly, Bitcoin has created incredibly innovative technology to manage digital data that requires trust between unknown participants as well as risk management. Bitcoin may not transform currency, but it may transform how the trust and risk that underpin financial services are calculated. We dont know. the bright individual who does may just change our world.

Social media will continue to increase in importance for firms and consumers. Social media will form an integral
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mining
Leveraging structured and unstructured data for financial insights
Financial services firms have constantly imposed structure on data think insurance claim forms, new application forms for bank accounts while consumers have constantly, if unconsciously, created unstructured data think phone calls, complaint letters, blog posts, tweets. Today the challenge for financial services firms is to leverage the two. The unstructured, combined with the structured, presents enormous opportunity for the financial firm as well as the consumer. While Internet search has made unstructured data miners out of all of us people need just a browser and an Internet connection for many financial firms the data opportunity may appear overwhelming. Complex regulations impose huge demands on firms ability to understand the structured data they have, let alone consider the opportunity of unstructured data. The larger, more complex and more siloed the bank or insurer, the more complex the challenge becomes. Moreover, the masses of data required by laws for financial transparency only add to the challenge. Still, financial firms are stepping up and making progress, recognizing that data fundamentally alters how to view risk. There are new ways to manage risk and new product offerings. Firms combine data from social networks with insurance claims data to stop fraud (a reality today), and marry the calculated emotional reaction of online consumers with demographic data to offer more tailored banking products. In the world of investments, corporations and consumers can analyze data from blogs, RSS feeds, reports and other online sources information once restricted to financial professionals for investment possibilities. DATA MInIng. Data mining focuses on structured data For firms, the data issue is no longer about storage (cheap) but algorithms and the models that use them. The human brain can rapidly shape individual algorithms to address rows and columns, digitized forms, reports and documents. In the workplace, this is what many people are familiar with: finding summaries and patterns in structured information. The first two mining waves, data mining and Web mining, are well understood and widely used by corporations; Web mining is widely used by consumers too. The financial services industry is in the early days of its data mining journey. The connected consumer is exploding the volume and potential of data for both corporation and consumer, though this potential is not always mutually beneficial. To understand the mining potential, this chapter describes the evolution from data mining to society mining, the impact of mining on various aspects of financial services, and the power of leveraging public data, particularly to measure risk. individual questions; it takes a person two seconds to craft bank account with lowest overdraft fees and google it. But for the firm creating the algorithms, a question like what is my risk-weighted exposure in my consumer lending book? is complex and needs to be asked in real time, with the answer monitored constantly. Vendors specializing in big data analytics for financial services are showing the way.
Four Waves oF Mining

At the dawn of the computer age, mining was about working with the only digital data available: data in files and then structured data in databases. It has since evolved to include text mining, Web mining, social mining, and society mining, the newest and most comprehensive of all. The mining evolution depicted in Figure 22 reflects the continuous addition of complexity because of the shift in the data landscape.
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Figure 22. Mining evolution
With the influx of Web, social and machine data, plus deep analytics, mining has evolved from the early days of structured data mining to the most recent and all-encompassing wave of society mining. Source: CSC
This has been the stuff of corporate management information systems for decades, but while the consumer has provided input to the process, the consumer has never engaged in data mining of this sort because it has not been relevant. Such traditional data mining simply does not answer questions that consumers may have. Even if it did, the data and mining tools have not been accessible. Though well understood, data mining remains a vast challenge that becomes more complex as firms globalize and regulations follow. For example, Solvency II affects the global operations of European insurers, and FATCA (Foreign Account Tax Compliance Act) affects the global operations of U.S. banks. The demand for an enterprise view of structured data, maintained in real time, that allows ongoing business activity monitoring is a problem banks and insurers are still wrestling with. WEB MInIng. In the last decade of the 20th century Sir Tim Berners-Lee unleashed the World Wide Web, which led to the creation of Web mining. google and other search engines have become essential consumer and corporate tools for mining the worlds unstructured data. Web mining has turned search results pages into the new global Main Street through which financial firms must reach consumers. For consumers, Web mining provides direction:
Which firm shall I choose? What does this product do? For example, consumers no longer have to sift through numerous financial services sites to compare offerings but can use aggregators like the U.K.s gocompare.com or MoneySupermaket.com.98 Some 50 percent of all U.K. car insurance is driven through such price comparison sites, which aggregate structured data previously locked inside diverse financial firms. The aggregators interface to subscribing insurers to compare car quotes from a wide range of providers and present a summary to the consumer for comparison and selection. Unlocking data, both structured and unstructured, is at once the reward and the challenge. (See Figure 23.) This is what French real estate company Akerys faced in seeking an innovative decision-making tool for real estate investors. The goal was to optimize real estate sales in France and minimize investor risk. Enter Lab Immo, Akeryss site designed to provide accurate, comprehensive real estate statistics. Lab Immo uses a semantic search solution from Exalead to analyze multiple sources of data, both internal and external, structured and unstructured. The solution distills millions of pieces of hybrid Web data and thousands of Web pages daily to provide the most current statistics possible. This Web data, primarily
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on unstructured data. conversely, the individual consumer,

Figure 23. The daTa challenge: hide and seek
always seeking a specific answer to a specific question, is comfortable with sifting and assimilating the unstructured data as is to make a judgment. Social mining is where consumers flex their muscles. The click or tap of a keypad is all that stands between consumers and their financial services products today. This contraction of the distribution system has positioned the consumer to drive demand and the financial services firm to listen rather than guess. Social mining provides deep, automated insights and answers. Information that may have come from focus groups, opinion surveys or complaint letters is now drawn from Internet activity. The like button is easy to understand, but it takes real mining to discover what makes people
Unlocking the value hidden in todays wealth of data, both structured and unstructured, requires tackling data volume, identification, format and translation so that data can be readily accessed (i.e., is usable) and searched (i.e., is meaningful). Source: CSC
move their money from bank to bank, why consumers defect from one insurance company to the next, and what types of customer service are important to a consumer.
from real estate agency sites, is used to enrich Akeryss existing data. Investors can review data by geographic region and obtain statistics such as price per square meter or the number of listings in a certain area over a certain period. In the past, data was provided by third parties, which was a slow, complicated, costly process. The Exalead solution enables Akerys to combine timely Web data with corporate data and let people explore the data for the insights they need. SocIAl MInIng. Data and Web mining focus on comparatively static structured and unstructured data. But the explosion of social media blogs, YouTube, Facebook, Twitter has ignited an explosion of opinions and emotions flowing second by second from individuals and influencers. For the financial firm, if it can be unlocked, an individuals emotional reaction to a type of product (stock markets terrify me) or a firm (I will never do business with them again) is a powerful indicator of propensity to purchase. A typical consumer uses social mining to answer questions like What experiences have others had with this bank? Yet here lies the difference in social mining for corporations and consumers. Because it is dealing with consumers on a large scale, the financial firm must seek to impose structure
This contraction of the distribution system has positioned the consumer to drive demand and the financial services firm to listen rather than guess.
The combination of social mining, data aggregation and pattern detection has created a new segment of technology companies that use text analytics and natural language processing to find meaning in social conversations, including sentiment, purchase intent and demographics. These companies enable firms to understand how they are perceived and engaging with consumers through social media. The fundamental questions are the same in financial services as elsewhere: What are the consumers pain points and how does the firm address them? How successful are promotional campaigns? What are competitors doing? Trampoline Systemss SonAR social analytics technology grew out of ethnographic research into the social behavior underlying efficient collaboration; today that knowledge is
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Data LanDsCape
As mining and its tools evolve, the nature of the data being mined is also evolving. SHApE. Data in rows and columns represent the facts of a transaction, but more important in the connected world is the story in a transaction. Today this is captured in the vast array of online communication channels: Web pages, RSS feeds, tweets, text messages, images, videos, podcasts, email, Facebook wall entries. The shape of data is different. SIzE. Unstructured data, primarily created by consumers, is massively expanding the volume of data in the world. IDc reports that the digital universe will be 44 times bigger in 2020 than it was in 2009.99 Enough said about size. VolATIlITY. What was once static or slow-moving structured data in consistency of data has taken a back seat to availability of information. That volatility challenge is the basis for Eric Brewers cAp theory about the inherent tradeoff in distributed database design.
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Changing
used and even attempt to prevent itself from being misused. This self-awareness is being driven by cybersecurity needs for missioncritical government data,101 but the implications for the financial industry are clear. Imagine: The combination of a persons credit card number, name, expiration date and security code is a financial passport to any criminals dreams that can be funded up to that persons credit limit. now imagine if this combination of data appears on a website accessed from a device the person has never used. The transaction is blocked, and via details registered with his or her bank, the person is sent a text asking to confirm the transaction. If not yet the stuff of today, there are sufficient big brains debating this to make this the stuff of tomorrow. Indeed, this is the sort of goal that repurposed bitcoin algorithms could accomplish.
corporate data centers is now fastmoving unstructured data created and altered at the click or touch of a keypad. consider a bank account application form (date of birth, address, telephone) low volatility, structured. consider a forum in which consumers discuss whether to fill in that form (emotional, regularly updated, few facts) high volatility, unstructured.
In short, you cant
have it all. For example, high availability required by sites like Amazon means that either Consistency or performance must be sacrificed. SElF-AWAREnESS. Data can be coded to understand how it is being
used for customer relationship management optimization. With social mining, the fundamental evolution in customer relationship management is being able to listen to all consumers or at least those many more consumers who care enough (positively or negatively) to engage actively on the Web.
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sensitive to banking fees than interest rates and, since she has been a customer for 10 years, suspend her service fee for a month. or, it could route a complaint to a call center for immediate follow-up. (note: It is best to engage first in the channel where the comment was made e.g., for a Twitter comment, use Twitter as the first point of contact.)
Firms can listen to these customers in the aggregate or individually. Using technology from Salesforce Radian6, financial services firms can identify topic trends over time (complaints about fees? praise for new credit cards?) as well as zero in on specific customer comments. A bank might detect that Jane Doe is more Sentiment analysis can be used for competitive information too. Bank A could listen for mentions of Bank B plus hate and reach out to those individuals. If a persons complaint is about high-interest credit cards, Bank A can market a lower-interest card to that person.
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For financial services firms, a many-to-one customer relationship can become a one-to-one customer relationship by leveraging the power of social big data, insights mining and cRM integration. This wasnt possible two years ago, says Jon Mcginley, marketing director, Salesforce Radian6.
Despite the Big Brother overtones of potentially tracking ones every digital detail, society mining is a positive tool in the hands of innovative, responsible firms. Society mining can provide an understanding of risk in the allocation of capital to minutely accurate levels, potentially transforming the nature of risk itself. Already, fail-safe mechanisms in trading prevent some risks, but for the consumer, the risk of investing, or driving a car, or just plain breathing can be transformed by a precise real-time understanding of the consequences of any action. If fraud is eliminated, then insurance premiums plummet. If investment risks are better understood, then consumers savings and investments are more secure. Society mining lays bare the fact that no two people are alike, enabling the financial services firm to better understand customers at the individual level and gear specific products to specific individuals, says Abhishek Mehta, cofounder of Tresata, the first company to provide a big data platform for analyzing financial industry data.
a many-to-one customer relationship can become a oneto-one customer relationship by leveraging the power of social big data, insights mining and cRM integration.
Ultimately, social mining is about individual relationships. parents teach their children you are judged by the company you keep, and banks and insurance companies are paying attention. Who you friend on Facebook could influence your credit rating if they pay late maybe that means you will too and whether or not you get a loan.103 With each connection consumers shape a picture of their lifestyle, tastes, avocations, friends and associates, providing grist for the social mining mill. SocIETY MInIng. Society mining extends social mining almost into digital omniscience. It is about aggregating and analyzing a mass of public and private, secure and open databases including credit bureaus, DnA databanks, Web logs, geospatial databases that track where the consumer has been, social sites, government databases, corporate databases, chat forums, surveillance videos and other sensors. This specialization is key, as financial services (like most This means an underwriter, loan officer or marketer can be armed with an arsenal of data that makes the connected consumer more digitally visible than ever before. Visa has applied for a patent for systems and methods to create profiles for ad targeting that go well beyond credit card transaction data. It describes the possibility of using information from social network websites, information from credit bureaus, information from search engines, information about insurance claims, information from DnA databanks and other sources.
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Why is it that Amazon knows more about me than my bank? asks Mehta. It doesnt have to be that way. Banks can leverage a massive amount of information about their customers. They can store it, analyze it, and use it to make decisions that advocate for the consumer. (See Figure 24.) Tresatas platform aims to do for financial data what google does for Web data: make sense of it using Hadoop, the framework for processing large, complex, distributed data sets. (Hadoop uses an open source implementation of googles MapReduce distributed processing framework. This, and other important big data trends, is described in the 2011 lEF report Data rEvolution.105) Firms can leapfrog traditional data warehouse approaches with Tresatas specialized analytics platform.
industries) uses very specific performance metrics and data semantics that Tresata can cater to. For example, propensity modeling for student loan applicants requires a different approach from propensity modeling for mortgage applicants, which is completely different from building an ad optimization engine. Tresata has developed analytics containers pre-built data, algorithms and query collections targeted to highly specific financial services business problems. These containers
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Figure 24. InnovatIve Data analysIs Reveals BusIness oppoRtunItIes
Aggregated analysis (such as national, state or ZIP code aggregations) masks the variability in data. By leveraging a platform that allows data to be stored, processed and analyzed at the individual (i.e., household) level, like Tresatas Analytical Platform, one can see the large variability in probabilistic analysis of home value versus property debt. What appears to be predominantly red values (negative, or high risk) at the aggregate level reveals a fair amount of green values (positive, or low risk) when seen at the household level. It is critical for financial services firms to process and analyze data at the individual level to see a true picture of the household and create products and services that meet consumer needs. Tresatas platform makes it possible to take data across all of a banks data systems, mash it with external data sources, and process the resultant data sets to better understand what consumers have, want and should be offered. Financial services firms can build business models that enable a virtuous cycle of innovation and value creation driven by consumer needs. Source: Tresata
are built on top of Tresatas massively parallel Data Assembly Line that can ingest structured and unstructured data; process, merge and score it at an individual unit level; and produce a total view of the customer. Historically, mining the vast volumes of data implied by society mining required access to vast data centers (and still does), but the financial firm no longer needs to own those data centers. Data as a service, from firms like Tresata, enables firms to tap the data they need when
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they need it, from the cloud. Tresata has partnerships with leading data companies that provide access to financial data (assets, net worth), non-financial data (online, email, real estate, telecom) and social data (tweets, geo tags). This is what society mining is all about: combining myriad data sources and finding useful patterns in them. This is where the firms insight into the consumer is unlocked. This is one reason Citi is exploring IBMs Watson technologies to analyze a range of client, financial and economic
data.106 no one firm owns all the data but as data is commoditized, the aggregation and analysis of big data sets becomes not only practical but essential. This connecting the dots is the corporate gold mine so valuable that governments must intervene with data protection legislation and rigorous protection of consumer information. If this sounds obscure, think of the insurer paying for a long-term costly treatment for diabetes; now interface that with the supermarket that confirms John Doe binges on Snickers bars. Unlikely? In a world where supermarkets act as insurance distributors? Think of the travel insurer that sells a policy that excludes bungee jumping, but the mobile phone database identifies that the insured was at Face Adrenalin, the worlds highest bungee bridge, on the date of the claim. Unlikely? Hardly. Saving one large claim could recoup the cost of the cheap interfaces needed to connect the dots. The limitation of society mining is no longer technology but privacy; data protection will never have a more important role to play for the consumer.
markets and banking typically have the shortest transactions times and therefore have seen the earliest and greatest impact from mining volatile data, because short-cycle transactions like trades and fraud detection are based on data that is stale by days end. longer-cycle transactions like those related to life insurance policies are based on long-term trends and thus are less affected by volatile data. InVESTMEnT SERVIcES. consumers most sophisticated, and most current, information needs relate to complex products dependent on the performance of markets (a unit-linked pension, for example). conveniently (or perhaps consequently), this area has seen the biggest explosion of data in unstructured analyst reports, blogs, discussion forums and RSS feeds. Wealthier consumers, increasingly dependent on their own financial decisions rather than a future generation of taxpayers for a comfortable retirement, demand this data to form insights. The exponential increase in real-time unstructured data has fueled new technology designed for corporations to exploit this data. But the combination of mobile technologies and new media has placed all of this in the hands of the consumer as well. no longer is an advisor-broker on the other end of the telephone line required for todays connected investor; the fast-moving data is there for anyone who can keep up. Importantly, the consumer asking the individual question to
Mining Makes iTs MaRk

Data mining impacts financial services in many ways depending on the situation, be it making split-second investment decisions or insuring a self-driving car.
Figure 25. TRansacTion TiMes foR financial seRvices
TRAnSAcTIon TIMES. Financial service transactions range from splitsecond trades to decades-long life insurance policies. If a person buys shares in a bank for her investment portfolio, she wants that done now; if she applies for a life insurance policy, that requires underwriting that may take weeks. Mining has different impacts depending on the length of a transaction, as shown in Figure 25. Typically, the shorter the transaction time, the greater the impact mining can have.
Transaction times vary for financial services, from split-second transactions for
The elapsed time leading up to the transaction commitment, and the time after that for transaction fulfillment, are noticeably different across financial services; so too is the impact of fast moving unstructured data. capital
trading to decades-long transactions for life insurance. generally, the shorter the transaction time, the greater the impact of mining volatile unstructured data, since short-cycle transactions are based on data that is stale by days end. longer-cycle transactions are based on long-term trends and thus are less affected by volatile data. Source: CSC
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draw an individual judgment requires far less sophisticated technology (i.e., a browser) than the broker. BAnkIng. While the financial transaction commitment time for a bank has historically been the end of the business day, the democratization of consumer access via the Internet and smartphones is challenging the retail banking industry for greater transparency. consumer access to low-latency data such as email, RSS feeds, social media and blogs helps address consumer demands in a volatile 24x7 financial environment. consumers can not only manage their money in an agile manner but influence the actions of their consumer networks. In December 2011 it was reported that a latvian bank run was caused by mounting Twitter rumors. As many as 10,000 customers in the Baltic republic withdrew large amounts of capital from both Swedbank and SEB, emptying cash machines of $29 million and leading to local reports of long queues and spreading concern.107 pRIcIng SEgMEnTATIon. Insurance, on the other hand, with its long begin-to-end cycles, can frame unstructured experience data with structured assessment data to drive new innovation in insurance risk assessment by reducing the time to the financial transaction commitment. progressive uses highly personal data you agree to share (your actual driving behavior, gathered via a plug-in device) to provide a new level of risk assessment and discounts. Data from an instrumented environment (the car) represents a new source of data that yields a single instance product based on a single instance of risk, with potentially substantial consumer savings. Will so-called telematics insurance take off? Some say young drivers will be more willing to offer their driving data in exchange for a discount.
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Such cumulative analysis compounds the complexity of the analysis but also the value of the results. converging technologies that push the envelope of media, mobility and big data into a reusable industrial-strength framework will help life insurers better exploit the fast moving volatile data. For instance, Revolution Analytics has created an enterprise-strength tonic from a recipe of one part R open source statistical modelling software, once only used by universities and the scientific community, and one part big data analytics to meet the technology demand of data-driven businesses. For decades, financial services has depended on financial modelling and analytics to understand money trends; now the open source concept allows those financial models to be shared by the inside-R.org community. Revolution Analytics provides an enterprise wrapper that makes R commercially viable. cSc is leveraging R in its development laboratory to design a starter expert model to give an insurer a jump start on creating customer intelligence up-sell and cross-sell marketing campaigns. FRAUD. For financial firms, consumer fraud comes in many forms, from credit card fraud in banking to claims fraud in insurance, costing the industry and consumers billions of dollars annually. The detection and prevention of fraud essentially comes down to mining for undetected relationships. This is where society mining can shine, enabling insurers to leverage unstructured data sources to detect unusual patterns and insights. Mining can also be used to prevent fraud in the first place. Integrating and mining different data sets is at the heart of MicroEnsures crop insurance that automatically pays out claims based on independent weather data. Since the consumer does not submit a claim, fraudulent claims are eliminated, making provision of the insurance viable. This is good for both insurers and consumers. cAR InSURAncE. The data-driven car which is to say, the self-driving car is on the horizon, with major implications not only for motorists but for car insurers. With self-driving cars, which are intended to be safer than human-operated cars due to innovative crash-avoidance techniques, accident risk shifts from the driver to the manufacturer. (See Figure 26.) nevada became the first state in the first country in the world to approve self-driving cars in February 2012; insurers are preparing for what could be a major upheaval.110 Several car manufacturers have announced a goal to eliminate auto-related deaths and injuries by 2020; autonomous technologies are part of the solution.111 Autonomous technologies in the car represent a powerful extension
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In any event, telematics rede-
fines risk from imagined to actual behavior and enables a form of mass customization for car insurance. UnDERWRITIng. Issuing a life insurance contract requires collecting factual data from the customers application, data from the agent/broker statement, and lifestyle data including physician statements, medical records and prescription drug histories. The insurer then applies that structured and unstructured data to risk profiles to determine a risk rating. Taming the shape and size of the unstructured data, and marrying it to structured data, is reshaping and collapsing the life underwriting process by utilizing science-based predictive underwriting tools like Mortality Assessment Technology (MAT), developed and patented by BioSignia.109 BioSignia uses analytics to determine the cumulative effects of health risks on mortality.
saved through better warnings and preparation. Given the immense human cost of catastrophe that dwarfs the impact of events affecting one or a few individuals, mining climate data for risk is arguably one of the most significant forces for good in which the financial services industry can engage. A variety of industries could benefit from historical geophysical and earth science data collected from satellites. Further, consumers could receive a return on their tax dollars through lower prices for property and business insurance or improved warnings about catastrophes.
Figure 26. With self-driving cars like this one from Google, risk shifts from consumers to manufacturers, a major change for the auto insurance industry. Source: Steve Jurvetson http://www.flickr.com/photos/jurvetson/5499949739
Pulling layers of unstructured data together is like collecting structured pixels of data until an image forms. CSC has designed OmniMap, using open source technologies and publicly available geospatial data, to pull together a variety of so-called pictures. OmniMaps unique ability to collect, analyze and overlay public domain unstructured data onto a geospatial structured context a map gives insights for
of automation: from recording data generated by the driver to operating the car based on the data.
a number of industries beyond the obvious government and federal applications. For instance, automobile insurers could see risk corridors based on U.S. National Highway Traffic Safety Administration data of accidents and severity overlaid on street maps.112 (See Figure 28.)
Leveraging PubLic Data

An important element of modern mining is the ability to leverage public data. CSC is working with the U.S. government to apply big data skills to climate and weather data, collected by agencies such as NASA and NOAA, so it can be leveraged for commercial use. The potential value of this data is broad, ranging from applications for insurance and reinsurance to energy and local government. (See Figure 27.) For example, climate affects agriculture, natural catastrophes, domestic and business energy use, and investments by public authorities to cope with snow and freezing conditions. The ability to more precisely forecast climate through data analysis has significant commercial implications for the poor farmer whose crops may be ruined, to cities overwhelmed by catastrophes, to local councils considering investment in snow plows. If one can better predict the probability, location, timing and size of catastrophes, then insurers and banks can price risk with much greater precision and peoples lives can be
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Never before has the mine field been so rich yet so complicated as it is with todays structured and unstructured
Figure 27. naturaL catastroPhes worLDwiDe 1980 2011 Overall and insured losses with trend
The ability to more precisely forecast climate by analyzing public climate data has significant implications for insurers, reinsurers and consumers. Source: Munich Re GeoRisksResearch NatCatSERVICE, January 2012
Figure 28. By overlaying accident data (red) from the U.S. national Highway Traffic Safety Administration on a map, car insurers can see where the high-risk areas are. cScs omniMap integrates the accident and geospatial data. Source: CSC
data. Detecting behavior patterns or weather patterns and predicting outcomes can provide actionable insight regarding risk. Mathematical algorithms that structure and align unstructured information to find relationships are the basis for fraud detection technologies. Yet analysis of unstructured plus structured data goes much further. Society mining, the new frontier, is about compiling a comprehensive digital dossier of you for risk evaluation, marketing and other purposes. Every digital step you take creates a digital footprint that builds a profile for the firm that wants to look well beyond demographics into emotions, attitudes, desires, hatreds, family, friends. The ease with which consumers, particularly young financial consumers, are willing to share intimacies is remarkable and important. Society mining is where the corporation can lay bare the consumer. Data protection is the consumers armor; the importance of enforcing data protection regulations will become ever more critical as complex data sets are assembled and the most intimate details of consumer behavior, attitudes and emotions are examined with ease. legislators will work overtime deciding public versus private data and how it can be used. As mining becomes more intimate, then, the consumer needs to be aware. To horribly mangle the words of george orwell: Hadoop is watching you.
That said, the implications of society mining are not all sinister. After all, the elimination of fraud would dramatically reduce insurance premiums. consider how information on Facebook and Twitter can be used to nail policyholders for filing inflated or fraudulent claims.113 In addition, society mining provides a superior way to assess risk; insurance rates can be more precise, based on known behavior patterns and repeatable characteristics that can be quantified. Indeed, the insights available from analyzing big data transform the very understanding of risk. Risk is at the heart of financial services and capitalism. It is not too extreme to suggest that big data will ultimately change almost every aspect of consumer financial services forever. It means not that insurers can better assess the risk of a driver crashing, but that the driver is completely incapable of crashing the car. It means not just that a firm can assess the mortality risk cohort that a person falls into for life insurance, but that it can identify individually when, barring accident, each of us is likely to die. It means that with ever greater precision, humanity can predict the catastrophes that can overwhelm entire countries and populations. In transforming the understanding of risk, and where risk lies, big data transforms the nature of financial services and capitalism itself.
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DigitaLLy powerfuL
Four themes mobile, micro, media and mining represent profound changes to how consumers engage with each other, the financial firms they transact business with, and the financial markets that serve them. These themes are born of the participation of most of the worlds population in digital networks mobile networks, payment networks, social media networks, the Internet. The themes drive a four-pronged revolution: in who and how people engage in financial services; in payments, the foundation of economic activity; in the players who serve the consumer finance market and create new processes for how financial services are delivered; and in the power that consumers can achieve. (See Figure 29.)
DigitaLLy VisibLe
the ether using mobile technology. In just the lifespan of a cat this has ceased to be fantastic, and that is extraordinary. This is a revolution in who is engaging in financial services, where they are, and how they are choosing to engage around money. At a human level, there is the potential of technologyenabled microfinance to bring greater prosperity to the poor. Despite legitimate issues and concerns, microfinance stands alongside healthcare, physical security and legal protection as a critical pillar to transform lives. This is important in the near term for consumers, and in the longer term for firms seeking new markets.
Figure 29. connecTed consuMeR: financial seRvices RevoluTion
With this digital power comes digital visibility. consumers views, actions and habits are on display like never before to those with the tools to understand them. For the financial firm, this brings both opportunity and threat.
Many Asian, latin American and African countries are not just more populous and faster growing, but they are growing in wealth and require the full gamut of consumer finance. In 2002, low- and middle-income countries had a gross national income per capita of $1,140.114 By 2010, gnI had nearly tripled to $3,288. The gulf to high-income countries remains huge, but that fast-growing income supports a fast-growing level of demand for financial services. The connected consumer is transforming consumer social responsibility. In lending models such as kiva,
people RevoluTion
Six billion mobile phone subscriptions and two billion Internet users mean that an Australian citizen in a taxi visiting new York chats live over the Web with an Indian banking employee in Delhi about a money transfer. A kenyan lacking electricity in her home makes digital payments over
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The connected consumer is transforming consumer social responsibility.
ing mobile first, driving enterprises to think mobile first. If that feels like the tail wagging the dog, it is culminating in a power revolution that is discussed last.
payMenTs RevoluTion
Alongside the people revolution is a payments revolution. The ultimate state monopoly, even in the most libertarian
zopa and prosper there is a strong strand of social activism that stretches from the purely charitable to investment opportunities (with a conscience). In the occupy movement a tiny minority of consumers used connection to try to effect major change in financial services. Whether one agrees with them or not, their old media impact enabled by new media connection is out of all proportion to their number. consumer power changed aspects of financial services years ago. Broadband access, widespread availability of sophisticated financial market data, discussion boards and consumer trading software have created an environment in which financially sophisticated consumers take responsibility for their own investments and make a living by doing so. consumers configure their own products on the Internet, such as options on insurance policies, investment funds and bank products. At the same time, the Internet is taking that level of interaction to a new level with p2p financial services. consumer trading platforms disintermediated the broker but p2p payments and lending disintermediate the bank. This is a trend measured in millions of consumers. A trend measured in billions of consumers is that people are thinking mobile first that is, mobile phones and tablets are the first devices people use to access financial services. Financial firms need to design for mobility not as an afterthought but as the primary mechanism through which consumers expect to connect. Thus the people revolution is not only about who is connecting to financial services, how, and why, but also the connected consumers impact on the financial services enterprise. consumers are think-
of countries, is money. Money not backed by assets is the supreme expression of consumer trust that the state will stand behind paper scraps, metal tokens or bits as having value. of course, money has no value except what a sovereign says it has. Bitcoin takes the payments revolution to its ultimate conclusion payment without sovereignty by privatizing currency. This is too radical, after millennia of state monopoly currencies, to succeed. But Bitcoins challenge to the fundamental foundation of how economies work is breathtaking in its ambition. In any event, a payments revolution is well underway. cash is a clumsy payment mechanism in a technology-equipped world. As a store of value, it is challenging for the poor, who are unable to access bank accounts and the assorted paraphernalia of checks, cards and ATMs. As a means of exchange, cash degrades in quality (notes anyway), is able to be counterfeited, is physically bulky, and is easily stolen with no recourse for proving ownership. The wealthy have had alternatives to cash for centuries, at least for significant payments first in the form of checks and then cards. However, for the first time, alternatives to
for the first time, alternatives to cash for mainstream payments of all values for all people are becoming available and economically feasible.
cash for mainstream payments of all values for all people are becoming available and economically feasible. That said, banknote printing and coin minting remain a growth industry; Euro notes in circulation grew to 14.3 million in January 2012 from 10.5 million five years earlier.115 However, there are more alternatives being used more frequently for more transactions. Euro area card payment transactions
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consumers are thinking mobile first, driving enterprises to think mobile first.
rose from 8.8 billion in 2001 to 20.6 billion in 2010, and electronic money purchases rose from just 135 million to 1 billion, while cheque transactions declined from 5.9 billion to 3.9 billion. But on a continent where cheques still outnumber electronic payments by nearly 4 to 1, one must take care not to scream revolution too loudly. The ubiquity of mobile phones has enabled private mobile networks (such as Safaricom) and technology firms (such as google) to enter the payment value chain. There is no apology for the airtime given to M-pESA in this report. M-pESA is a model for the payments revolution in poorer countries. Some analysts believe that the value of mobile payments, estimated at some $240 billion in 2011, could exceed $1 trillion by 2015.
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insurers, from citi to prudential, have growth strategies in Asia. Much as enterprise technology services have become, to some extent, an Asian game that the United States and Europe try and hold back with trade barriers called visas, so consumer financial services is becoming at the very least a global game, and over time it is tilting further south and east. But these are not the most radical consequences of the players revolution. The most radical are the new firms that have not just extended the boundaries of existing financial space but have steered towards new horizons. These are the new intermediaries, and their entire existence lies in the connected consumer. connection has disintermediated aspects of the firms that manage consumer financial services, from brokers to payments. Yet consumer connection has not destroyed the need for intermediation. Rather, it has slimmed the intermediary and changed what the intermediary does. kiva and zopa are still intermediaries; paypal and Alipay are still intermediaries. The point is that they are different types of intermediaries. M-kESHo and M-pESA are enabled by a mobile telecommunications company, Safaricom, getting into financial services. The connected consumer does not so much create new space as change existing space. consumer financial services have always been about mediating consumers capital and the risks they face. Its still about mediating capital and risk but, at least in banking, were starting to see a slimmer mediation by firms that understand mediation in a consumer-driven, consumer-connected world. The new intermediaries are often inextricably interwoven with the technology that supports them. That said, new technology firms have appeared across mobile, micro, media and mining. companies such as Exalead, Trampoline Systems and Salesforce Radian6 exist at the intersection of media and mining, enabling firms to make sense of the mass of Web and other unstructured data that connected consumers are continually adding to. companies like Tresata, also playing at the intersection, have moved up the stack to offer this data as a service. Also, consider the worlds top 10 visited websites: google (1998), Facebook (2004), You Tube (2005), Yahoo (1995), Baidu (2000), Wikipedia (2001), Windows live (1975), Twitter (2006), QQ.com (1998) and Amazon (1995).117 Although none of these are financial services firms per se they are not regulated financial entities all are building consumers knowledge of financial services, fostering
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Japan leads the world in nFc mobile payments with 47 million Japanese using tap-and-go phones. other countries will follow, but differently, and at different paces. The use of nFc-enabled mobile devices, perhaps alongside QR codes, is happening and will grow. The purse or wallet, a mainstay physical store of cards and cash, will become less important as mobile devices enable payment through multiple cards and from bank accounts at marginal cost, meaning my digital payment for my Snickers bar is simply more convenient. Digital payment won the battle for the larger transaction many years ago. Today the payment battleground is cents, pence, jiao and centavos; card and mobile are gearing up for this fight with cash. Its not a fight to the death but a fight for supremacy, and the winner will vary by country. payment networks, like any network, illustrate the network effect: The network increases in value with the number of participants. So the more interoperable the payment network is with other payment networks, the more participants and thus the more power it will have.
playeRs RevoluTion
The connected consumer is providing space for new brands, for transformed brands, and for a whole new breed of financial intermediaries and technology firms. This is changing where financial services are happening, whats happening, and how theyre happening. Middle-income countries in particular are generating consumer brands. Brazil, china and India already have, or will soon, the capital, expertise and desire to export financial brands at scale. Meanwhile, Western global banks and
Questions for finanCiaL
serViCes firms
To help financial services firms grasp the challenge and opportunity of the connected consumer, here are 10 questions to consider. Some may have already been answered. others may be uncomfortable. All are relevant. Where are consumer payments in your value chain, and how will the payments revolution affect your processes? Does the payment revolution open up new business opportunities? In which of your consumer touchpoints will mobile devices play a role? What are the devices (tablets, smartphones) and what role will each play? If the answer is they wont, a thought experiment for you: Think of a scenario where a mobile device must be used in a process. now ask someone in their early 20s why that will never happen (because they will convince you it will). To what extent should lowerincome consumers in both lowerand higher-income countries have To what extent will you take the risk of converting employees into corporate activists to engage with connected consumers in social media? If you wont, how will you engage in the discussion about your firm that is happening somewhere right now? In the 1990s, you gathered biometric data about who your How do you plan to leverage the digital visibility of your customers? Will you target them shamelessly or become their advocate? What does customer visibility mean to your firm? To what extent is your firm equipping customers to demonstrate consumer social responsibility and ensuring that employees demonstrate the values that consumers expect? If you could know anything about your customers, what would that be? Increasingly, the question will be how much you want to invest to obtain that knowledge. What products should you redesign for micro whether targeted at higher- or lower-income consumers and how? How should you grasp the increasing granularity of financial products? A thought experiment: Describe how a new player could cannibalize part of your business by connecting your customers in a different way. How much money would you bet that this would never happen to the financial industry, which is digital? Just like it would never happen to the music industry, which is also digital. oh. a place in your customer strategy? What would be your motive for reaching these customers? customers are. now how far will you go in using technology to understand how your customers think and their emotional reaction to your firm?
new payment methods, determining consumer perception of financial brands, and allowing consumers to select financial services firms. They are the new digital dance floor for financial firms. new players find space because they change the process of financial services. The process of making payments is very different in kenya today than in 2000 because of telecommunications firms. The retail insurance business is
49
less affected by the payments revolution than banks, but insurance is being transformed as profoundly by the power of the connected consumer. The process of motor and home insurance distribution in the U.k. has been turned upside down by online insurance price comparison sites; online insurance quotes are the mainstream now in that country. Tablet technology brings investment advice more easily into the home at the same time as a more educated consumer has already googled those investment firms on
which his pension depends. Bank branches and insurance claim updates are on Facebook.
wishes to hear. Firms need to listen, respond and proactively serve the connected consumer.
poweR RevoluTion
Financial services were built on corporate networks, where firms intermediated consumer capital and risk. As a 15year-old, this reports author was interviewed yes, interviewed by the local bank branch manager to see whether he was a sufficiently worthy citizen to hold a bank account; his father briefed him on how to present himself well. planet Mars? no, England in the late 1970s. Such corporate power over consumer has become laughable because technology has connected consumers. But and there has to be a but a profound consequence of digital engagement is digital visibility and loss of anonymity. Store cards have provided supermarkets such as Tesco deep insight into the habits of its customers: their children, their drinking habits, their attitude to saving money. cash is the last bastion of the consumer who wants the corporation to be unaware of his or her intimate habits. Are digital payments just too orwellian to destroy cash? Whats the value to the insurer who funds your diabetes treatments of knowing your secret chocolate habit? How long before that interface is created? The consequences of consumers using social media to obtain information, and posting about getting grumpy about banks that keep them waiting for 20 minutes during their lunch break, may appear to be vaguely interesting if not amusing. It is much more than this. The Facebook generation has an expectation that the firm will engage with them on their terms and in their space, which is the virtual world every individual has built for himself or herself. This has huge consequences for employee engagement and how firms organize themselves to engage with consumers. It could place all staff on the digital front line. A financial firms brand is increasingly shaped by consumers digitally, its services are increasingly consumed digitally, and it is increasingly easy for consumers to amplify their views on their experiences. A consumer who screamed at the top of his or her voice dont bank with them and reached family and friends can now with minimal effort whisper DonT BAnk WITH THEM and reach whoever
The fuel of economic activity, payments, is being transformed by technology. people once unable to access financial services are finding that access; others, once the targets of financial services, are flexing their muscles in the realization that their individual voice can be amplified by connection to their peers. Financial services firms are transforming how they engage with customers; new firms are appearing. All this is possible because consumers are connected not with the corporation, as they always were; not with their family and local community, as they always were; but with everyone they want, wherever they are, to achieve anything they want to do. If you think that is dramatic, we think so too. Yet is all this actually a tame analysis? Is there an ultimate disruption? Is there a development so profound that it does to banking or insurance what iTunes did to music? If an organization truly supplies consumers with the power to take control of financial services using mobile tools, addressing micro needs and leveraging all the power of new media; and if it can use the petabytes of data being generated and the tools available but not yet leveraged to unlock intimate knowledge of the consumer; and if it uses that digital intimacy not to target the consumer but to become what Abhishek Mehta of Tresata calls a consumer advocate if that organization makes it so easy, so desirable, so financially attractive and so specifically relevant to do business with it, what then for the future of financial services? A transformation this profound can happen. The secret is not mobile or micro or media or mining; it is all four of those Ms. google has done it for the worlds information not by mining, but by combining mobile (where the consumer is), micro (tiny payments for search advertising funding free searches), media (the most visited website in the world) and mining (their algorithms to unlock the worlds knowledge). Firms are innovating in financial services on various combinations of the four Ms. As these innovations evolve, an even more radical financial future is in store for the connected consumer.
Join the blog and debate about the connected consumer at csc.com/connectedconsumer
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1 2 The British Museum, The origins of coinage, http://www.britishmuseum.org/explore/themes/money/the_origins_of_coinage.aspx Three Big plastic Issuers Take Step Toward Mobile Wallets, The Wall Street Journal, 28 February 2012, http://online.wsj.com/article/SB10001424052970204520204577249252046328364.html Ibid. google Wallet, How It Works, http://www.google.com/wallet/how-it-works.html Taiwans Bank Sinopac issues credit cards with digital display, Finextra, 14 october, 2010, http://www.finextra.com/news/fullstory.aspx?newsitemid=21900; Mastercard unveils interactive credit card, cards International, 15 october 2010, http://www.vrl-financial-news.com/cards--payments/cards-international/issues/ci-2010/ci-450/mastercard-unveils-interactive.aspx; and The end of the credit card as we know it? msnbc.com, http://www.msnbc.msn.com/id/21134540/vp/41987487#41987487 (video) credit card of the future, www.wimp.com/creditcard The future of banking? The credit card that will spell out your balance, Daily Mail Reporter, 10 March 2011, http://www.dailymail.co.uk/sciencetech/article-1364772/The-future-banking-credit-card-contains-read-aloud-balance.html M-pESA customer and Agent numbers, http://www.safaricom.co.ke/fileadmin/M-pESA/Documents/statistics/M-pESA_Statistics_-_2.pdf (data as of April 2011) Mobile payments go Viral: M-pESA in kenya, Bill & Melinda gates Foundation, January 2010, http://siteresources.worldbank.org/AFRIcAEXT/Resources/258643-1271798012256/M-pESA_kenya.pdf Mobile Money live: Deployment Tracker, http://www.wirelessintelligence.com/mobile-money/ (last accessed 18 March 2012) Red laser Mobile App now Supports paypal and Milo, payments news, 28 november 2011, http://www.paymentsnews.com/2011/11/red-laser-mobile-app-now-supports-paypal-and-milo.html paypal Unveils the Future of Shopping, paypal blog, 14 September 2011, https://www.thepaypalblog.com/2011/09/paypal-unveils-the-future-of-shopping/ (See video.) chase iphone app lets you deposit checks by taking pictures, IntoMobile, 2 July 2010, http://www.intomobile.com/2010/07/02/chase-iphone-app-lets-you-deposit-checks-by-taking-pictures/ Sreedhar kajeepeta, IT pro Impact: nFc and Mobile commerce, InformationWeek, 5 January 2012, p. 4, http://reports.informationweek.com/abstract/18/8626/Mobility-Wireless/it-pro-impact-nfc-and-mobile-commerce.html google Wallet reportedly coming to the Uk, in time for the 2012 london olympics, The next Web, 9 December 2011, http://thenextweb.com/google/2011/12/09/google-wallet-reportedly-coming-to-the-uk-in-time-for-the-2012-london-olympics/ Inside shows off nFc on a SIM, nFc World, 15 november 2011, http://www.nfcworld.com/2011/11/15/311321/inside-shows-off-nfc-on-a-sim/; and SIM-based nFc gains global support from 45 mobile carriers, all huddled around gSMAs standard, Engadget, 17 november 2011, http://www.engadget.com/2011/11/17/sim-based-nfc-gains-global-support-from-45-mobile-carriers-all/ Sreedhar kajeepeta, IT pro Impact: nFc and Mobile commerce, InformationWeek, 5 January 2012, p. 5, http://reports.informationweek.com/abstract/18/8626/Mobility-Wireless/it-pro-impact-nfc-and-mobile-commerce.html Schmidt sees nFc terminals everywhere, The Register, 23 June 2011, http://www.theregister.co.uk/2011/06/23/google_nfc/ Visa moves US to EMV and nFc, nFc World, 9 August 2011, http://www.nfcworld.com/2011/08/09/38989/visa-moves-us-to-emv-and-nfc/
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20 How levelUp aims to shake up mobile payments, cnET, 30 January 2012, http://news.cnet.com/8301-1035_3-57367720-94/how-levelup-aims-to-shake-up-mobile-payments/
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21 Mastercard QkR unites QR codes, audio, kinect, and nFc, Electronista, 16 September 2011, http://www.electronista.com/articles/11/09/16/mastercard.shows.off.qkr.platform.for.mobile/ Quicken loans is first lender with a mobile mortgage app, Mobility Digest, 28 June 2011, http://mobilitydigest.com/quicken-loans-is-first-lender-with-a-mobile-mortgage-app/ kenya: crop insurance via cell phone takes root, African Agriculture, 23 May 2011, http://www.africanagricultureblog.com/2011/05/kenya-crop-insurance-via-cell-phone.html www.statefarm.com/mobile Theres an App for That: Mobile phone Quoting, Insurance Journal, 21 February 2012, http://www.insurancejournal.com/news/national/2012/02/21/236521.htm How Snapshot Works, http://www.progressive.com/auto/snapshot-how-it-works.aspx In Sweden, cash Is king no More, The Huffington post, 17 March 2012, http://www.huffingtonpost.com/2012/03/17/sweden-eu-cash-cashless-money_n_1355510.html Bell Ringers go Digital This Season, The new York Times, 15 november 2011, http://www.nytimes.com/2011/11/16/business/salvation-army-bell-ringers-accepting-mobile-payments.html?ref=todayspaper Will bank branches wither away? USA Today, 16 november 2011, http://www.usatoday.com/money/perfi/basics/story/2011-11-16/bank-branches/51244020/1 22
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30 McB Mobile wins MMT Award for The Best Bank led Mobile Money Transfer programme, McB Mobile, 27 october 2010, http://home.mcbmobile.com/blog/news/#1 31 The Socio-Economic Impact of Mobile Financial Services: Analysis of pakistan, Bangladesh, India, Serbia and Malaysia, Boston consulting group, April 2011, p. 4, http://telenor.com/wp-content/uploads/2012/03/The-Socio-Economic-Impact-of-Mobile-Financial-Services-Bcg-Telenor-group-2011.pdf The Mobile Financial Services Development Report 2011, World Economic Forum, http://reports.weforum.org/mobile-financial-services-development-2011/content/pdf/wef-mfsd-report-2011.pdf, p. vii. World Bank policy Research paper 5253, Measuring Financial Access Around The World, March 2010, p. 2, http://www.cgap.org/gm/document-1.9.43130/Measuring_Financial_Access_Around_World.pdf Ignacio Mas and Dan Radcliffe, Mobile payments go Viral: M-pESA in kenya, Bill & Melinda gates Foundation, March 2010, p. 25, http://siteresources.worldbank.org/AFRIcAEXT/Resources/258643-1271798012256/M-pESA_kenya.pdf Financial Services for the poor, Strategy overview, Bill & Melinda gates Foundation, november 2010, p. 2 commercial Insurers in Microinsurance, August 2011, p. 4 and p. 6, http://www.microinsurancenetwork.org/networkpublication57.php Report overview here: http://www.microinsurancenetwork.org/networknew-675.php Microensure, Weather Index crop Insurance, http://www.microensure.com/products-weather.asp providing access to affordable livestock insurance, IcMIF Microinsurance, 6 July 2011 (originally published in July 2011, prosper issue 9), http://www.microinsurance.coop/news/providing-access-to-affordable-livestock-insurance RSBY, http://www.rsby.gov.in/index.aspx
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40 Insurance & technology to better serve Emerging consumers: learning to improve access & service, zurich Financial Services group, January 2011, p. 16, http://zis.biz/internet/main/SitecollectionDocuments/insight/Insurance_and_Technology.pdf
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41 MTn and Hollard Insurance group pilot mobile money insurance in ghana, Modernghana.com, 24 March 2011, http://www.modernghana.com/news/321871/1/mtn-and-hollard-insurance-group-pilot-mobile-money.html From Exclusion to Inclusion with Micropayments, Unique Identification Authority of India, planning commission, April 2010, p. ii, http://uidai.gov.in/UID_pDF/Front_page_Articles/Strategy/Exclusion_to_Inclusion_with_Micropayments.pdf Mastercard provides payment solution for Indias UID card holders, oneWorld South Asia, 8 December 2010, http://southasia.oneworld.net/ictsfordevelopment/mastercard-provides-payment-solution-for-indias-uid-card-holders 42
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44 The Use of Mobile phones in Education in Developing countries, The World Bank, http://go.worldbank.org/2Y63oQHog0 45 Text2Teach: Making SMS Relevant in Education, philippine Headline news online, 3 June 2005, http://www.newsflash.org/2004/02/si/si002009.htm
46 Vijay Aditya, co-founder and cEo of ekgaon, is credited with this insight in Insurance and technology to better serve Emerging consumers: learning to improve access & service, zurich Financial Services group, January 2011, p. 7, http://zis.biz/internet/main/SitecollectionDocuments/insight/Insurance_and_Technology.pdf 47 Indias sub-$50 Android tablet claims 1.4 million orders in two weeks, Engadget, 4 January 2012, http://www.engadget.com/2012/01/04/india-sub-50-android-tablet-1-4-million-orders/; and Worlds cheapest tablet launched, The Times of India, 5 october 2011, http://timesofindia.indiatimes.com/tech/news/hardware/Worlds-cheapest-tablet-launched/articleshow/10243846.cms
48 MTn ghana and Hollard launch m-insurance service, ITp.net, 23 March 2011, http://www.itp.net/mobile/584261-mtn-ghana-and-hollard-launch-m-insurance-service 49 Financial Services for the poor, Strategy overview, Bill & Melinda gates Foundation, november 2010, pp. 3-4 50 giving Indias poor a new Way to Save, grameen Foundation Blog, 5 January 2012, http://grameenfoundation.wordpress.com/2012/01/05/giving-indias-poor-a-new-way-to-save/ 51 M-pESA meets microsavings with Equity Bank deal in kenya, cgAp Technology Blog, 18 May 2010, http://technology.cgap.org/2010/05/18/m-pesa-meets-microsavings-with-equity-bank-deal-in-kenya/ opportunity Fund, Microsavings, http://www.opportunityfund.org/about/our-programs/microsavings Ingenico payment solutions help promote financial inclusion in the Middle East and Africa, press release, 19 May 2011, http://www.ingenico.com/es/media_center/press_releases/ingenico-payment-solutions-help-promote-financial-_gnufhckh.html Vortex Engineering, http://vortexindia.co.in/ Insurance & technology to better serve Emerging consumers: learning to improve access & service, zurich Financial Services group, January 2011, p. 10, http://zis.biz/internet/main/SitecollectionDocuments/insight/Insurance_and_Technology.pdf Financial Access @ Birth FAQ, http://financialaccessatbirth.org/index.php?option=com_content&view=category&layout=blog&id=39&Itemid=71 About FAB, http://financialaccessatbirth.org/index.php?option=com_content&view=category&layout=blog&id=34&Itemid=60 Microfinance as a development and poverty reduction policy: is it everything its cracked up to be? overseas Development Institute, March 2011, p. 1, http://www.odi.org.uk/resources/docs/6291.pdf Microfinance Investment in Sub Saharan Africa, International Association of Microfinance Investors, Table 1, http://www.iamfi.com/MI_sub-sahara-africa.html
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60 Microloan Foundation, http://www.microloanfoundation.org.uk/MlFHome
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61 62 63 Shark Bait: Microfinance is not just for poor countries, The Economist, 8 october 2011, http://www.economist.com/node/21531470 create Jobs for USA, http://www.createjobsforusa.org/ IDc predictions 2012: competing for 2020, December 2011, p. 20, http://events.idc-cema.com/dwn/SF_52232_top_10_preditions_2012.pdf
64 Mining the chatter: optimizing Social Media Monitoring, celent, July 2011, p. 8, http://www.celent.com/reports/mining-chatter-optimizing-social-media-monitoring (requires client registration) 65 lifenet Insurance company, http://www.lifenet-seimei.co.jp
66 Breathing new life into an old Industry, lifenet Insurance company, September 2011, p. 11, http://www.csc-connectforasia.com.sg/downloads/DAY%201/D1-07-DaisukeIwase_Directo%20to%20clients.pdf 67 68 Ibid., p. 27. commonwealth Banks Time Vault treasure hunt begins, mUmBREllA, 22 november 2011, http://mumbrella.com.au/commonwealth-banks-time-vault-treasure-hunt-begins-65968; and commonwealth Bank opens Vault on Facebook, The Financial Brand, 17 november 2011, http://thefinancialbrand.com/20484/commonwealth-bank-time-vault-facebook-game-sweepstakes-promotion/ The Top 35 Banks on Facebook, The Financial Brand, 1 September 2011, http://thefinancialbrand.com/19526/the-top-35-banks-on-facebook/
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70 Ibid. 71 Mining the chatter: optimizing Social Media Monitoring, celent, July 2011, p. 18, http://www.celent.com/reports/mining-chatter-optimizing-social-media-monitoring (requires client registration) gEIco Steps Further Into Facebook, Insurance networking news, 25 october 2011, http://www.insurancenetworking.com/vwc/geico-shortcuts-facebook-app-29206-1.html customers chat one-to-one in Banks Virtual Facebook Branch, The Financial Brand, 26 May 2011, http://thefinancialbrand.com/18510/asb-bank-virtual-facebook-branch/ ASB on Facebook is at https://apps.facebook.com/asbvirtualbranch Fiserv MyMoney Banking Application Built on Facebook platform Wins The Banker Technology Awards 2008 Retail Award for online Innovation, press release, 28 August 2008, http://newsroom.fiserv.com/releasedetail.cfm?releaseid=330941 Investors look to social media for financial advice: survey, Investment Executive, 28 February 2011, http://www.investmentexecutive.com/-/news-57078 get financial advice from social media? Most of us do, The Whig Standard, 20 May 2011, http://www.thewhig.com/ArticleDisplay.aspx?e=3132817 About MoneySavingExpert.com, http://www.moneysavingexpert.com/site/about-the-site Bank Transfer Day pushes 40,000 To Join credit Unions, Survey Finds, The Huffington post, 9 november 2011, http://www.huffingtonpost.com/2011/11/09/bank-transfer-day-40000-join-credit-unions_n_1083744.html occupy Together Meetups Everywhere, http://www.meetup.com/occupytogether/
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80 occupy london: archbishop of canterbury backs new tax on banking, The guardian, 2 november 2011 The guardian, 2 november 2011, http://www.guardian.co.uk/uk/2011/nov/02/occupy-london-archbishop-canterbury-tax 81 The Authentic Enterprise, Arthur W. page Society, 2007, p. 9, http://www.awpagesociety.com/images/uploads/2007AuthenticEnterprise.pdf
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82 83 paypal, https://www.paypal.co.uk Facebook sets sights on payments, while banks debate M@MBo, Banking Review, 22 April 2010, http://www.bankingreview.com.au/2010/04/facebook-sets-sights-on-payments-while-banks-debate-mmbo.html
84 About clearXchange, http://clearxchange.com/about.html 85 Bank of America, chase, Wells Fargo Form new Venture To Help consumers Make person-to-person payments Electronically, press release, 25 May 2011, https://www.wellsfargo.com/press/2011/20110525_clearxchange Alipay snatches online payment crown from paypal, china Daily, 24 november 2010, http://www.chinadaily.com.cn/business/2010-11/24/content_11600336.htm communications with zopa 12 March 2012 prosper, http://www.prosper.com/ Smava, http://www.smava.de/; communitylend, http://www.communitylend.com/
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90 zimpleMoney launches zimpleAuto: give credit Where credit Is Due, press release, 24 June 2010, http://www.zimplemoney.com/news/20100624_1.aspx 91 92 93 prosper company overview, http://www.prosper.com/about/ Funding circle, About Us, http://www.fundingcircle.com/about-us zopa, p2p lending: How it works, http://uk.zopa.com/zopaWeb/public/about-zopa/big-idea.html
94 Friendsurance, https://www.friendsurance.de 95 Bitcoin, http://bitcoin.org/
96 Royal canadian Mint aims to kickstart digital currency with Mintchip developer challenge, Engadget, 5 April 2012, http://www.engadget.com/2012/04/05/royal-canadian-mint-aims-to-kickstart-digital-currency-with-mint 97 98 How Digicash Blew Everything, Unknown Author, 10 February 1999, http://cryptome.org/jya/digicrash.htm http://www.gocompare.com, http://www.moneysupermarket.com/car-insurance/
99 The Digital Universe Decade Are You Ready? IDc, sponsored by EMc corporation, May 2010, pp 1-2, http://www.emc.com/collateral/analyst-reports/idc-digital-universe-are-you-ready.pdf 100 The cAp theorem is like physics to airplanes: every database must design around it, Four kitchens Blog, 21 February 2010, http://fourkitchens.com/blog/2010/02/21/cap-theorem-physics-airplanes-every-database-must-design-around-it 101 cyber Security R&D needs for DoE, http://chas.typepad.com/dli/2009/01/cyber-security-rd-needs-for-doe.html 102 Social Media for the Financial Services Industry, http://www.radian6.com/resources/library/social-media-for-the-financial-services-industry/ 103 Eli pariser, The Filter Bubble: What the Internet Is Hiding from You (new York: The penguin press, 2011), http://books.google.com/books?id=wcalroI1YbQc&pg=pT67&lpg=pT67&dq=stryker+creditworthiness+based+on+social+graph&source=bl&ots=I0b aurkFMt&sig=jSWwTdUfWXBnEMn--nuIkER1n8&hl=en&ei=gAefTqlln-rhiAlkzITocQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0cBsQ6AE wAA#v=onepage&q=stryker%20creditworthiness%20based%20on%20social%20graph&f=fals 104 Visas Blueprint for Targeted Advertising, The Wall Street Journal, Digits Blog, 24 october 2011, http://blogs.wsj.com/digits/2011/10/24/visas-blueprint-for-targeted-advertising/
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NOTES
105 Data rEvolution, cSc leading Edge Forum, September 2011, http://assets1.csc.com/lef/downloads/lEF_2011Data_rEvolution.pdf 106 IBMs Watson gets Wall Street Job After Jeopardy Win, Bloomberg, 6 March 2012, http://www.bloomberg.com/news/2012-03-05/ibm-s-watson-computer-gets-wall-street-job-one-year-after-jeopardy-win.html 107 latvian bank run sparked by Twitter rumors, gigaoM, 12 December 2011, http://gigaom.com/2011/12/12/latvian-bank-run-sparked-by-twitter-rumors/ 108 Will telematics change car insurance as we know it? 28 February 2012, http://news.gocompare.com/2012/02/will-telematics-change-car-insurance-as-we-know-it/ 109 cSc Teams with BioSignia to offer life Insurers, Reinsurers predictive Underwriting Technology, press release, 11 April 2011, http://assets1.csc.com/life_annuities_and_pensions/downloads/prBioSignia_110411.pdf 110 nevada approves permits for self-driving cars on roadways, Digital Journal, 17 February 2012, http://www.digitaljournal.com/article/319792 111 zero Fatalities: can Auto Makers Eliminate Vehicle Deaths By 2020? WardsAuto, 26 February 2010, http://wardsauto.com/ar/zero_vehicle_fatalities_100226
112 omniMap, http://geo.cscomnilocation.com/geoserver/www/omnimap.html 113 Insurers use social media to investigate claims, Sun Sentinel, 9 october 2011, http://articles.sun-sentinel.com/2011-10-09/business/fl-insurance-social-media-20111009_1_social-media-insurers-insurance-fraud 114 The World Bank, gnI per capita, Atlas method (current US$), low- and middle-income countries, http://data.worldbank.org/indicator/nY.gnp.pcAp.cD/countries/Xo?display=graph 115 European central Bank, Banknotes and coins circulation, http://www.ecb.int/stats/euro/circulation/html/index.en.html 116 global mobile statistics 2012, http://mobithinking.com/mobile-marketing-tools/latest-mobile-stats 117 Alexa Top 500 global Sites, http://www.alexa.com/topsites Data as of 17 April 2012
confidentID is a registered trademark of computer Sciences corporation.
56
aCknowLeDgments
pATRIck MolInEUX is chief services in the future. The report looks utterly different from patricks initial ideas, a desirable consequence of the intellects of the reports many contributors. The most important part of the journey for patrick was microfinance: I had been conscious of microfinance but unconscious of its power to transform lives. Microfinance takes technology from being merely useful to being, in some cases, life changing and saving. That is a lesson I patrick has held roles in project management, consulting, sales and marketing at cSc and previously worked in the financial services industry. He sees his strategy role as working with colleagues and clients to understand the broad scope of the financial services sector and zero in on the key areas for cSc to focus on. patrick embarked on this report to bring mental order to the vastness of where technology can take financial patrick lives near guildford in Surrey, England, and counts as his hobbies gardening, reading, cooking, community affairs (he is a local councillor) and medieval history (specifically, English history of the 1060s to 1090s). pmoline3@csc.com patrick has worked hard to increase his technical illiteracy, believing that any 21st century technology should be so advanced in its simplicity that it is easy for everyone to use. needed to learn. strategy officer for cScs financial services business. As lEF Associate, he drove the research for this report, shaping the core themes and drawing on a team of cSc experts and select financial services and technology firms.
The lEF thanks the many others who contributed to the connected consumer report. Special thanks go to ERIcA M. SAlInAS for enriching the Mobile and Micro chapters, DAISY WEAVER for her expertise on the Mining chapter, and lISA BRAUn for synthesizing and producing the final text.
Mohit Banerjee, CSC Randy Barker, CSC Rajeev Bhatia, CSC Rich carreau, CSC prasenjit chatterjee, CSC David Dyer, CSC Bob Evans, CSC Michael Ferrari, CSC Rosemary Hartman, CSC Dan Himmerich, CSC
Sreedhar kajeepeta, CSC paul leadbetter, CSC Ben lydecker, CSC Mitch lynch, CSC Mark Masterson, CSC Brandon Mathews, Zurich Jon Mcginley, Salesforce Radian6 Abhishek Mehta, Tresata Simon Millett, CSC Dan Munyan, CSC
Andrea oconnor, State Farm Bank nalini omtri, CSC Amitabha Ray, CSC Hugh Roberts, CSC Tom Rogerson, CSC Eric Rogge, Exalead Utkarsh Sharma, CSC Faisal Siddiqi, CSC Brian Wallace, CSC Simon Wardley, CSC chris Wiesinger, CSC
57
Worldwide CSC Headquarters The Americas 3170 Fairview Park Drive Falls Church, Virginia 22042 United States +1.703.876.1000 Asia 20 Anson Road #11-01 Twenty Anson Singapore 079912 Republic of Singapore +65.6221.9095 Australia Level 6/Tower B 26 Talavera Road Macquarie Park, NSW 2113 Sydney, Australia +61(0)2.9034.3000 Europe, Middle East, Africa Royal Pavilion Wellesley Road Aldershot, Hampshire GU11 1PZ United Kingdom +44(0)1252.534000
About CSC The mission of CSC is to be a global leader in providing technology-enabled business solutions and services. With the broadest range of capabilities, CSC offers clients the solutions they need to manage complexity, focus on core businesses, collaborate with partners and clients and improve operations. CSC makes a special point of understanding its clients and provides experts with real-world experience to work with them. CSC is vendor independent, delivering solutions that best meet each clients unique requirements. For more than 50 years, clients in industries and governments worldwide have trusted CSC with their business process and information systems outsourcing, systems integration and consulting needs. The company trades on the New York Stock Exchange under the symbol CSC.
2012 Computer Sciences Corporation. All rights reserved. Produced in USA 2468-13 5/12

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the Leading edge Forum

LEF TEchnoLogy Program LEadErshiP

csc in FinanciaL sErvicEs

Connected Consumer and the Future of Financial Services

ConneCted ConSumer and the Future oF FinanCiaL SerViCeS

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Connected Consumer and the Future of Financial Services

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

MONEy AND PAyMENtS MORPh

Connected Consumer and the Future of Financial Services

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Connected Consumer and the Future of Financial Services

to Africa and India, significant growth potential exists

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Connected Consumer and the Future of Financial Services

The companys latest readers support

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

will play together, but widespread contactless payments seem inevitable.

Faster, Leaner Processes

Connected Consumer and the Future of Financial Services

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Connected Consumer and the Future of Financial Services

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

CSC ConfidentID Mobile Solution Layers

Multi-Factor Out of Band Access and Transactional Authentication

Mobile Device Management

Mobile Application Protection on Device

Private, Secure Location Mapping

Connected Consumer and the Future of Financial Services

SECURE IDENTIFICATION WHEREVER YOU GO (continued)

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Figure 13. Deepening Financial access in Kenya

Connected Consumer and the Future of Financial Services

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Connected Consumer and the Future of Financial Services

Individuals are enrolled using mobile

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Connected Consumer and the Future of Financial Services

Providing the ability

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Opportunity Fund, which claims that

Overcoming many of the

Connected Consumer and the Future of Financial Services

How Mobile PayMents

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

organizations are revolutionizing microcredit by harnessing

Connected Consumer and the Future of Financial Services

Connected Consumer and the Future of Financial Services

CSC LEA DIN G EDGE FORU M

Connected Consumer and the Future of Financial Services

Connected Consumer and the Future of Financial Services