A lesson from the
man in the moon
How people buy

I challenge you not to see the face.

I challenge you not to see the face.

THIS MUCH won’t surprise you: Younger generations continue hopping aboard person-to-person payment (P2P) apps faster than older ones. 

But maybe this will surprise you: Better than half of Boomers are onboard with P2P. Considering P2P’s relative newness and Boomers’ measured approach to sticking toes in new technological waters, I think it’s fair to call that record time.

The news comes from a study by Early Warning Services, the folks behind Zelle, the fast-growing P2P app looking to overtake Venmo this year. As reported by PR Newswire

Of those surveyed, more than seventy-five percent of Millennials have used online or mobile P2P payments. Generation X is a close second at sixty-nine percent, and Baby Boomers are closing in at fifty-one percent … Forty-nine percent of Millennials use P2P payment services at least once a week, followed by forty-two percent of Generation X and thirty-two percent of Boomers.

I take particular interest in the factor that most strongly influences each age group’s app choice. For Millennials and Gen Xers, it’s friends and family. For Boomers, it’s their bank. In other words, all age groups seem to follow the lead of a trusted individual or a trusted institution. Though not a shocking revelation on its face, underlying it is an important point about human nature that marketers overlook at their peril. 

Age-old human tendency

Technological evolution keeps accelerating at breakneck speed. Moore’s Law—that the number of transistors you can fit into an integrated circuit doubles about every two years—still holds largely true. With it comes exponential growth and increased speed in computational power. (To be fair, some argue that Moore’s Law must inevitably slow, and some believe it already has.)

Human psychology, by contrast, evolves at not quite a glacial pace. That’s why one part of our brain cannot unsee the face on the moon even though another part of our brain knows it’s not really a face. (Apologies to readers who didn’t know.) Another human tendency we hang on to despite a part of us that knows better is that of settling for a friend’s recommendation instead of doing sound homework. This is true even when the stakes are high, for instance, when we’re choosing a surgeon.

Likewise, we humans could take an in-depth look at an array of P2P apps and choose the one that best meets our requirements. But we don’t. We ask friends or an authority figure—like, say, a bank—for a recommendation. It’s an age-old facet of human nature that technology hasn’t changed it one whit.

Implications for marketing 

Acknowledging that people rely on friends for recommendations is pretty much a paraphrase of word-of-mouth is the best advertising. But the friends part is not to be overlooked. People seek advice only from people and institutions they trust. It goes without saying, then, that people don’t seek advice from people they don’t trust. That’s why Ronald Reagan’s ironic, oft-quoted “I’m from the government and I’m here to help” draws laughs to this day. 

Most people start out trusting their financial institution. Otherwise, they’d never have set foot inside or logged on in the first place. Since the relationship starts out with trust in place, the challenge becomes to avoid losing it, and, better yet, to maintain and grow it.

Sometimes all it takes to lose trust is a rude employee. Fortunately, most clients understand that with thousands of employees a wild card is bound to come up now and then. More damning would be management’s poor handling of a complaint. Even more damning would be the exposure of a practice bringing down government censure in a public forum. 

Riding herd on apps

While riding herd on thousands of customer-contact people has its limitations, riding herd on apps need have none. In today’s market there’s no excuse for offering digital banking apps that are anything short of well-branded, cutting-edge, up-to-date, reliable, and user-friendly. 

A bank without the resources to develop its own apps can draw upon a world of quality third-party resources. In choosing one, I recommend—besides peer recommendations—actually digging deep. The best resources will welcome your scrutiny and shine under its light.

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From thumbprints
to butt scans
and morality
in biotech

eye-2771174_960_720WAY BACK—well, five years ago—when Apple introduced iPhone 5s’s thumbprint scanner, fear mongers lost no time claiming that phone thieves would now take your phone and your finger. Never mind that it wouldn’t work—irrational panic spreads faster than rational calm—and besides, what if your phone thief doesn’t know that iPhone can’t scan a dead finger?

Safe as your digits are, there are valid reasons for concern about thumbprint scanners. According to the New York Times,

… researchers at New York University and Michigan State University suggest that smartphones can easily be fooled by fake fingerprints digitally composed of many common features found in human prints. In computer simulations, the researchers from the universities were able to develop a set of artificial “MasterPrints” that could match real prints similar to those used by phones as much as 65 percent of the time.

Carry around enough masterprints, reasons one NYU professor, and you could unlock up to half the smartphones out there. 

But the NYU professor’s statement indulges a bit of hyperbole.

For one thing—one, very big thing—testing was done in a lab, not on real phones, and laboratory conditions often fail to predict what happens in the real world. For another, Apple places the odds of a rogue fingerprint’s opening your phone at one in 50,000. It’s reasonable to assume bias on Apple’s part, but then, besides making phones, Apple is also in the business of not getting sued for shoddy security. 

But just to be safe, if you know that 49,999 of your friends tried to hack your phone, beware the next one.

Other forms of biometric ID are a burgeoning business. And that leads to bigger biometrics questions having less to do with thumbprint security and more to do with privacy. Namely, who owns your biometric information? Who can share it, and with whom, and for what purposes? And what to do if your biometric identifiers are stolen or compromised? You can’t exactly change them.

No longer the stuff of movies

Readers may remember the 2002 movie Minority Report, which depicted a futuristic world where eye scanners tracked people’s location, greeted them by name in shopping malls, and served up personalized advertising. The possibility is not so far off. India has already scanned into a national database the irises and fingerprints of 1.2 billion residents. Researchers at the University of Tokyo have come up with a way to replace car keys with a butt-scanning driver’s seat. Smartphones complement fingerprint recognition with facial recognition. Biometric devices recognize your ECG, your walk, even your body odor. (That last one might not be terribly secure. I know a few people who could activate such a device from several miles away.)

A national database of biometric information can be useful for second- and third-world nations. For first-world nations, however, especially those with something akin to the Fourth Amendment to the United States Constitution, it opens a can of worms as to where illegal search begins and ends. USA Today raised valid concerns:

The rapid rollout of biometric ID systems holds some promise [for underdeveloped nations]. Hundreds of millions of people lack formal identification, and that’s an obstacle to participating in society …

… [But in] the United States, Europe and other regions, the worry is not that the state doesn’t know who you are, but that it knows too well—like Big Brother. Critics of biometric programs argue that important questions haven’t been resolved.

Who has the right to collect your biodata? Who gets to access it? How can it be used? And what happens in case of security failures? After all, you can change your passwords after a Heartbleed bug, but you can’t change your irises.

From a technology standpoint, it’s not necessary to obtain your permission or even your cooperation to collect your biometric data. As Scientific American reported:

Since 2011, police departments across the U.S. have been scanning biometric data in the field using devices such as the Mobile Offender Recognition and Information System (MORIS), an iPhone attachment that checks fingerprints and iris scans. The FBI is currently building its Next Generation Identification database, which will contain fingerprints, palm prints, iris scans, voice data and photographs of faces.


Department of Defense–funded researchers at Carnegie Mellon University are perfecting a camera that can take rapid-fire, database-quality iris scans of every person in a crowd from a distance of 10 meters.

Such data gathering can make linking criminals to crimes easier. It can help put names to unidentified remains. But at what point does collecting—and distributing—your biometric data intrude? Clearly, what is technologically possible must be tempered by what is legally allowed and morally supportable.

The age of biotech legislation

Per the American Bar Association:

A few states have enacted legislation specifically to regulate third parties’ use and collection of individuals’ biometric information. State laws concerning biometric information fall roughly into one of three categories: (1) laws with respect to the collection and use of biometric information belonging to students; (2) laws dealing with collection by government actors; and (3) laws targeting the collection and use of biometric information by businesses.

And per the Security Privacy and the Law website:

So far, Illinois is the center of biometrics privacy litigation, thanks to its strongest-in-the-nation law regulating the use of biometrics.  The Illinois Biometric Information Privacy Act, passed in 2008, imposes requirements with respect to the retention, collection, disclosure, and destruction of biometric information.  Only two other states, Texas and Washington, currently have biometric-specific privacy laws in force, each of which for its own reasons has not had quite the impact of the Illinois law.  (Note that some states, through their criminal laws, already protect biometric data against identity theft.)

2018 may bring big new developments, however.  For one thing, look for courts to rule on the application of the Illinois law to parties located outside of Illinois.  For another, a fourth state has passed a law containing biometrics privacy protections, set to go into effect in April. With various pieces of biometric-related legislation pending across the country, it’s a good bet that other states–and perhaps the federal government–will follow suit in the coming year. 

In sum, your fingers and thumbs are safe, at least from informed thieves. But there remain daunting questions both philosophical and legal as to collection, distribution, and use of your biometric data. It’s no longer the stuff of science fiction. I need hardly point out how the use of biometric ID could help out—and, in some cases, compromise—the banking industry. It behooves us to keep abreast of, or even get involved in, future developments.

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Push, pull, and
the gig economy

JobsMost marketers know a push from a pull strategy. True to its name, a push strategy pushes a product the market has yet to demand. 3M brand Post-It Notes provide a great example. People the world over had no idea how badly they needed those little yellow stickies until they found themselves at wits’ end when their free, introductory supply ran out.

A pull strategy, no less true to its name, obliges markets with already-desired, that is, “pulled-for” products. While it’s easier to fill a known demand, learning what markets want is tricky. Ask any marketer who, after rave focus group reviews, introduced a product for it only to flop.

Digital products are of a necessity a bit of both push and pull. Technology heretofore unimaginable has no choice but to go looking for a market. Take, for instance, smartphones. In 2007, Apple had little luck pushing its newfangled iPhone on a market that demanded neither a touchscreen nor a device that was big and clunky next to sleek, miniaturized phones. Users began pulling only when Apple pushed out third-party apps. “That’s when the iPhone discovered that its killer app wasn’t the phone, but a store for more apps,” wrote Brian Merchant in his book The One Device.

Digital payments began as a push strategy. People liked portable devices and convenience at the point of sale, but it was unknown if they’d go for combining the two. The growth of point-of-sale payment systems must have brought a collective sigh of relief to early backers.

The gig economy pulls apps

The gig economy is pulling payments apps in a big way. Gig economy refers to work on a limited-time, non-employee basis. This can include temp workers, independent laborers, freelancers, babysitters, Uber drivers, handypersons, and the like.  The gig economy has been around for as long as individuals have been charging for short-term work. What’s new is the way digital payments are solving the age-old problem of timely payment. 

Companies that retain or broker gig workers usually pay by check and often take 30, 60, 90, or even 120 days to do it. Such delays can cripple the independent worker. According to a Pymts.com article by Karen Webster, 84.3 percent of gig workers said they would do more gig work—indeed, more than half have day jobs they’d cheerfully give up for full-time gig work—if payment were faster.

Solutions are fast emerging in the form of specialized apps that connect gig workers with eager customers while facilitating fast payment. Uber and Lyft, prime examples of gig economy apps, collect fares and disburse them almost immediately to drivers. Airbnb similarly collects and distributes rent. Bill.com lets businesses pay freelancers via the ACH, charging the latter only 49¢ per transaction instead of the more typical three percent. Amazon recruits delivery drivers and pays them via Amazon Flex. People blessed with strong backs can earn extra bucks moving furniture thanks to Bellhops.com. Independent homecare nurses, pet sitters, and childcare providers can collect via Care.com. Solo drivers let restaurateurs add delivery to their menu using TryCaviar. (The list goes on. A Wonolo article, where I found the foregoing examples, lists 50.)

$1.4 trillion

Since individual gig transactions tend to involve smaller amounts, it might be tempting to assume the gig economy is too small to pull the current profusion of apps. But small, individual transactions add up. According to pymts.com, American gig workers are headed toward racking up a good $1.4 trillion in 2018.

That’s certainly enough to pull more than a few apps.

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Zelle to overtake Venmo


Some of you may recall my predicting a bright future for Zelle at last year’s Payments 2017. Indeed, Zelle has not disappointed—as you’ll see in my just-published article for The Financial Brand:

Zelle on Trajectory to Crush Venmo

in War for P2P Payments

Since this time yesterday, the number of people enrolled in Zelle increased by 100,000. By this time tomorrow, that number will have increased by another 100,000. On average, anyway. At this rate, according to eMarketer and others, Zelle will outstrip current market leader Venmo this year.

Until recently, digital banking options covered most of the bases save one exception. Consumers could make digital payments to businesses, and businesses could make them to one another. But when a consumer owed a buddy a few bucks, for too long the only option was to hand over cash or write a check.

In a digital world, that’s an inconvenience at both ends. To marketers, of course, inconvenience at both ends indicates a need waiting to be filled, so it’s not surprising that Google, Apple, PayPal, Venmo, Square, and others have … [click here to read the entire article on The Financial Brand site]

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The Six-cent Dollar

dollar-463380_960_720There’s something odd about money. Namely, that it has no intrinsic value. What gives it value is billions of people throughout the world agreeing that … well, that it has value.

Currency has come a long way since its start in the fourth century BCE. We have arrived at a time and place where you can trade between three and four slips of intaglio-printed paper with the word “One” printed on them for a gallon of gasoline, between one and two thousand of them for a new mattress, tens of thousands of them for a new car, and, in some cases, hundreds of thousands of them for your very own legislator.

The Sixth Cents

The total cost in labor and materials for producing one of those slips comes to just under six cents. Larger denominations are slightly more costly to produce because they require more security features. Counterfeiters, it seems, rarely bother with one-dollar bills.

In his book Sapiens: A brief history of mankind, author and historian Yuval Noah Harari refers to the agreed-upon value of money as a “shared myth,” which means pretty much the same thing as “agreed-upon value” but sounds decidedly more scholarly. Ayn Rand’s Atlas Shrugged, which contemporary politicians love to cite and, in so doing, reveal that they haven’t read it, describes the value agreement when Francisco d’Anconia responds to the “root of all evil” cliché with a pages-long diatribe. I shall excerpt only a few lines here (you’re welcome):

“When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others … Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor … Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle …”

Rand’s insertion of “…which should have been gold” bears mention. Rand and others who rue the abandonment of the gold standard seem to overlook that gold, too, has a no less tenuous agreed-upon value than printed paper. Its high agreed-upon value is not due to its utility as an electrical conductor but to its coveted position as the stuff of royalty and the rich.

Likewise, diamonds have little intrinsic value yet an abundance of agreed-upon value. For the most part, the only practical uses for diamonds are things like polishing, cutting, and drilling. Diamonds’ popular value is tied to their use in jewelry, a carefully controlled supply, the fairly recent expectation that an engagement ring requires a diamond, and the near elimination of used diamond markets thanks to two sentiments: One, that diamonds are heirlooms not to be sold but kept in the family; and, two, that a “used” diamond is a sign of a stingy, insufficiently smitten prospective groom (even though used diamonds don’t exactly show wear and tear).

So much for gold-backed currency

Though no country has gold-backed currency anymore, currency’s agreed-upon value remains. The danger is that not backing currency with gold leaves a country free to print money at will. Unfortunately, at one time or another most countries have. Rampant overindulgence of the money-printing privilege can be a factor leading to inflation and devaluation. On the other hand, FDR’s letting go of the gold standard helped the United States pull itself out of the Great Depression.

Stocks are the epitome of agreed-upon value. The more people want a stock, the more its price increases—even if the issuing company isn’t doing well. A more recent example of agreed-upon value is cybercurrency. Much like stocks, a cybercurrency’s value depends on how many people are willing to pay for it, and how much they’re willing to pay. The most famous cybercurrency, Bitcoin, needs no introduction, but right now coinmarketcap.com lists 1653 other, actively traded cybercurrencies. How hot are cybercurrencies? Writing for Smithsonian magazine, Clive Thomas cites the case of  “… Billy Markus, a programmer who created a joke alt-coin called ‘Dogecoin,’ only to watch in horror as hucksters began actively bidding it up.”

Whether we’re talking dollars, stocks, cybercurrencies, or seashells, the fact remains that an unwritten social contract determines a currency’s value. Yet over the centuries, currency has proven itself a fairly solid house of cards. After all, we still use it. We likely will continue to do so long after we will have replaced paper and coin with ones and zeroes.

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