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BIGcast

17Oct

The Question Isn't Would You But Should You

 

 

Good Coffee Makes for Good Technology Part 2: The Future of Mobile Payments, and the Secrets behind Successful Technology Innovations. Last time on BIGCast, I talked with Chuck Davidson, founding member/current Head of Customer Experience at CARDFREE and innovator of the Starbucks Mobile Payment system, which he designed, developed, and launched.

He detailed the journey towards the launch and ultimate success of the application, which included stories about the stealth nature of Chuck’s work, like his stalking of a women’s walking group and his going deep undercover as a technology-savvy barista. 

We ended the episode on a cliffhanger.  What is the future of mobile payment systems?  Are microchips in our future? We know we can do it, but the real question here is should we do it.  Before we delve into that conundrum, let’s look at some things to consider when researching any new system.

Will I Feel Dumb Using this Mobile Payment System?
Chuck reminds us that the million dollar question behind every innovation is to ask one’s self: would I, as the consumer, do this?  (It is easy?  Does it make sense?  And is it part of my work flow?  If it’s not, forget it!)  
“When researching Starbucks payment systems, we used to listen to folks pitching solutions before we developed our own.” says Chuck, “Part of that is thinking about a) would you as the consumer use it, or would you feel dumb doing it, b) is it a natural extension of your daily work flow, and finally, c) can it be consumed operationally?”

This type of thinking comes from Chuck’s retail background, and it’s a part of what makes him so special.  The human characteristic surrounding the idea of “would you feel dumb doing it?” is important.  As technologists, we don’t think about that a lot.  I don’t think, “Will I feel stupid waving my phone around at the POS?” 

For example: I go into this bathroom, it’s time to wash my hands, and there I am, trying to conjure water out of the faucet.  I don’t have to actually touch the faucet.  Next, I’m conjuring soap out of the hands-free soap dispenser.  Then, it’s time to get a paper towel.  There I am, hand dripping wet, waving at the paper-towel dispenser.  Nothing’s happening.  Finally, this man comes up next to me, turns a dial on the side, and gets a paper towel.  Everything in there was wireless and remote except the paper towel holder.  There was a continuum there, and I did feel stupid trying to get water magically out of the faucet. Sometimes it feels as though we’re from the future, and we don’t understand the stuff that works manually anymore.  As technologists, we want to avoid those dysfunctions.

Dysfunctions Make us Feel Dumb
Another example of a technological dysfunction: I’m a big fan of the self-checkout at Lowe’s or any grocery store, because in the new world, I don’t buy my groceries all at once.  I like buy them eight at a time and make sixteen trips.  The dysfunction with the self-checkout process lies somewhere in between the scanner and the card-swiper.   You can tell they’re not really connected.  The screen will say, “Swipe your card now!” but when I swipe my card, it’s not the right time.  And they’re all different!  Sometimes you swipe first and sometimes you swipe last. God forbid you introduce technology into a big box store and use an online payment tool where you authenticate versus using your card; no matter what the process, the consumer stands there with this cartoon bubble holding a question mark over their head.  And meanwhile, there’s a line of people backed up behind me…

“With a piece of plastic, the consumer can swipe in two seconds,” says Chuck, “you’ve got to be just as fast as the plastic and you’ve got to add utility.  And some of these things that we can do and thought would work don’t necessarily satisfy that litmus test.  My favorite was the microchip.” 

The World is NOT Ready for Embedded Microchips as a Form of Mobile Payment
Ahhh, the dreaded microchip. Chuck researched the microchip idea years ago.  The solution was to have a chip implanted into your skin to simplify payment (and relay other information easily.)  Each chip has sixteen digits and you can pay with your hand or your eyebrow, whatever body part is microchipped until, of course, Target gets hacked and you have to dig the thing out of your skin and put another one in.  But that’s a story for another time.

The microchip idea never went anywhere because it just didn’t sit well with consumers. 

The World IS Ready for Delivery Drones and Personal Customization
Another new idea being kicked around, Chuck says, is delivery by drones.  There’s the idea that you can be in a store, scan something, and then get that item delivered to you.  As a consumer, this makes sense because scanning is easy and it gives you utility.  Maybe I have a small car I can’t fit my big purchase in the trunk- that type of thing.  We may see drone delivery in the near future.  It’s a solution that asks both can we and should we do it, and so far, both questions get a thumbs up. 

Chuck says that innovators are getting smarter about what we’re offering consumers.  At Cardfree, Chuck does a lot of work in CRM (customer relationship management.)  A lot of modern CRM is customer-specific offers.  A company knows that a consumer likes chocolate and not vanilla, so they make sure that that consumer gets an offer in line with their specific taste.  Consumers should get that level of personalization, Chuck says. “There’s enough out there, and we’ve moved from that realm where we’re only looking at data to make sure fraud doesn’t happen.  Now we can look at data for segmenting and smart offering and making sure the customer feels unique.  The customer wins when you do that.  They say, ‘That’s utility!  They know I like vanilla!’”

I point out that this is the genius of Amazon.  If I go on to Amazon to buy a guitar, it offers me picks and a case to go with it.  Of course, I need those things! Amazon offers a low-barrier exit, and it’s fast.  If you have only three minutes and you need something, you can order in only three minutes.  Items can arrive as soon as the next day.  When they launch drone-delivery systems, delivery will be even faster.

The Future of Business: Data and Analytics
Chuck and I agree: data and analytics are the future.  Financial institutions are only going to make their revenue and stay in business by using analytics to get smarter about their customers and better understand their customer’s needs.  Today, there are too many financial tech solutions stealing our business one little thing at a time.  Brett King calls it death by 6,000 cuts, because there are 6,000 fin tech startups out there.  Case in point: if the zombie apocalypse comes, who’s going to survive?  The ones who can hunt and sleep outside.  FIs are only going to survive if they fully embrace analytics. 

When considering analytics, Chuck always wanted to be respectful of the customers.  One of his main concerns was that technology solutions that incorporated analytics would come off as invasive, like a “Big Brother” surveillance system.  Initially, Chuck believed that customers wouldn’t want companies to know a whole lot about what their tastes and activities.  His fear was that customers would feel their privacy was being compromised, and that they would act by deleting the company’s app.  But he was quickly proven wrong.  Chuck found that customers will register and give out personal information in exchange for good information and utility.  And the younger the generation, the less of a problem it seems to be.  Millennials, who are used to sharing everything on line, have no issue giving out their information. 

When Innovating, Consider the Culture
So why did the microchip idea disappear so quickly?  Innovators also have to consider cultural repercussions.  The microchip as a mobile- payment-system idea touched a nerve with Christians who saw it was a harbinger of the end times.  While the biblical relevance of embedded microchips might mean nothing to other groups of people, the large Christian population was turned off by the concept.  Culture is incredibly important, and in terms of the Starbucks mobile app, incorporating culture into his system was Chuck’s secret sauce: Chuck succeeded because he mixed in with potential customers and understood what they were all about.

“The customer experience is so key,” says Chuck. “I’ve always said the technology is interesting, and it’s really fun to do something in mobile, especially in payments.  But for me, what really moves the needle is adoption.  Because that means folks are not only using what you’ve come up with, but you’ve actually found a way to make things faster, better, and more in-line with the synergy of their day.  Whatever you’ve created has added value.  I always think about kids.  You have to train a kid to floss after they brush, but after a while, they start to do it automatically. At first, it’s not natural.  But it’s important!  And it’s of value!  Your gums are happy!”

The Product Adoption of the Starbucks Mobile Payment System = Success
Chuck got to see what it was like to have 10,000 plus stores adopt the system on which he had worked so hard.  An inventor can make whatever they want, but the real power is seeing it go viral- seeing it used.  And adoption is not just something that consumers just chose to use: it becomes a part of how they do things.  It becomes a natural part of their daily workflow.

At Cardfree, Chuck continues to look into new ways to bring value to his customers.  Currently, he’s into using data to makes things meaningful to the customers.  “At Cardfree, we see a lot more data and so we’re able to provide smart offers, and then we’re able to actually watch behavior- and that’s exciting to me.”  Chuck is interested in using proximity as a way to give the consumer an individualized experience.  What if a customer walked by a particular store and got an offer relevant to his or her particular needs?  “Utility!” Chuck would say.

In October, we’re pushing analytics here at BIGCast, and I won’t let Chuck go until he promises to come back and discuss.  (Thankfully, he does!)

Until then, you can best reach Chuck at Cardfree.com..

About the Author

John Best

John Best

CEO

Best Innovation Group

John Best is recognized as a thought leader and visionary of technology advancements and financial application development within the credit union industry.

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