First Data’s 9-page whitepaper discusses how devices like PCs, smartphones, tablets, ATMs and smart terminals provide merchants and financial institutions with exciting new ways to engage their customers, and we‘ve summarized it for your convenience.
Welcome to the age of Universal Commerce—commerce that is integrated, personalized, secure, open and smart. The lines between in-store commerce, eCommerce and mobile commerce are blurring. Consumers expect a more integrated buying experience that is quick, consistent, secure and available wherever they happen to be, at any time and through any type of device.
Consumer Smart Devices
Browser-equipped smartphones and tablets have capabilities that traditional PCs do not possess, such as geo-location receivers (i.e., GPS) that provide exact positioning and navigation, cameras that can also work as barcode scanners, and other technologies. As such, smartphones and tablets are communication devices that provide businesses with the opportunity for context-sensitive, real-time, direct interaction with consumers. Some smartphones come with Near Field Communication (NFC) chips that enable contactless payments, and there are applications and devices that allow merchants to accept payments anywhere via their own smartphones and tablets, as well. Accordingly, smartphones, and increasingly tablets, are at the heart of the Universal Commerce revolution. In addition, other kinds of smart devices are emerging that will impact the way consumers purchase products and services: game consoles with Internet connectivity, web TV, Internet-connected cars and smart household appliances that integrate with other devices.
Merchant Smart Devices
Merchant smart devices are in-store appliances, eCommerce sites and mobile equipment that facilitate buying decisions and enable transactions. These can be in-lane Universal Commerce-capable point-of-sale (POS) terminals, mobile POS, kiosks, tablet-based in-store catalogues or other devices. Some manufacturers offer card-reading peripherals that turn tablets and smartphones into mobile payment terminals.
Financial Services Smart Devices
The ATM network has long been financial services providers’ traditional smart device interface for consumer services. Institutions are also finding that tablets equipped with the right applications or CRM interfaces can reinvent the branch experience by streamlining workflows, reducing paperwork, and helping staff sell more effectively. In-branch tablets can also function as hybrid self-service channels that improve efficiency but also allow for personal interaction. By providing customers with branded mobile banking applications, financial services institutions can effectively turn a consumer’s smartphone into a virtual ATM that allows them to manage their accounts and receive individualized messages designed to promote services and increase loyalty. By pursuing an integrated Universal Commerce channel strategy, financial services providers can offer continuity of experience across online banking, mobile banking and ATMs.
How Smart Devices are changing traditional Commerce
Although consumers have been quick to adapt to the possibilities of Universal Commerce, there are significant opportunities for businesses, as well. Consider these examples of how smart devices are changing the way traditional commerce works:
• Influencing Purchasing Decisions: That influence has been partially subverted by social networks and user review sites that can be used to learn about products, services and merchants; mobile apps that can search for product reviews and optimum pricing; the practice of visiting stores to view products before purchasing them online; and deal publishers that exert their own control over promotion, publicity and pricing. Fortunately, the same technologies consumers use to build personalized decision-making spheres can also provide a direct communication channel for merchants. This has presented an opportunity for highly targeted promotions that are more cost effective than broad, poorly focused awareness advertising.
• Streamlining Loyalty and Promotions: Fortunately, the emergence of Universal Commerce has facilitated the introduction of electronic promotions, virtual wallets that allow consumers to consolidate and track their offers, and offers transaction platforms that ensure a higher redemption rate and better tracking. These capabilities not only change the way consumers take advantage of offers, they alter the economics of offers and loyalty programs themselves. They also provide merchants with detailed data about the shopping behavior of customers.
• Reinventing Payments: With Universal Commerce, consumers are discovering new alternatives for payment and even alternative ways to utilize traditional payment methods with smart devices. There are prepaid mobile apps, some purchases are simply billed to the consumer’s mobile phone account and there is NFC technology, a mobile wallet, as well as cloud-based systems.
Implications for Merchants
Merchants must develop an engagement strategy that takes into account both consumer smart devices and in-store smart devices. If merchants are to influence consumers, they must be where the consumers are: with an online shop, an app, social media integration, search engines, YouTube, and other relevant sites. A positive user experience also requires consistency across channels and locations. Some merchants allow customers to buy online and pick-up in store, a simple way to integrate the online and offline experiences. Some merchants also provide in-store product finder information in their online catalog. Consumers can access the online catalog on their mobile devices to find the products they are looking for in the store.
Some analysts see the rise of the “mobile commerce store” (MCS), an online shopping venue optimized for shoppers’ smart devices. The MCS can be a shopper’s focal point for researching products, verifying availability at nearby physical store locations, and then finding a product and comparing it to others on the shelf while in the store. At any location, a shopper can populate a virtual shopping cart, pay for those items available in the store, or have out-of-stock items shipped to the home or to the store.
Another important engagement strategy involves reaching out to consumers with timely, relevant communications. These can be triggered by customer location (for example, you can use “geo-fences” to trigger messages through your branded mobile app based on a customer’s location). Messages can also be tied to customer catalog activity, product searches, loyalty program status, and analytics related to past purchasing patterns. All of these provide a personalized customer engagement experience.
Implications for Financial Institutions
In many ways, Universal Commerce is making life more complicated for traditional financial services providers. For one thing, it has made it possible for a number of alternative payment service providers to successfully compete with the providers of traditional consumer credit and debit cards. Another Universal Commerce reality is that consumers, especially younger consumers, often choose convenience and value over loyalty to a vendor, store, or financial institution. Nevertheless, smart devices are providing new opportunities for traditional financial institutions. According to a recent survey conducted by First Data, most consumers would rather have a virtual wallet application issued by their own bank than by any other entity - such as their mobile provider or a social network. This represents an obvious opportunity for financial services providers. As consumers move more of their financial management and purchasing activity to their mobile devices, they want a virtual wallet to track card accounts, loyalty programs, and offers, as well as to send and receive person-to-person payments. A bank-issued virtual wallet provides the bank with a direct communication channel to the consumer, creating an advantage in the competition to keep their payment products top of wallet.
Smart devices have had a profound impact on the way consumers engage with merchants and financial institutions, effectively becoming the focal point of an integrated customer experience before, during and after a transaction. Accordingly, businesses must embrace these changes by developing Universal Commerce strategies that take into account the power and potential of smart devices. Merchants must carefully consider which types of smart devices best meet their needs—whether it is countertop terminals with advanced capabilities like contactless, EMV card acceptance and enhanced security; or mobile devices like smartphones and tablets that can accept payments on the go or in the store. Financial institutions must seek to implement a strategy that produces a uniform, integrated customer experience across smart devices—from in-branch, to online, to ATMs, to mobile banking and virtual wallets that all work together to promote greater usage and loyalty across all channels.
Consumers have quickly adapted their smart devices to the kind of shopping experience they desire. In doing so, they have taken the initiative in controlling many of the influences that have an effect on their purchasing decisions. However, the same technology can work for merchants and financial services providers too. A smart device strategy planned in the context of a larger Universal Commerce engagement program will provide merchants and financial services providers with the technology plan they need to optimize the customer experience.