The event is split in two parts, the conference and the exhibition.

The conference is made up of panel sessions primarily and they were generally good, with some turning out to be excellent. I spoke on a panel entitled “Understanding the real value of payments data” along with speakers from, in alphabetical order, Citi, The Clearing House, Dovetail, JP Morgan and RefData. Our challenge was that there was simply so much too much to discuss in such a short period of time. But the questions from the audience clearly showed a need for greater transparency into payments data. This was somewhat alarming as I first spoke about this requirement from corporates nearly 10 years ago, but is does reflect the theme of my research agenda this year.

The exhibition is unlike I’ve seen at any other event, and I think it works. Instead of the exhibitors bringing their usual mega stands with them, it effectively becomes fixed size display. This picture gives a far better idea of how it works. At the same time, the pricing for a stand is much lower than many other shows. One client shared their costs at a high level – they spent less than 50% than they would have at a rival show for a stand, but got considerably more in addition to the stand for their money. Guess which show is growing and which is shrinking? The outcome was that there was a real buzz in the building, with everybody staying onsite, and staying in the same area as the exhibition. Something also done better than any other show so far was the availability of free wifi throughout the entire building – thanks to Clear2Pay for sponsoring.

So, takeaways & themes.

SEPA remains a key topic, with attention turning to the detail now. As Simon Newstead of RBS pointed out, the “single end date” legislation actually has 10 end dates, mentioned in 34 places. Furthermore, whilst everyone was talking about what corporates need to do, actually getting a handle on what corporates have already done, proved to be much more tricky. Indeed, only 2 company names came up in conversation at all during the conversations. Whilst there must be more, it served to highlight the real scale of the problem.

Greece. Other than the highly entertaining keynote by the German economist, the general consensus seemed to be it was when Greece left the euro, not if. This and the related economic troubles cast a long shadow over the event. The industry wasn’t necessarily pessimistic for its future – indeed, consensus was SEPA will continue regardless – but that the exit would an event not seen before and would accordingly result in new challenges. The worriers were more concerned by who might follow them.

Next year the event will be in….well, they’re playing that card close to their chest. Traditionally announced in the closing plenary, the only clues that were given was that it was a country that started with the letter G and contained the letters R & E. With Frankfurt only a recent host, perhaps Greece has suffered its first euro exit, albeit from the Euro Banking Association!

Canada seems to have many of the ingredients for mobile payments to succeed. The banking and telco markets are relatively concentrated making it (in theory) an easier task to cooperate on industry-wide initiatives. The country has implemented EMV and is boasting one of the highest use rates of contactless cards - according to MasterCard, over 10% of their transactions in Canada are contactless. And the smartphone adoption is already high and continues to rise.

However, I couldn’t help but shake off a bit of a “me too” feeling about the announcements. While the guidelines are obviously a welcome document for the Canadian market, it follows a long line of similar documents from EPC, GSMA, SCA, MobeyForum and other organisations. And the wallet announcement reminds of a Quick Tap from BarclayCard and Orange, one of the first NFC initiatives launched in the UK - it’s a single MNO, single bank and a single platform (Blackberry) solution. Given that it is a SIM-based solution, scaling on other platforms, particularly Android, should be possible. Adding more banks and more operators might prove to be more difficult.

So, congratulations on taking the first steps. However, more will be needed to make mobile payments ubiquitous in Canada.

For those of you who’ve not been, it’s a large event – registrations this year were around the 2500 mark, with just under 100 exhibitors. But for many it’s the conference itself that’s the attraction, with approximately (I haven’t counted!) 160 sessions, may running concurrently in 6 tracks.

A quick word on the event overall. As an analyst we spend a lot of time attending events like these – indeed, you could easily do nothing but! Whilst a large number of attendees, a concern voiced by a couple of clients was that it both felt smaller in terms of attendees (something I’d have to agree with), and lower in level of attendee. There were some complaints that the exhibition was something of a poor cousin, relegated to the basement, a long way from the exhibition. At least one fellow delegate asked me where it was, though I have to say it was very well signposted. I feel that the event is still a must for most of us, but with budgets tight and getting tighter for many, ensuring the events deliver for attendees is an absolute imperative.

At shows like this, we rarely get chance to attend many of the sessions, as we’re meeting clients & prospects, and walking the floor. I’ve usually caught up with the sessions by listening to the replays afterwards, so I was very disappointed to see that the sessions weren’t being recorded this year. A few themes did come out though. Of those I or those who I spoke to attended, the most animated audience award goes to that discussing the impending 1073 rule. It was standing room only, implying that the audience knew that it was an important topic. Yet the response of the audience suggested rather different – there was a palpable sense of disbelief at what was going to happen very soon. As an aside, I’d be very interested in hearing any opinions or insight on the topic.

Mobile loomed large on the agenda. It’s not an area that I specifically focus on but I was struck by the diverging opinions. On one hand, some banks were saying that those customers who used the mobile service were the most profitable. However, others also said they didn’t know how or when they’d make money from mobile.

That same polarisation of views came to the surface regarding faster payments in the US. The common debate has been whether the introduction of such as service would impact revenues from wire payments. The discussion seems to have moved on somewhat, with more (though not all) believing moving up the processing window to create a same-day service would have little impact. However, the discussion, probably fuelled the debate hosted by the Fed in September focussed more on immediate funds transfer. Whilst admittedly a small sample set, the discussions here seem to have moved from “should we?” to “how do we?”, with many pointing to ClearXChange as being the most likely to capitalise on this growing interest. The main question here is if or when the proposition moves from P2P to A2A, and captures the demand that AFP surveys show that corporates have. The nay-sayers interesting didn’t seem to questioning the demand, but focussed solely on the likely ability for banks to alter their systems to cope with the challenges that such speed brings.

Overall, I was left with an impression that the industry was bracing itself for considerable change over the next few years, some driven by increasing regulatory intervention (welcome to Europe!), and others driven by the recognition that increasing demands from corporates and consumers require changes in the back office part of the system, as well as the front-end. ACH is playing a vital role today – but with some investment, could play an even greater role tomorrow.

See you in San Diego for Payments 2013!

In a previous post, I commented on why wholesale lockbox belongs in the headlines even though it has been around as a staple treasury management offering for five decades. The post emphasized that fter all these years, the market opportunity for wholesale lockbox services remains significant. While the majority of large corporations already use bank WLBX services, WLBX adoption falls markedly with the size of business – particularly among businesses with annual revenues below US$250 million.

WLBX and ICL Deposit Services are Complimentary

The above chart shows the number of businesses by annual revenue that utilize bank WLBX services, or not. Why wouldn’t a good size company, say one with $250 million in annual revenue not use a bank for WLBX services? Because, for whatever reason, they choose to do the work internally. A significant number of these companies have their own remittance processing systems. Some are dated, but most are image equipped and are equipped to send x9.37 compliant files to a bank (or could be made to be). Lots of businesses in other words. All are ICL deposit candidates.

Offering an ICL deposit capability used to be a hassle. In the early days of image exchange, there were many variations on the x9 standard going around, and accepting an image file from someone’s in-house system was easier said than done. Well, it probably still is, but not nearly as much so. Now, a bevy of solution providers offer this capability. Some offer outsourced item processing services also, making the task even easier for smaller and midsize banks. But most banks have been focused on offering RDC solutions bundled with desktop scanners, even though tens of thousands of businesses don’t want to buy RDC – they already have scanners. As a result, a minority of U.S. banks offer ICL deposit services. And, the smaller the bank, the less likely ICL services are offered.

Hungry for fee revenue? Opportunity knocks!

I am pleased to announce that we have secured some great panelists and presenters for this event. I will provide a sneak peek for the moment, others can be found by visiting our event site. A few others are going to be announced shortly:

Tablet Mania: Banking Will Never be the Same
- Jimmy Dinh - Senior Director, Mobile Banking Strategy and Planning, CIBC
- Jeff Easley, Deposits Product Manager, USAA

The Disruptors
- Antonio (Yobie) Benjamin - CTO, Managing Director, Citi Transaction Services and Global Enterprise Payments
Yobie is also the Chairman of Citi Innovation Labs.

The event is free for Celent clients.
Non-clients can save $125 by registering with the following discount code: celent2012
Discount is valid through May 22nd. Full event agenda and registration can be found here.

I encourage you to take a look at the report, and explore some of the trends. Mobile banking, social media, portal development, fraud prevention, the role of the tablet, and much more are covered in this report. I also recommend that you read this report in conjunction with, Corporate Mobile Banking: Revolutionizing Cash Management. I look forward to hearing your thoughts, and please feel free to weigh in here with online cash management trends and observations that are top of mind.

Dr. Roubini was definitely a good news/bad news kind of guy. There is good news: Global trade is up. The large global corporates are both profitable and sitting on piles of cash. Population growth drives GNP. Productivity growth drives GNP. New technologies are coming along in many areas to drive growth, specifically energy, biotech, and IT. 

Now the bad news: Most government balance sheets are fragile. Most household balance sheets are fragile. Most European bank balance sheets are fragile. Oil shocks acould be quite disruptive, and aren’t unlikely.  We’re seeing a double dip recession in the Euro zone and the UK. The PIIGS are suffering from austerity fatigue and the Germans are suffering from bail out fatigue. He predicted that Greece would drop out of the Euro within the next year or two.

Dr. Roubini states that a monetary union is generally followed by a fiscal union and a political union. This is what happened with the reunification of Germany, Italy, etc. and what he expects to happen in Europe…or not. If Europe doesn’t move towards tighter integration, he thinks the monetary union will ultimately fail.

Thank you to Dr. Roubini for an enlightening discussion.

• Quick Tap, an NFC payments solution from Barclaycard and Orange
• PayTag, a contactless sticker from Barclays
• PingIt, a mobile P2P service from Barclays  (see my earlier blog)
• Simply Tap from Mobile Money Network (see my earlier blog)
• PayPal mobile app
• O2 wallet, launched just last week

… and I can also look forward to the future services:

• Mobile wallet from Vodafone and Visa partnership announced in February
• V.me wallet from Visa - UK will be one of the first countries to launch in Europe
• Bank account-based P2P services built on the Mobile Payments Platform being developed by the UK Payments Council and VocaLink
• Any services built on top of the infrastructure provided by Project Oscar, a JV from the leading MNOs, provided they get the necessary approvals from the EC (see my earlier blog)

I am sure I probably missed something, but in any case, the picture is clear - many competing iniatives, both at the infrastructure level and at the consumer level.

With the exception of Quick Tap and PayTag, none of the other solutions today is very useful at the point-of-sale, as most of them are either designed or launched so far as wallets for P2P money transfers and online shopping via mobile. And many suffer from early glitches around registration, or consumer experience around the application itself.

I was at the UK Payment Council’s Driving Change in Payments Conference yesterday, chaired by a well-known BBC technology correspondent Rory Cellan-Jones, who joked that “you should try everything once, except for incest, line-dancing and mobile payments.” I know Rory was being deliberately provocative, but he was also highlighting some of the real issues and frustrations consumers have experienced with some of these new offerings - “1.5 hrs to register”, “days until the payment even leaves your account”, etc. Some of the challenges are understandable - if the registration process was too easy, there would be those that would complain that it’s not secure enough. Others are less so. Gareth’s 13-year-old daughter perhaps summed up the consumer sentiment best with her very sensible question “why anyone would want to deface a beautifully designed iPhone with a sticker?”

For now, many consumers are hungry for new products and are willing to try things out. But if they continue to be bombarded with offerings that don’t quite deliver, there is a risk that the consumers switch off and their goodwill evaporates by the time the industry is truly ready. Many of us remember a WAP banking disaster, which put mobile banking back by nearly a decade. Today’s mobile payments don’t deserve the same fate.

Yes, ACH isn’t geeky anymore, its sexy! You heard it here first

There are always the announcements that accompany any show. I’m party to one announcement between 2 clients that I think is a very interesting - expect commentary and thoughts when its in the public domain next week! From the inquiries I’ve received, I also expect the Nacha consultation on Same Day Payments to be a topic of many conversations, along with the inevitable questions relating to mobile.

Anyway, I’m looking forward to meeting many clients and prospects, and as always, if you see me, please do stop me and me and say hello.

How Much to Lead is the Tricky Part

What does this have to do with financial services? Tons!
Today’s financial services landscape is challenged with astonishing array of changes, and the rate of change is faster than most have seen in our lifetimes. It’s my observation that most financial institutions aren’t leading the bird. One example lies with retail banking delivery channel priorities. With astonishing consistency, banks and credit unions respond to surveys indicating that channel priority is simply a function of channel usage. The more the usage, the higher the priority. Simple enough, except for the fact that doing so doesn’t lead the bird. Instead, doing so guarantees that financial institutions that behave this way will forever lag the market. The faster the bird, the greater the miss. Other examples in banking:
 • Overreliance on the branch channel for sales even though all indications point to continued declines in foot traffic.
 • Slowness in deploying mobile RDC even though most major retail brokerage now offer.
 • Waiting for Americans with Disabilities Act (ADA) mandates to invest in deposit automation ATMs even though ATM usage skyrockets among FIs that deploy them.

An example of leading the bird is PayPal. EBay Inc.’s top brass made it clear in a recent earnings call that mobile technology is dominating strategic thinking at PayPal Inc., even though it does not yet account for a significant share of transaction volume for the eBay unit. As reported by Digital Transaction News: Addressing stock analysts during eBay’s quarterly earnings call, eBay chief executive John Donahoe lauded the expansion of PayPal’s point-of-sale payments service to some 2,000 U.S. Home Depot Inc. stores earlier this year. “This is just the beginning,” he said. “We have signed contracts with several additional retailers.”

Leading the bird doesn’t mean having to be on the “bleeding edge” of technology. Even fast followers can lead the bird. And, leading the bird isn’t the same as being proactive. It’s not a matter of attitude. Instead, leading the bird is a way of aiming. It means taking action based on where things are going, not where they have been – or even where they are. It’s analogous to the difference between predictive analytics and business intelligence. Both are useful, but they serve two very different purposes.
Leading the bird doesn’t mean you come home with all the spoils, but it does invite doing so. At the very least, it ensures you come home with… something.