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Monitise:
Helping Banks become “Media Channels”

monitise_header.pngOne thing is certain about the world of mobile commerce and marketing – companies need to be able to adapt quickly and exploit new opportunities as they appear, or else they risk becoming obsolete.

One company that is doing just this is Monitise, a company that began in mobile banking, but now has grown to support mobile payments and mobile commerce. And soon, Monitise intends to turn banks in a “media channel”.


As part of MobiAD’s coverage of mobile commerce and mobile payments, its important to look at some of the companies that are driving change in the industry. Recently we had a chance to talk with Richard Johnson, Strategy Director at Monitise, about the company’s plans.

Starting with Mobile banking

Monitise’s core business has been in working with banks to implement mobile banking. Mobile banking is essentially using a mobile device to access a normal bank account, and execute normal banking transactions.

The most popular of these services is usually checking an account balance, but most banks will also offer many other services such as transferring money between accounts, notifications if a charge is made to a credit card, help finding the nearest ATM or branch, etc.

Mobile banking is seen as critical to many banks as a way to appeal to a younger demographic, and also to reduce certain operating costs in the branches. The graphic shows the strong age related penetration of mobile banking in the US.

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Monitise has never been a consumer brand, they are a “B2B2C” company, providing the infrastructure and services that banks launch under their own name. Over the past several years many, many banks have begun offering mobile banking services, and this has been a key driver for Monitise’s growth. Currently they work with over 350 banks, there are over 28 million customers that use their services, and something over $70 billion is transacted each year.

Although overall the uptake has been very good, according the Richard there are still a number of “vanity projects” in the market, where the mobile app was designed to look pretty, but not enough focus was given to customer functionality and marketing. So while these banks can now say that they provide mobile banking, their usage has not been great.

On the other hand, banks who have taken it seriously have seen great results. “The ones that have done it right are able to close branches, are tapping new customers, and are building much deeper relations with existing customers”, commented Richard.

monitise_quote3.gifIn fact, certain banks have now reached a key threshold, where more transactions are happening over mobile than over the standard online banking channel. This despite the fact that internet banking has been offered for much longer and usually has a higher the penetration in the customer base. The reason is that the level of mobile interaction is so high – often 30, 40, or 50 times per month – and so the volumes are huge.

From Mobile banking to payments and commerce

As the industry developed, Monitise realized that they were in a good position to offer additional, related services to the market. So they expanded from mobile banking to supporting mobile payments, and then mobile commerce. Now their corporate slogan is “Bank Anywhere; Pay Anyone; Buy Anything”.

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Looking more closely at their products, Richard explained that there are in fact 2 fundamental things that the company provides to clients.

First is a cloud-based software platform. This provides the business logic for all the various types of transactions, which include not only banking transactions, but also customer card registration, location-based offers, P2P payments, NFC payments, QR codes, client management, etc.

The second main part of the offer is the connectivity to a wide range of financial institutions and other key players in the eco-system. These might be for example card clearing networks, ACH gateways, mobile airtime top-up aggregators, cinema ticket providers, etc.

This approach allows the company to remain agnostic about the particular payment method or technology selected by a bank for a service – for example ACH vs. Visa, or QR code vs. NFC. It also means that a client can add new features relatively easily – for example adding air time top-up to a banking app can be done with minimal new development.

Their business model is primarily recurring, volume-driven license fees and revenue share. Richard points out that Monitise is not built around disintermediating companies in the financial eco-system. Rather, he says, “we are all about lubricating the existing infrastructure, securely, into the mobile world”.

Banks as a media channel

Monitise believes that the popularity of mobile banking has now reached the point where banks could in fact become effective media channels. And there are some reasons to think this might be right.

monitise-quote1.gifIn most countries, according to Richard, mobile banking apps rate consistently among the “Top 10″ most popular apps. Mobile banking customers typically use their app every day, and often up to twice a day. In addition, banks have collected a lot of data about the users.

So combining the popularity of the apps, the high level of customer engagement with the app, and the presence of lots of personalized data, it seems a reasonable conclusion that that banks could monitise this situation by acting as a media channel and including additional offers to their customers.

Richard is quick to point out that the offers would have to be very relevant to the ongoing bank activity. “You wouldn’t want to check your bank balance, then do a funds transfer, and then see an advertisement for socks,” he says. But carefully selected offers, aligned with the customers interests might do quite well, and eventually the banking app would evolve into a trusted place for commerce.

And Monitise has some research to back up this supposition. They recently published a white paper titled M-Commerce: Building the Revenue Opportunity for Banks. Data from the study showed that customers are much more confident if m-commerce is provide by their bank, as shown below.

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In addition, consumers said they would be willing to make higher value purchases if they were brought by the bank. [note: to get the full study, see the download link at the bottom of this article.]

To help encourage this evolution, Richard explained that Monitise is pursuing two complimentary strategies.

monitise_acquisitions.pngFirst, they are helping their banking, telco, and retail partners to generate more even more eyeballs through creating high engagement applications. To this end, last year Monitise acquired mobile agency Grapple, which has now been branded Monitise Create. And earlier this year they acquired Istanbul-based Pozitron, a leading developer of mobile banking apps.

These firms are charged not only with building apps for clients, but also with developing “best practices” that lead to improved customer engagement, through innovations in design, user interface, and the overall customer journey.

The second part of the strategy relates to the commercial offers. Richard explains that, “We are actively working with our clients to help them bring relevant commercial content to their users. We believe this is a great way to help nudge the proposition along.”

The future of payments

Monitise believes that mobile payments will continue to be an area of great innovation and competitive growth. “Ten years ago, payments was usually viewed simply as an operational function of a company. Now, people are viewing payments as a real competitive weapon. These days we are seeing a full-on battle for how mobile commerce is going to develop.”

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In terms of what consumers should expect, Richard believes that payments will become more ‘invisible’, and the market will need to coalesce around just a couple of mobile payment options.

monitise_quote2.gif“Commerce is moving to mobile at lightening speed, but it is still very fragmented. In the long term, you don’t want consumers walking into a shop thinking ‘In this store do I tap my phone? Or will my phone vibrate? Or do I scan something? Or do I need to log in to an app?’ That’s not a good situation, and things will have to become more standardized for consumers.”

The industry itself will also continue to change and grow at a rapid rate, but the opportunities are very big. “We know that disruptive companies will continue to bring out disruptive new services – the question is whether the incumbents can react quickly enough to keep their place at the table. We expect that the next major company to emerge in the internet space (i.e. like a Google or a Facebook) will be a company that finds the right way to combine payments, with some m-commerce, with CRM, with big data, plus social consumer engagement.”




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