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Payment Horizons

July 5, 2016

The Zombie App Apocalypse – In Progress On A Device Near You


Déjà Vu All Over Again

Those of us who have been involved with FinTech for more than a few years have a tendency to look at “innovations” through an historical lens based on our previous experience. It can be difficult to determine when history and experience are relevant but, if you live long enough, you will find yourself contemplating their applicability to the “new” trends you see unfolding around you.

I remember when my daughter was 12 years old. We were living in London, England on assignment with my then employer ACI. Like many children her age, she wanted to fit in at school and one of the most important areas for insuring this was the case had to do with clothing. So she was delighted when she rushed into my office in the flat to show me her latest fashion acquisition: bell-bottoms. To give you my historical context for interpreting this moment, I was her age in 1970. Get it?

To quote Yogi Berra: “It’s déjà vu all over again.”

Back To The Future

Recently, I have been having a Yogi-esque experience relative to the apps being created and distributed for our mobile devices, especially the ones that relate to the delivery of financial services to consumers. There are certain parallels I see between the increase in mobile apps and the rise of distributed computing in the 80s and 90s. Distributed computing was seen as the “answer” for solving all the problems associated with the mainframe-centric environment that we had lived with since the information age had started.

The idea was to free the power centralized in the mainframe by placing it in the hands of PC users. With this power, these users could then control their own destiny and figure out how to improve time to market for innovations that would make us all more productive. There were unintended consequences encountered, however.

Moving the computing power to the desktops did not diminish the need to share data and knowledge across the enterprise – a strength of the mainframe strategy. In fact, the dispersion of the data onto systems that were difficult, if not impossible, to integrate and the operational nightmare of coordinating versions of software on those distributed devices created inefficiencies and made many people less, not more, productive.

Soon, we found ourselves on a march back to centralized control. This time though the technology associated with the Internet allowed organizations to accomplish centralization more effectively than in the past. The terminology changed – SaaS, Cloud, virtualization, etc. – but the ability to control and share data was re-established. Interestingly, there is a similar cycle of distribution and re-centralization underway, IMHO. That cycle began with a phrase made famous by Apple: “There’s an app for that!”

More Devices, Fewer New App Downloads

Today at our disposal are a variety of highly portable devices with powerful processors. The preferred model for taking advantage of this power involves creating applications tailor-made for these devices. Sound familiar? It is distributed computing. While it is much different than the days of PCs from a UX perspective, the practical and operational issues have not changed much. With more than 150 different browser/device combinations used alone by customers of financial institutions worldwide, the overhead for keeping current in an environment where new devices are introduced several times a year is non-trivial.

In addition to these operational issues, there are some trends relative to the end users that merit discussion. According to ComScore’s latest U.S. Mobile App Report, mobile usage in the U.S. increased by 52 percent since last year, making it the leading digital platform, with total activity on smartphones and tablets accounting for an astounding 60 percent of our digital media time. The majority of all this digital media time spent occurs on mobile apps despite the fact that users have all but ignored downloading new apps in favor of the ones they’ve already downloaded.

These issues are pertinent to any organization that provides apps to its customers. Their significance is even greater for financial service providers, because the services provided to their customers require exceptional security and deal with one of the most important and personal aspect of their lives; i.e., their money. The impact from any limitations or problems with a financial services app is immeasurably worse than if a map app crashes or leads me down the wrong street.

Consumers, Control And Where To Go From Here

Experience and history are only partially helpful in this case. Unlike with distributed computing, it is not likely that we will be able to put the genie back in the bottle with mobile apps. In the days of distributed computing, most of the hardware and software was owned by organizations with hierarchical structures that allowed for “dictating” IT policy. Total, the “distributed” devices and their applications are in the hands of more than a billion users who do not take orders. In fact, they are the ones most in control.

Financial service providers, along with anyone else wanting share of the mobile device real estate, need to plan on a continued proliferation of device types, screen sizes and mobile operating systems. To address this dynamic environment, organizations are increasing their use of technologies that can reduce some of the overhead involved. For example, responsive web design (RWD) can be deployed to provide a consistent user experience regardless of mobile device. Hybrid applications using RWD as a framework for delivering specific services on a particular device allow financial service providers to differentiate themselves while still reducing the cost of managing the app.

In addition, consumers are suffering from “app fatigue.” This is an opportunity especially for financial services providers that already have an established digital relationship with their customers. As more and more consumers resist applications that deliver limited functionality, organization that already have a digital relationship with the consumer have an opportunity to extend the functionality that they offer through their mobile applications.

Financial service providers that look for innovative technology options that make it easier to give their customers what they want, regardless of their preference in device, and extend their franchise by expanding the functionality with existing applications will, over time, position themselves to be successful in a landscape where business as usual is never the case.

To achieve this, financial services providers need to find partners with the depth of experience in payments and new technological methodologies to deliver a competitive advantage. One thing is for certain, new developments will continue to emerge that will require flexibility and nimbleness for any organization who wants to continue to play in the game.