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Can a bank disrupt? Imagining the bank as a retailer for digital goods. In this webinar Amir Tabakovic, Head of Market Development at PostFinance will share his expertise on the latest technology to disrupt the traditional banking model; the integration of digital gift cards into banks’ own existing digital channels. Integrating gift cards embraces the continuing shift in media consumption towards digital channels and generates new revenue for the bank, while improving customer loyalty. “By looking at partnerships with multinational companies from a completely new perspective, we were able to zero in on the area of digital goods and look for ways we could begin innovating. We realized that the in-app buying process for virtual codes, such as those used by iTunes, Nintendo, XBOX, Sony-PSN, and paysafecards, inside a banking app would be a first not only for PostFinance but also for the entire banking sector. During the webinar I’ll be sharing how we approached the idea practically, what we feel the market potential is, and what challenges we’ve had to overcome.” - Amir. Amir Tabakovic currently serves as Head of Market Development at PostFinance, the fourth largest retail bank in Switzerland. In his current role, he is responsible for initiation, development and market introduction of digital innovations. A former internet start-up entrepreneur, Mr Tabakovic likes to be at the centre of merging business and communication technologies and bringing new solutions to market. He has participated in the Mobey Forum since 2010, currently chairs the Mobey Forum Mobile Wallet Workgroup and has been a member of the Board since 2011.
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Can a bank disrupt the retail industry? Bank as a retailer for digital goods
Amir Tabakovic, Head of Market Development
@TABAKOVIC
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Facts & Figures about PostFinance
Facts & Figures about PostFinance
One of the leading retail financial institutes of Switzerland
3rd biggest retail bank in Switzerland
More than 3 million customers in total (40% of Swiss population)
Market leader in the customer segment “youth & students”
First mover in digital banking
More than 1.5 million e-banking users
First PFM solution in Switzerland
More than 500’000 downloaded Apps (Android and iOS)
Number one in Swiss payment transactions
#1 in Swiss payments: 965 million transactions processed in 2013
967 ATMs in Switzerland generating more than 77 million customer contacts per year
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The way we consume… …music, movies, books, games is changing
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Apple launches iTunes in April 2003
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What are Digital Goods?
Digital Goods Market: Software/Games, Audio & Video Content, eBooks ...
Nature of Digital Goods “First copy costs” -> high margins Digitalization -> high market growth Distribution is in flux Old school distribution via MNOs New school distribution via market places/app stores/streaming platforms Payment Methods Mobile phone bill; included in the HW price; membership; Online payment methods (credit cards, PayPal, eMoney, etc.); Prepaid cards/gift cards
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Who are the players in the Digital Goods market?
Marketplaces
Streaming platforms
Gaming console platforms
Online gaming platforms
Software manufacturers
Cash to online players
…
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Who are the classical retailers of gift cards?
Ticketing Machines Retail Stores Kiosks
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PostFinance’s as a retailer of Digital Goods
Starting small: Airtime top up at ATMs
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How «Bank as a Retailer» idea evolved over time?
Phase 1: Selling airtime for MNOs and MVNOs
– First experiences with airtime top up via ATM in 2002
– Airtime top up via SMS in 2009
– Airtime top up via PostFinance mobile app in 2011
– First experiences with Paysafecard gift cards via SMS in 2011
First conclussions:
– Top up of third party prepaid accounts works!
– There is more out there than only MNO airtime
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Getting ready for the Phase 2
From «starting small» to «thinking big»
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How did we implement the mind change at PostFinance?
– Analyzed Digital Goods market
– Focused on Digital Goods and gift cards for the start
– Explained and sold well bank’s new role internally (merchant role)
– Discussed the implications (image, communication, organization…) and executed fast:
– Right team
– Right culture
– New environment
– Fun
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How does merchant role pay off for the bank?
DG Market Place DG Retailer Payment Method Margin Allocation
Financial Institute
Retailer
Financial Institute
Retailer
Financial Institute
Retailer
Financial Institute as a Retailer
In store Debit card payment
Online shop Credit card payment
In App Sale Direct account debiting
A23XB36H…
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New value proposition: distribution of virtualized gift cards
Easiest way to buy gift card
Alternatives to credit card payments
Seamless digital shopping experience
Alternative distribution channels for market specific virtual currencies/gift cards
Opportunity for banks: -> Entering the high margin, high growth niche
Advantages for partners and its customers
Advantages for Partner
– Access to the PostFinance‘s huge customers base
– Additional distribution channels (24/7)
– Cost savings through digitization of the gift cards
– Very low implementation effort thanks to a technical integrator (see next slide)
– Innovative image in the Swiss market
Partner’s Customers
– The easiest way in the world to buy and redeem gift cards (anytime & anywhere)
PostFinance communication power
– Over 500’000 app downloads
– Mobile app teaser
– 1.5 million online customers
– Homepage
– “youth & students” microsite
– Newsletter
– 3 million ATM customers
– Account balance letter
– Direct mailings
– Customer print magazines
– Marketing screen/ATM
– Annual national “youth & students” campaign
– Billboard advertising
– Online campaign
– Print campaign
(Example of a promotion on PostFinance’s homepage)
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How to digitize gift cards? …preferably with mobile
How does the iTunes case work?
Click on image to see an illustrating video on youtube (http://www.youtube.com/watch?v=ulFSk53wfP4)
Simplified Voucher Ordering and Delivery Process
PostFinance
Technical Integrator
Delivery of the digitized gift card code to the customer.
Internal Systems as:
• Entry Server
• Account management
• Authorization
• Etc.
A
2
3
4
1
2
3
5
4
A technical integrator (periodically) receives a certain amount of digitized gift card codes and stores them.
Process Steps:
Customer request for a digital gift card (via SMS, App, ATM).
Processing within PostFinance’s internal systems (authentication, T&Cs, contracts etc.).
Requesting the digitized gift card code at the technical integrator.
Activation of and delivery of the code to PostFinance.
Remarks:
Key
A
5
1
PostFinance app
Digitized gift card
Market Introduction iTunes (Online and Mobile Campaign April 2013)
PostFinance communication power: Different promotions
Already Implemented Use Cases
More than 500’000 purchases in 2013.
App ATM SMS
(more to be added soon)
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Content Promotions Give your customer a song or an app as a gift
Are you familiar with Starbucks «Pick of the Week»?
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http://simplefavorites.blogspot.ch/2012/02/starbucks-pick-of-week.html
http://www.bigfishgames.com/blog/starbucks-pick-of-the-week/
Content promotion PostFinance and Marc Sway (Sony Music)
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– Seemlessly digital process
– New forms of collaboration and promotion with music labels and Swiss artists
– New form of brand marketing
Content promotion: Song as a code
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Conclussion
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– Digital Goods: High growth, high margin market
– Your advantages as a bank:
– Huge customer base
– Established digital communication channels
– Trust
– Clear benefits for customers, digital goods partners and the bank
– Benefit for customer is big enough to reach the mass market
– Banks willing to enter this market need a new mindset and skills
– It’s not only about new revenue steams, it’s about deepening customer relationship
Epilogue
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Thank you!
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