I realize that “it seems like it was just yesterday” is a tired cliché, however, it seems like it was just yesterday that I joined Fiserv as Managing Director, Marketing Strategy and Innovation, Digital Payments. In fact, it was seven years ago this month.

Today I’m grateful (and just a little bit amazed) to announce that I have been promoted to President, Digital Payments and Data Aggregation at Fiserv.

I’m looking forward to my new role.

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A farewell to checks

Predicting the demise of checks isn’t new. But when banks abandon them, it’s a whole new ball game.

“It’s kinda like a debit card …”

The advent of debit cards predates my own advent, but I am familiar with the way bankers explained them to my parents’ generation: It’s the same as writing a check, just faster and easier.

But could it be that debit cards and checks have switched places in terms of ubiquity? I found it not just amusing but telling that, in her recent InvestorJunkie post, Kara Perez used debit cards to explain checks. “Personal checks act in the same way a debit card does,” she wrote, “only on a much slower time frame.”

The very need to define checks to a rising generation indicates a sharp decline in their use. Indeed, evidence of a checkless future is popping up everywhere. By the end of this year, UnitedHealthcare will have phased out sending payments by paper check. The Social Security Administration did away with sending checks in 2013, replacing them with electronic payments and prepaid debit cards. The incidence of stores that refuse checks is rising to the point that First Quarter Finance deemed it needful to publish a list of retail establishments that still accept them.

None of that is good news for checks. But it’s a whole new ball game when banks start giving up on checks. Which is exactly what’s taking place in South Africa right now. According to Finextra,

The humble paper cheque may be on the verge of extinction in South Africa, as banks begin moves to phase out the age-old method of exchange in favour of cards and digital payment mechanisms. Major banks Nedbank, FNB and Absa have already announced plans to discontinue the use of outdated cheque payments beginning in January of next year.

Checkless versus cashless

While the meteoric rise of digital payments led many to predict the demise of cash and checks alike, it’s easier for a society to go checkless than cashless. It turns out that going cashless is not without complications.

In 2018, CNBC reported that Amazon planned to open 3000 cashierless, cashless, cardless Amazon Go stores by 2021. But here we are, with 2021 about 10 weeks away, and there are exactly 27 Amazon Go stores. Either Amazon is planning a building spree the likes of which has never been seen, or things have changed since 2018. Moreover, Amazon Go stores began accepting cash in 2019.

The change wasn’t driven by the market but by the regulatory environment. An increasing number of local governments find that cashless stores discriminate against the unbanked, a number the U.S. Federal Reserve estimates puts at about 55 million Americans. Hunton Retail Law Resource reported in June:

… at least 21 cities and states have adopted or are considering cashless retail bans. Massachusetts, Rhode Island, and New Jersey have already enacted bans, and at least 10 states may be poised to follow. Berkeley, Philadelphia, and San Francisco also prohibit retailers from refusing cash; New York City’s ban takes effect on November 21, 2020. At least four other major cities are considering bans of their own.

Seeing a bit of writing on the cashless wall, wise retailers are choosing not to rush cashlessness. For now.

But checks are another matter.

While not accepting cash is increasingly off-limits, not accepting checks is still fair game. That’s because, unlike the unbanked, whose only means of payment is cash, checking account holders have other options such as plastics, online bill pay, smartphone payment apps like Zelle, and—if it must come to that—even cash. So while cash does not appear to be headed out anytime soon, checks’ days may be numbered.

A trend away from checks should take no one by surprise. Check printing companies are certainly preparing for it. Although they still argue the continued viability of their flagship product, many like Harland-Clarke and Deluxe have diversified into other, non-obsolescent offerings.

Meanwhile, I can’t remember the last time I wrote a check. How about you?

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TBT: Whatever happened to caffeine for data?

This week’s TBT falls in the Whatever Happened To … category.

About this time in 2018, I blogged about Shiru Cafe and its unique approach to capturing and remarketing personal data. The company still operates, but not in the United States. Unable to secure corporate sponsors, Shiru Cafe closed its three U.S. location— less than two years after opening the first one.

No sooner did direct marketers commence salivating at targeting opportunities posed by that newfangled Internet thing … than the United States Congress and various regulatory bodies set about passing laws to hamper them. 

Or, at least, that was the idea. Many rules are so plastic as to allow for a good deal of wiggle room—and marketers have proved adept wigglers since the dawn of time. The CAN-SPAM Act, for instance, forbids “false or misleading” headers; but one person’s “false and misleading” may be another’s “creative and charming.” Or, take retargeting, which provides a neat circumvention of rules against emailing website visitors without their express permission. Though it’s perfectly legal, a growing number of consumers are creeped out when ads for a recently searched product suddenly show up wherever they look.

The wisest course for building an online database has always been simply to request data along with permission to use it. Since people rarely give up something for nothing, marketers often dangle a compelling offer in exchange for data and permission. The offer is usually some sort of downloadable file—a document, music, video, images, etc.—or sometimes a non-downloadable incentive that requires shipment.

But SHIRU CAFE, a three-year-old Japanese company, has found a way to deliver a non-downloadable incentive on-the-spot in exchange for data. 

SHIRU CAFE is at once a coffee shop and a gatherer and marketer of data. 

If you’re a student at Brown University in Providence, Rhode Island, SHIRU is a coffee shop—but your money is no good there. The price for a cup of coffee at SHIRU is your personal data. According to NPR’s “The Salt” …

To get the free coffee, university students must give away their names, phone numbers, email addresses and majors, or in Brown’s lingo, concentrations. Students also provide dates of birth and professional interests, entering all of the information in an online form. 

Faculty can pick up a cup of Joe for a dollar. Tough luck if you’re neither a student nor faculty member. You’ll have to go someplace else and pony up.

If you’re a corporate sponsor, SHIRU is a gatherer and marketer of data. Sponsors, if you were wondering, pay for the coffee by purchasing the data. Students who participate, continues NPR,

… open themselves up to receiving information from corporate sponsors who pay the cafe to reach its clientele through logos, apps, digital advertisements on screens in stores and on mobile devices, signs, surveys and even baristas.

It doesn’t take much imagination to understand the value marketers might place on that information. Financial institutions, for instance, could use it to identify students likely to someday prove valuable clients.

There’s no deception or sleight-of-hand going on. SHIRU is up-front about why they want students’ data and how they plan to share it.

As you’d expect, some find the idea distressing. Two Brown students recently called for a boycott. Others have set to work envisioning the worst and writing about it

But come on. College students are big kids. Moreover, no one is forcing their participation. There’s an arguable win-win here, since database marketing is about matching marketers with more-likely prospects, and vice-versa.

Though the Providence café is SHIRU’s only U.S. store and hasn’t yet landed a sponsor, SHIRU operates a number of other profitable, corporate-sponsored cafés in Japan and India.

I’ll be interested to see if the concept grows in the U.S. If it does, expect knock-offs. It would be an easy matter for Starbucks or another chain to offer students coffee in exchange for data. Such would have an easy jump on SHIRU, since in the U.S. you can throw a textbook and hit three Starbucks stores.

For that matter, perhaps a bank looking to capture rising generations might strike a deal with coffee houses near college campuses, offering students free coffee on showing proof-of-account. Although many bank lobbies already make coffee available, a bona fide coffee house presents cachet—and an aura of quality—that no bank lobby can approach. Besides gathering data, a coffee house program would provide an incentive for students to open an account.

Surely there are other possibilities. Perhaps I’ll think of more. But first I’m going to need another shot of caffeine.

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Can’t beat fintechs? Join ’em.

“There is nothing permanent except change,” declared sixth century BCE Greek philosopher Heraclitus. I would venture to say that modern society agrees with him, as evidenced by an abundance of expressions hinting that there is wisdom in making the most of change, and naught but folly in attempting to slow or stop it. For instance:

  • Aviator Betty Green quipped, “Bending beats breaking.”
  • UK Prime Minister Harold Wilson said, “The only human institution which rejects progress is the cemetery.”
  • Trekkies gleefully quote the infamous Borg’s “Resistance is futile.”
  • And we have history’s most prolific commentator, Anonymous, to thank for “If you can’t beat ’em, join ’em.”

In Darwinian terms, the financial services industry is a model of survival via adaptation, inventing and re-inventing itself through centuries of cultural, legal, and technological change. Readers may have noticed that Wells Fargo didn’t disappear when the great California Gold Rush of 1849 subsided in 1855, JP Morgan Chase is no longer a waterworks, and my employer Fiserv has moved well beyond its roots as a data processing company only.

Love thy enemy?

At first, the banking industry sounded alarms as fintechs proliferated and tech giants such as Google, Facebook, and Apple dangled their toes in financial services waters. They were, to put it bluntly, The Enemy.

Now, although cautions remain, alarms are fading with the realization that The Enemy’s continued incursion is unstoppable. And if that is so, the wiser tactic may not be to fight but to embrace. That is, to turn The Enemy into an asset.

This seems to be especially true for smaller institutions. Finn AI CEO Jake Tyler recently wrote for The Financial Brand,

A partnership with the big tech powerhouse could enable community banks and credit unions to offer a sophisticated digital experience quickly, including an alternative to Apple Pay … When Google announced that it had partnered with six more banks and credit unions on a checking account—in addition to its original two partners—it had many in the banking and fintech space scratching their heads … [but] Google has more than 67 million Google Pay customers, which could give its banking partners access to a huge potential customer base. It could also allow them to offer consumers a digitally focused experience, something that many traditional financial institutions—notably smaller banks and credit unions—struggle with.

But partnering with tech firms needn’t be the exclusive domain of tiny institutions. Just last month, Finextra reported on Google’s plans to provide co-branded accounts via eight US banks of varying size in terms of assets, including Bank Mobile, BBVA USA, BMO Harris, Coastal Community Bank, First Independence Bank, and SEFCU.

Moreover, if you have an Amazon Rewards Visa credit card, you probably know that it’s really a co-branded Chase card. As I noted in March, Goldman Sachs is partnering with Apple on the—what else would it be called?—Apple Card. And nearly a year ago, reported that Google had “… announced it will partner with Citigroup and Stanford Federal Credit Union to launch consumer checking accounts.”

Yet, argued elsewhere, “… instead of trying to be the bank, Google is leveraging the brand name, banking infrastructure and reputation for trust and stability of two banks.” The article, by Market Platform Dynamics CEO Karen Webster, continues:

[I]f successful, these accounts could become the cornerstone for the everyday app ecosystem that every Big Tech and FinTech player has its sights set on developing … to leapfrog their Big Tech and FinTech competitors and gain the consumer’s trust for keeping their funds safe … this ecosystem would link payments, banking, identity and commerce credentials to a funding source that does something no other FinTech or Big Tech ecosystem has been able to do at scale: capture the consumer’s primary paycheck and use it as the flywheel to make funds movement between those various ecosystem endpoints seamless, trusted and secure.

“What all banks and credit unions bring to Google’s table,” wrote The Financial Brand CEO and executive editor Steve Cocheo, “is the ability to offer insured deposits, connections to traditional payment rails, and regulatory compliance experience.”

Fine, but what’s in a Google alliance for banks? Citing consultants Richard Crone and Heidi Liebenguth of Crone Consulting, Cocheo suggests that merely avoiding being left out may provide incentive for financial institutions to play ball with Google:

If they aren’t with Google, they’ll be competing with partnerships offering the accounts. A major strength of fintechs … is their known ability to offer a customer experience, and innovation, superior to what most banks and credit unions offer. Those not allying with Google will need to be able to tap internal and vendor expertise to provide competitive digital experiences.

Holdout-purists may view partnering with fintechs as a treasonous act. But pragmatism has a habit of winning out in the end, especially in relatively free markets. This might be a good time to invoke the words of Patrick Henry, spoken in 1765 to the Virginia House of Burgesses on the subject of American independence: “If this be treason, make the most of it.”

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TBT: Digital sleeve garters

Halloween is around the corner. Why not dress up like an old time banker? Originally posted August 30, 2016.

It’s not hard to pick out the banker in a Western. Just look for someone sporting sleeve garters and a translucent visor.

This is a rare case in which Hollywood actually gets things right. In the late 19th century, sleeve garters served a practical purpose. Back then, you couldn’t walk into Nordstrom and ask for your neck size and sleeve length; if you couldn’t afford your own tailor, you made do with a one-size-fits-nobody. Shirt makers tended to err on the side of making sleeves way too long, so unless you wanted cuffs below your fingertips, you’d don garters to hoist them up where they belonged. This also helped reduce soiling from dragging sleeves over ink, dusty shelves, and musty documents.

Translucent green visors came along a little later on the heels of newfangled incandescent lighting. Clerks donned the visors to protect their eyes from the harsh overhead light of early bulbs. That’s also why green shades sit atop the traditional banker’s lamp.

Fast forward to a few decades ago …

Worsted and flannel suits in navy and charcoal gray had become all but required attire for bankers and other professionals. Suits were dark and somber for two reasons. One was that dark fabrics hide stains better than light ones. The other was that, until dry cleaning came along, the only way to make a stain “disappear” was to dye the whole suit a few shades darker.

Fast forward to today …

A growing number of banks are opting for business casual, having traded the suit and tie for khakis and sport shirts.

Assuming, that is, we’re talking about banks that still bother with physical locations. For all you know, your online banker could be in a T-shirt and blue jeans.

And that has marketing implications. Despite their practical origins, sleeve garters, visors, and, later, dark suits circled around to become symbols of professionalism. You could walk into a bank, see the attire, and—right or wrong—feel some assurance that you were dealing with competence.

The new challenge is to convey an aura of competence absent the traditional trappings that once characterized banks. That job increasingly falls to websites and apps. More than function, they must look and feel like the kind of business to whom people would willingly entrust their funds, business and personal information, and more.

Branding isn’t going away. Like everything else, it’s going digital.

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