If there was ever proof – if proof were needed – that social networks are becoming the de facto Internet browsers on mobile, the latest flurry of fintech news confirms it.
In two separate announcements, Facebook’s platform is lending itself to mobile banking through a wire money trial in Singapore in 2017 and the launch of a banking messenger bot in conjunction with Barclays in South Africa in 2016.
In both cases, customers whose Facebook (and also in both cases Twitter) accounts are linked to their mobile numbers will be able to make money transfers. In the South African example, the service uses a bot to let customers check their account balances, find ATMs, contact the bank as well as make payments, all without leaving Messenger.
The bot is also linked with Masterpass, the Mastercard digital wallet. In July 2016 Mastercard announced that Masterpass would work via mobile online, in-app and also in-store via Android NFC (iOS does not allow third party access to NFC payments).
In a way it’s been inevitable that finance and banking would shift to the mobile platform. 2016 is the first year where the use of SMS has declined. But it makes total sense. If you can send messages for free over IP why not use it for everything?
A mobile universe
To say customers are living their lives on mobile is both an overstatement and an oversimplification. It makes more sense to say customers are managing their lives using a mobile and organising it by app.
Within their own mobile universe, they have their very particular services -- their Netflix and Uber accounts, their Snapchat and Telegram conversations, their restaurant booking service and their favourite cinema chain. But critically their browser isn’t Safari or Chrome. These two are the search apps of last resort. Increasingly users are going to Facebook for their local information, Twitter for their breaking news, and Instagram for lifespo (lifestyle inspiration).
When it comes to winning on mobile, only three things matter: user experience, security, and fraud prevention. Already with user experience we’re seeing the disappearance of the card. You get into your Uber, you take the journey, you get out, a messaged receipt arrives. We used to think the big financial story was the long, slow death of cash. The death of the card may be much quicker.
You just need to look at the success of Mpesa in Kenya. Big emerging markets are going to be skipping card payments just like they skipped fixed lines and the internet. In Indonesia, of a potential market of 280 million, only 20 million have a bank account but according to Roy Morgan Single Source, 50 per cent of the population owned a smartphone in 2015.
Technology isn’t driving this change but it’s certainly partnering it. Blockchains are already accelerating data management and thus improved user experience in the banking sector, along with improved data security, transaction verification and fraud protection.
It’s a protocol that is ultimately going to revolutionise the transfer of digital value. It might take another 10 or 20 years but this will become pervasive. We’re in the very early stages of digital value transfer and ultimately we could be talking about each user defining the value of what they transfer. Will it be an exchange of data for currency? Will data become their currency?
But for today, when we’re concerned with the transfer of cold, hard cash that can be lost and spent by less scrupulous characters, there needs to be a sense of reassurance that sending money to a Facebook page or Twitter handle isn’t the cyber equivalent of throwing notes off a cliff. And already there are device IDs and PCI compliance that means, in the mobile environment, peace of mind is a given.
And it’s why the millennials driving the mobile payments trend aren’t worrying over whether or not Facebook or Twitter is a secure way to transfer cash.
Whether the social networks go ahead and build an encrypted value transfer platform bolted onto blockchain, it’s just another version of card schemes and payment networks that underpin transactions today. Barclays’ vaunted function to pay a Twitter user via their @ handle through Pingit – announced as long ago (18 months qualifies as ‘long ago’ in mobile) as early 2015 – is just an alternative labelling of the Paym pay by mobile scheme launched the year before.
Mobile payments are the future
Should brands be throwing in their lot with the social networks then? Will social media become a ubiquitous shopping network via mobile? It looks unlikely. Facebook isn’t the only fruit, where social platforms are concerned.
Telegram, WeChat, Snapchat, Whatsapp, Kik and many, many more will serve as environments for conversation, search and bots but app interactions will continue to be necessary, particularly when they deliver the best possible user experience.
No-one’s going to go blundering through hashtags and profile names in Facebook when they can call a cab with a single click in their Uber app. But with Tap and Go phones, mobile wallets and in-app payment tech, cashless and cardless transactions for everything from ordering a pizza and a cab to buying a designer dress through Net a Porter will be the norm. Very soon few people will be blundering through their wallets looking for a piece of plastic either.
Michael Wallis-Brown, CCO, Judo Payments