Apple Pay, Samsung Pay:
Does being first matter?

Sam-Apple CroppedConsulting firm First Annapolis recently posted a helpful, feature-for-feature chart comparing forthcoming Samsung Pay with Apple Pay. I won’t reproduce the entire chart here for two reasons. One is that you need only click here or on the image at right to view it on First Annapolis’s site. The other is that I have high regard for copyright laws and for the consequences of violating them.

In their classic Positioning: The Battle for Your Mind, Al Ries and Jack Trout argued that no position was stronger than being first. If you cherry-pick, it might look like a solid claim. Products like Coca-Cola and Scotchgard have held their primacy, and it is not unreasonable to include iPhone with them.

Upon announcing iPhone in January 2007, Apple set the smartphone standard that holds to this day. At the time, Google was poised to introduce the first Android smartphone. It was to have been a Blackberry-esque device with a small screen and solid keyboard. With one look at iPhone, Google quietly scrapped two years of development and returned to the drawing board, choosing being late over being eclipsed.

But the case for first-ness falls apart when you reverse-cherry pick. Consider IBM PCs, Jeep, and Prodigy, where being first helped pave the way for latecomers by softening a market toward a new product, and by bringing to light mistakes for latecomers to avoid. And, to wit, Android now commands more than 50% of the smartphone and tablet market despite its late arrival.

History may repeat itself with Apple Pay and Samsung Pay. Samsung is bringing to market a product that looks a lot like Apple Pay. Both platforms support credit, debit, and prepaid cards. Both rely on cloud-based payment credentials, support NFC technology, and neither stores credit card account numbers on the device.

That is not to say that there aren’t differences. Apple Pay triggers POS devices to receive payment tokens from Visa, whereas Samsung Pay retrieves cloud-based payment tokens and passes them to POS devices at the point of sale. Samsung portends greater convenience at the point of sale with magstrip reader compatibility, and allows for Private Label Credit Cards (PLCC). On the other hand, Apple Pay offers convenience in the form of automatically loading at the point of sale, whereas Samsung Pay customers must launch the app. Apple Pay allows for payment through the app, whereas Samsung Pay works only at the point of sale.

Early indicators are that Apple’s system may be the more secure, but whether security differences are subtle or great, or matter to consumers, remains to be seen. One difference that I predict will be largely moot—unless Americans step up plans to vacation in Seoul—is that, unlike Apple Pay, Samsung pay will work in South Korea.

Returning to first-ness, I suggest that both products qualify. First-ness per Ries and Trout has nothing to do with being first to launch, but with being first in consumer minds. Since Apple Pay is available only to Apple users, Samsung Pay can own the position of “First” among non-Apple users. Samsung may also enjoy a slight advantage in the form of a market that has had a year to adjust to the concept of payment-by-portable-device.

It should be noted, however, that we not dealing with an iOS-versus-Android situation, but with a single manufacturer of Android devices. Were we discussing not Samsung Pay but Android Pay, its chances of attaining better than 50 percent of the market as did Android itself would be far greater.

It goes without saying that Samsung and Apple each hope to pull converts from the other’s camp. Good luck to them. From what we know about each group’s commitment to its own platform and animosity toward the other, conversions happen but not en masse. Each brand will simply sing to its own choir. The relative merits of Apple and competing products will matter less at the point of sale and more when people sit down to argue about whose phone or tablet is better. As long as neither Apple nor Samsung goes to great lengths to alienate its respective piece of the market, both products will probably fare well.

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It’s Time To Accelerate
e-Bill Adoption

(My newest article in The Financial Brand)

Research shows a strong positive correlation between e-bill adoption and customer satisfaction, loyalty and profitability for both financial institutions and billers. Yet, despite a growing digital consumer lifestyle, growth of e-billing remains underdeveloped, especially when compared to rates of online bill pay.

By Matt Wilcox, Senior Vice President, Marketing Strategy and Innovation, Fiserv

Marketing consists of filling wants and needs at a profit. The safer, less costly way to do that is to find out what the market wants and outdo the competition in delivering it. The riskier, costlier way is to introduce an unknown product that fills an unknown need – as 3M did with Post-It® Notes – and set about convincing the market that they can no longer get along without it.

At the outset, with no track record on which to base predictions, e-bill adoption fell in the latter category. It wasn’t quite clear whether the idea of going paperless would turn out to be Post-It Note success … or an Edsel flop.

Now, just a few years after being introduced, we know there is [read the rest of the article by clicking here now]

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How to make your bank the envy of the Peppered Moth


Ever sat down for a chat with a Peppered Moth?

Prior to the Industrial Revolution, the Peppered Moth flourished in the forests of England. Well, the light-colored ones did. They alit on tree trunks and blended in. Life wasn’t so easy for their dark-colored siblings. They struck such a contrast with the surrounding trees that they might as well have held up signs that said “PREYING BIRDS–DINNER IS SERVED.”

But then the Industrial Revolution came along, bringing with it smokestacks that blackened the trees. Before long, lighter moths became easy pickings while darker ones flourished in their place. A dark moth given to schadenfreude would have had a heyday.

The triumph of this well-known adaptation belies a sobering lesson. Creatures can adapt to environmental change only if they have the DNA for it. Most species that have lived on this planet didn’t, which is why 99 percent of them aren’t around anymore. The Peppered Moth was downright lucky that it had the DNA for producing the occasional dark-colored adult. Without it, it could well have fallen to extinction then and there.

Bankers, our environment is changing.

Going back to the days of green visors and sleeve garters, banking had always been a face-to-face business. As competition swelled, some—if not you, people you know—buried their heads in the sand of being in a “relationship business.” Our customers are our friends, went the reasoning, so no bird will pick them off.

If ever that was true, and you may have gathered that I have my doubts, it is no longer. Just as factories made light-colored tree trunks the exception, technology is making in-person financial transactions the exception. In this new, fast-changing environment, is adaptation within your financial institution’s DNA?

DNA is a set of coded instructions that guide an organism’s development  in terms of traits genes will express, when genes switch themselves on or off, when they work in concert, when they work at odds, and when they don’t work at all. These factors determine how an organism will fare in a given environment. I think it’s fair to say that a financial institution’s DNA is its management, rules, policies, guidelines, and culture. These account for the difference between a bank that is well suited, and one that is not so well suited, to adapt to and prosper as the landscape shifts.

Now, permit me to share a bit of news that is sure to make you the envy of even the most successful Peppered Moth. Your financial institution needn’t resign itself to metaphorical biological determinism. It can do something that no Peppered Moth could ever hope to do. Namely, it can look around, assess the environment, and change its own DNA to match.

There’s just one catch. The ability to look around, assess, and change must itself be written into your bank’s DNA. It must be a product of management, rules, policies, guidelines, and culture. Here is where the analogy breaks down. DNA is not subject to ego. Management, rules, policies, guidelines, and culture are.

Having trouble adapting in a timely manner? Maybe it’s time for a little gene splicing. If a moth can adapt by serendipity, surely a financial institution can do so on purpose.

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Big versus other data

If numbers can make you look smart, it should stand to reason that big numbers can make you look super smart.


Big and small: each has its place.

But then, looks can deceive.

Don’t get me wrong. I hardly need enumerate the virtues of big data. It reveals behaviors, preferences, and predilections on a mass scale. All of which are useful.

But note the “mass” in “mass scale.” Then, recall that a strong brand is, by design, not for everyone. It is important to guard against letting big data homogenize at the expense of niche opportunities, and against letting it keep you from winning by zigging while the rest of the world zags. Unless yours is a financial institution like all others, do not let big data lull you into assuming that your clients are like all others.

While big data is useful for revealing how we behave, it is less so for predicting how, given the chance, we might behave. Big data did not predict, nor could it have, that consumers would willfully stand in line to overpay for coffee, text more than talk, or, for that matter, buy shoes—something that data revealed people had to buy in-person—online.

That is why wise marketers take care to round out big data with other, smaller, more specific data. And to test small before going big.

On the technical side, beware applying the same logic to big as to smaller data. Take, for instance, p-value, defined (loosely) as the probability that the null hypothesis is wrong. The bigger the data, the greater the danger of false positives. As Minitab’s Patrick Runkel explains, a too-large sample can appear to magnify numbers you would rightly ignore in a smaller sample. And as neurologist Steven Novella explains, “The p-value tells us the probability of the data given the null hypothesis, but what we really want to know is the probability of the hypothesis given the data. We can’t reverse the logic of p-values simply because we want to.”

Big data can offer an alluring but dangerous out for the lazy marketer. (Perish the thought that lazy marketers rank among this blog’s readers. I’m taking about, you know, those other marketers.) Embrace it. Stay current with it. Mine it for every gem. But don’t assume the thinking has been done.

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Canaries and the Patriot Act

It’s time for Section 215 of the Patriot Act to expire


Let ’em live!

It was once common practice never to descend into a coal mine without a canary. Canaries are more sensitive than humans to methane and carbon monoxide, which are odorless, colorless, and deadly. If the canary expired, it meant you needed to hightail it out of the mine before you expired, too.

The practice ended early in the 20th century. But now, in passive-aggressive response to Section 215 of the Patriot Act, a namesake practice known as a “warrant canary” has arisen.

Section 215 lets the FBI make any person or entity fork over on demand pretty much anything—printed matter, computer files, data, online search histories, phone records, purchases, reading habits, underwear, you-name-it. The FBI can exercise this privilege without having to show grounds or probable cause.

Moreover, if you’re issued an order under Section 215, it is illegal for you to say so.

Still, it wasn’t long before a few astute, rebellious souls noticed that Section 215 neglected to make it illegal to say that you haven’t been issued an FBI order. Suddenly statements began appearing like this one, from Apple’s 2013 Transparency report:

“Apple has never received an order under Section 215 of the USA Patriot Act. We would expect to challenge such an order if served on us.”

That statement is a warrant canary. The idea is that if the statement changes or disappears, we might reasonably infer that the warrant canary has died—that is, that an order has been issued. That is why not a few people were concerned when one year later Apple changed the statement to this:

“To date, Apple has not received any orders for bulk data.”

The qualifier “bulk” may portend a deceased canary in the form of Apple’s having received orders for specific data.

The FBI, it seems, is not a fan of loopholes. Nor does having named the loophole in question after a sweet, colorful finch appear to have appeased them. As I write, the FBI is pursuing legal action to disallow warrant canaries. Not just Apple, but the likes of Twitter, Google, others, and of course the ACLU, are opposing the FBI on this one.

I bring it up at this time for two reasons. First is that the issue has been heating up of late. Second, Section 215 of the Patriot Act is due to expire on June 1 of this year.

I hope that our elected leaders will stay their hands and let Section 215 pass into oblivion. I am no lawyer, and call me a rebel if you must, but I think that Section 215 rather flies in the face of the spirit of the Fourth Amendment:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Or, to put it even more succinctly: Without cause and due process, government officials cannot barge into your personal place and dig around willy-nilly just to see what they find.

Watch for this issue to escalate as June 1 draws nearer. Until then, let’s hope that the ACLU, Apple, et al can continue to—I can’t resist saying it—give Section 215 the bird.

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