Archive for September, 2014

How To Accelerate Mainstream Adoption Of eBooks

Friday, September 26th, 2014


As soon as I opened The Inner Circle, Brad Meltzer’s novel about the presidential spyring Culper Ring, on my B&N Nook Color, I noticed that it had 977 pages. Which is quite a lot for the average paperback.

I’m no stranger to big books – Texas by James A. Michener, Exodus by Leon Uris and Atlas Shrugged by Ayn Rand are at least three novels I’ve read that I recall crossed the 1K page mark – but an average bestseller tends to get tedious beyond 450-500 pages.


Bonus Novel

Nevertheless, I decided to give The Inner Circle a try, telling myself that I’d dump it as soon as it started dragging. When I reached page # 450 or so, I began to feel that the story had reached a logical conclusion and started wondering what was in store in the next 500+ pages.

Fortunately, nothing. The book ended at page # 458.

Curious to find out what was occupying the next 500+ pages – malware? – I flicked on. I got past the table of contents, copyright notice and a few more standard pages until I saw a bonus book starting from page 467. Unlike free first chapter previews regularly thrown in at the end of most eBooks nowadays, The Inner Circle actually gave away a whole book for free. And not just any book –  The Cabinet Of Curiosities has received a 4-star rating on my go-to book review app Goodreads.

With two books for the price of one, The Inner Circle was great value for money.

Not to look at a gift horse in the mouth but the notification of the bonus book should’ve ideally appeared at the start of the book – avid readers know the difference between racing through a 400-odd page book once a week and settling down for a 1000 page tome a few times in their whole lives.

By bundling another book at no extra cost, publishers can take the value proposition of eBooks to the next level and thereby accelerate the pace of their mainstream adoption.

How Can Fintech Companies Grow When Banks Are Shedding Customers?

Friday, September 19th, 2014

ft01In their diatribes about the underbanked, unbanked and financial inclusion, many fintech companies and members of the digerati threaten banks with the risk of losing customers to prepaid cards, P2P lending platforms, money transmitters, and other “neobanks”. In their urge to dish out free, unsolicited advice, these self-appointed Saviors-of-Bankingdom constantly exhort banks into action with slogans like “Innovate or be disrupted”, “Disrupt or die”, and so on.

I think they’re barking up the wrong tree.


Because banks are busy doing something else.

Like staying profitable.

According to Sheila Bair, “Many … ‘under-banked’ households once actually had traditional banking accounts”. They don’t any more because of their inability or unwillingness to pay checking, overdraft protection and other fees charged by banks. The former FDIC Chair and current Santander Group board member makes this point in her FORTUNE magazine article titled Watch out for those hidden fees in prepaid debit cards (subscription required or click here to download as PDF) to explain why the volumes of the under- and unbanked segments – 42.9% of the population according to the latest FDIC survey conducted in 2011 – are growing.

In India, the government’s push towards expanding formal financial services into the rural hinterland has met with lukewarm success. This is despite the fact that the Indian banking sector is dominated by public sector banks in which the government has majority ownership. Notwithstanding the social agenda baked into their charters, banks have simply found it unprofitable to operate in smaller towns and villages. Thankfully, the government has realized that what’s good for politics is not necessarily good for banks and, according to news reports, it has recently proposed to pay commissions to banks for pushing financial inclusion.

I see these as clear signs that the banking industry

  • Is not interested in growth for the sake of growth
  • Is emphasizing profits over revenues
  • Is not averse to shedding existing customers if that helps in bolstering profits, in an apparent nod to the famous Pareto Principle: “If 80% of our profits come from 20% of our customers, why shouldn’t we shed the 80% of customers that contributes to only 20% of our profits?” More on this in my earlier blog post Analytics Or Hair Splitting?

Against this backdrop, any threats about banks losing customers are likely to fall on deaf ears.

ft08That said, fintech vendors should be worried by these trends since a good portion of their revenues is linked to the activity levels of their banking customers. In pursuit of their growth, it’s but natural for fintech marketers to urge banks to grow their portfolios aggressively. In an egregious example of this approach, a fintech CEO advises banks to enter subprime lending by – you guessed it – using his company’s software.

However, this strategy is unlikely to work since banks seem to be following exactly the opposite approach in their pursuit of profits (apart from my general belief that threatening your customer’s existence is not a great marketing strategy.)

So, what should fintech companies do?

Maybe they should drink some of their own innovation Kool-Aid to devise new engagement models whereby they don’t lose revenues when banks prune their customer base. For starters, profit-sharing is one option worth exploring, given that

  • Financial services is the most profitable sector in FORTUNE 500 in 2013
  • The sector’s profits are at near record levels, according to WSJ
  • 6 out of 10 most profitable FORTUNE GLOBAL 500 corporations in 2015 are banks

While there could be many other approaches, my urge to dish out free, unsolicited advice ends here!

Apple Pay Puts Banks Squarely At The Center Of Mobile Payments

Friday, September 12th, 2014

apple0286Like many, I’ve long held that nothing is broken with plastic cards for instore payments and made the case for mobile wallets to stick to gift, loyalty, ID and other forms of non-payment cards (see Mobile Wallets Should Fix What’s Broken – And It Ain’t Payments).

Until I read this line about Apple Pay:

“Every time you hand over your credit or debit card to pay, your card number and identity are visible”.

Coming as it did on the same day that Home Depot made the official announcement that nearly 60 million payment cards were breached at its stores, Apple’s statement suddenly sounded ominous.

By combining existing features and apps like Touch ID and Passbook with new iPhone 6 enhancements like NFC, Device Account Number and a transaction-specific dynamic security code, Apple Pay does make a convincing case that it solves the data breach problem that’s becoming increasingly common with plastic cards in the USA. (For the record, I’m personally a happy Android user who has no plans to switch to iPhone, but credit where credit is due.)

However, people have short memories and I wonder if better security alone will be enough to convert even the most zealous FanBoy or FanGal from plastic to mobile payment. If not, some of the other strengths of Apple Pay might help Apple drive a behavior change that has eluded many other mobile wallet providers so far:

  1. 900 million iTunes users who are just three keystrokes and one tap away from becoming Apple Pay customers: “To get started, you can add the credit or debit card from your iTunes account to Passbook by simply entering the card security code.”
  2. Ease of onboarding: “To add a new card on iPhone, use your iSight camera to instantly capture your card information.”
  3. No need to fumble around after reaching the store checkout to find the wallet app or locate the merchant on it: “There’s no need to open an app or even wake your display”
  4. No need to manually select one card out of many: “The first card you add automatically becomes your default payment card.”
  5. No loss of privacy: “Apple doesn’t save your transaction information.” “Apple doesn’t store the details of your transactions.” “…your information stays where it belongs. With you.”

Since Apple Pay is not yet available, I’m left with quoting from Apple’s website ( to illustrate the features that enable its above mentioned benefits.

On the whole, Apple Pay comes across as a way to improve user experience. That fits right in with what Apple has always been famous for doing. This strategy has worked well in the past to delight customers, strengthen the ecosystem and bring more converts into Apple’s fold. There’s no reason why it shouldn’t in the future.

One more thing…

In eschewing the much-expected iWallet monicker, Apple has clearly positioned Apple Pay as a feature and not as a mobile wallet product or a mobile payment platform. By highlighting that it “works with most of the major credit and debit cards from the top U.S. banks” and sprinkling its keynote and website liberally with logos of CHASE, Wells Fargo and other banks, the tech giant has put card networks and banks right at the center of its entry into mobile payments. I didn’t hear any posturing from Apple about issuing its own card or disintermediating banks from the payments ecosystem (which had been predicted by many digerati and finsurgents). Call me naïve but, all in all, Apple seems to be perfectly happy about delivering a superior CX and pushing more products out the door as a result.

apple0154Actually, yet another thing…

I wonder how Apple plans to bring merchants onboard. After all, unless they install contactless terminals, Apple Pay will become a damp squib for instore payments. For years, retailers have been hearing about how mobile wallets will give them a wealth of information about customer identity, demographics and purchase history, using which they can run targeted offers and drive sales uplift. Against that backdrop, merchants might be a little shaken by Apple’s declaration that, when the payment is made with Apple Pay, the cashier won’t know the consumer’s name or card number. Something tells me we haven’t heard the whole Apple Pay story yet. By October, which is when Apple will make Apple Pay available in the USA, can we expect a few announcements around iBeacons, lower interchange fees and other retailer-side benefits?

Walking The Tightrope Between Driving Repeat Purchase And Rewarding Loyalty

Friday, September 5th, 2014

mc05I recently received an offer for INR 100 discount on my next trip on Meru Cabs, India’s leading cab dispatch company. To redeem this offer, I’d need to enter a certain code when I used the company’s mobile app to book my next ride.

My first reaction to this offer was, “How the heck am I supposed to remember this code when I book my next ride?” Meru Cabs doesn’t operate where I live. While I do visit the cities where it does, it’d be several weeks until that happens. Trying to remember the code until then is asking for too much. Of course, I can always ruffle through hundreds of pictures on my smartphone gallery to locate this offer when I place my next order. But that’s too much trouble for saving a hundred bucks.

So, this offer joined the heap of so many others that I regularly toss out because they’re irrelevant or unredeemable or both.

This got me thinking why Meru Cabs couldn’t automatically apply this discount whenever I made my next booking without requiring me to remember a code. If it did that, I’d surely come out feeling that the company rewarded my loyalty. Since that’d be a major goal of any customer engagement program, shouldn’t all companies including Meru Cabs follow this approach?

Should they? More importantly, will they?

Maybe not. Because, in addition to rewarding loyalty, brands have another important CEM goal, and that’s to “drive repeat purchase”. That goal can’t be achieved by automatically applying the discount on the next order – after all, what’s the guarantee that there’ll be a “next order” at all?

It’s ironical how, in trying to drive repeat purchase, a brand misses out on the low hanging fruit of rewarding loyalty.

While both goals are valid, there’s often a conflict in trying to achieve them simultaneously. Some degree of tradeoff is required. Crafting targeted offers to fulfill one goal at a time could be a good place to begin the tightrope walk between the twin CEM objectives of “driving repeat purchase” and “rewarding loyalty”.