Webster Bank's plotting its move into mobile payments, and part of its strategy is to let others make the mistakes, particularly when it comes to tapping payments data for purposes such as marketing.
Greg Jacobi, senior vice president of distribution for the $20 billion-asset card issuer, recently discussed the bank's plans in an interview with PaymentsSource. While non-bank startups have dominated the early development of the mobile payment market, Jacobi says he is not worried.
The bank is figuring out how to best use the data that accompanies digital paymentswhat can and can't be sold or marketed via the mobile channel. Those lessons are best taught by others, Jacobi says.
For Jacobi, the question that remains is howor even ifit's wise to take advantage of the wealth of information provided by digital commerce.
PaymentsSource: Where is Webster Bank right now in terms of offering mobile payments?
Jacobi: We aren't doing anything specific right now in terms of enabling consumer to use the mobile device to make payments at the point of sale. Currently, we allow mobile bill payments and also payments to Webster loan accounts. We're obviously spending a lot of time and effort figuring that out, and we're in the beginning stage right now of our mobile payment strategy.
PaymentsSource: For a bank your size (about $20 billion in assets), where do you see Webster on the mobile payment development curve?
Jacobi: What's interesting for a bank our size is we're not in a position where we're going to have to deliver what's going to happen in mobile [for the entire market]. The scope of the mobile payments market isn't for us to define.
PaymentsSource: Is there also a challenge to being in that position, as models such as NFC and bar codes develop, along with mobile payment initiatives such that are driven by other players such as telecoms and technology startups?
Jacobi: It's critical to get it right, and to make sure we're prepared for the various options that crop up as they take hold and making sure that we're there to take advantage.
PaymentsSource: How do you see your bank taking advantage?
Jacobi: What we're seeing is the folks that are doing interesting things in mobile right now are working on the payment technology that's up front, on the execution. What we're doing is looking at how we enable mobile payments, but to really gain traction we have to incrementally increase the value of the transaction. We want to do more than just move the payment from the card to the phone.
PaymentsSource: Does that mean tying mobile point of sale payments to customer relationship management?
Jacobi: Absolutely. Banks have always had this treasure trove of data. What we're looking to do is leverage that information, but to do it in a way that's good for the consumer, in a way that creates value for them. We don't want to use that information to blindly cross sell. We want to find products and services that deliver value and offer those up via mobile. We don't want to do something that's going to cause the customer to lose trust.
PaymentsSource: Would personal financial management (PFM) be a good mix of payments and consumer data?
Jacobi: We don't like the idea of PFM as a separate entity called PFM. But we are using a lot of concepts around PFM, whether it's the visual presentation of data to help the customer understand their financial position, or budgeting. We have a home grown online banking solution [with mobile banking from Monitise], so we love to bring consumer and transaction data into the core as much as we can. And mobile is a big piece of that as we try to tie the data back into our mobile app.
PaymentsSource: Does that include linking budgeting tools with payments?
Jacobi: We have full card management on all of our sites. So if you want to see what your balance is around your card payments, you can customize the online banking site.
PaymentsSource: You mentioned Webster is developing a prepaid product. Other companies outside banking, such as Moven, have positioned prepaid as a launching point for deeper banking relationships. Will that be the case at Webster?
Jacobi: Payments create a context for what's happening in a customer's life and mobile is a great way to add to that context. You can view and track payments as a way to find out why a consumer pays for something in a certain way or a certain channel. And the power of having all of that on a phone gives us a huge opportunity to use payments in a way that adds value to the customer relationship.
PaymentsSource: What do you see as your bank's advantage over non-bank payment providers, particularly those that are already providing the user interface to accept payments and capture data for marketing, special deals and sales?
Jacobi: As a bank we have been hesitant to use data in a way that makes the customer feel uncomfortable, so there are uses of data that we're not pursuing right now. Non-bank competitors may start to use transaction data more broadly and in some cases may prove they were right to do so, or they may break that trust with consumers. Or the customer may say 'this is great and we'll give you permission to do that.' I feel it's OK for [alternative payment companies] to [use payments data for cross selling], especially if they are going to feel out what consumers are comfortable with.