What's in Your (Customer's) Wallet?

Curtis Franklin Jr., Executive Editor | 3/1/2012 | 6 comments

Curtis Franklin Jr.
It's funny, when you think about it, just how quickly actions and practices in the financial industry go from "possible" to "allowed" to "required." I'm old enough to remember when the idea of walking up to a machine to get cash anytime you need it, rather than waiting to see a tellar during banking hours, was an exciting possibility. Not long after, banks started offering it as an option for customers, and within a few years, many institutions were charging a fee if a customer wanted to deal with a teller rather than an ATM. The pendulum has swung back and forth over the question of which will be the extra-cost option, but it wasn't a long journey from possible to required for some banks.

Now, we're somewhere along that same spectrum with electronic wallets. The idea that a customer will begin using information stored on a smartphone as a payment instrument, rather than whipping out a credit card, flashing cash, or (heaven forbid) writing a check. The question for most CIOs in the industry has to be, not whether they can be ready for their institution to allow customers to use an electronic wallet, but how their systems will respond when it becomes a virtual requirement.

This is a classic CIO issue, combining elements of business and customer relations with obvious technology questions. Right now, the largest set of questions is on the business and customer relations side of things, especially as it relates to security and privacy. Recent events haven't encouraged the general public to think of anything computer-related as particularly secure (StratFor, anyone?), and the economy of the last few years hasn't encouraged them to have a cavalier attitude about money. What, then, is a CIO to do?

The first thing to do is look to the east. You might not find the bright morning star, but you will find examples of smartphone payment systems used in Asia that are generations ahead of anything deployed in North America. It's not that residents of the region care less about security and privacy. It's just that they have more realistic views of current threats. They also have a much smaller legacy payment footprint than banks in North America.

Ultimately, finessing the legacy will be the most challenging aspect of the move to electronic wallets in North America. There are still millions of customers who grew up writing personal checks (and, in many areas, still do), millions more who have become accustomed to the ritual of swiping a card of some sort to make a transaction, and a smaller number who, for reasons of background, circumstance, or privacy, continue to conduct their business in cash. There's really nothing much to do to convince those in the third group that an e-wallet is the answer, though a tie-in with paycheck-cashing companies and cash-transfer organizations could move value directly from a paycheck into an electronic wallet tied to a smartphone.

The real battle, though, is going to be over those who have moved into the plastic world. Convincing them that a smartphone is as secure as the Visa card in their leather wallet will be the front line of the battle, and economic incentives will almost certainly be required to lure many into the e-wallet fold. How much incentivizing can your payment infrastructure bear? How many different incentives can you easily track and apply? Those will be the sort of questions that the CIO's office should be prepared to answer -- and sooner, rather than later.

View Comments: Newest First | Oldest First | Threaded View
Syerita Turner   What's in Your (Customer's) Wallet?   3/4/2012 2:28:44 PM
What's in Your (Customer's) Wallet?
The one question that is being overlooked is that of our older members of society. It is becoming harder to implement technologies as a mass because not everyone it "with the times" in terms of understanding and using the latest technology available now. Implementing for everyone to use electronic wallets will take forever to do im msss quantities. What is the incentive for someone to switch to using this? I don't even think I would want to use an electronic wallet because of hacking and identity theft. How can we ensure our custoners that yes you will be able to use this and not have any adverse or bad occurences happen? - We can't.
nasimson   What's in Your (Customer's) Wallet?   3/4/2012 1:49:59 PM
People will accept it.
The idea of using Credit Cards online had security issues. Similarly, e-wallet introduction might raise some questions but if it's safe and easy enough, people will accept and start using it widely like they used Credit Cards for online purchasing. In Asia, majority of the people still avoid using Credit Cards for purchasing due to privacy and security issues.

With the changing technology, people minds are changing too and today's generation is quite receptive towards technology changes (especially those which help saving time and effort).
CurtisFranklin   What's in Your (Customer's) Wallet?   3/2/2012 3:35:54 PM
Re: Payment by Bio metric method
@Gigi, I agree that some sort of biometric component will be part of the ultimate system, but vendors will be wary of biometrics adding too much "friction", especially when consumers are still getting used to the technology. It's good that security and privacy have become such compelling issues for so many consumers -- it's forcing vendors and banks alike to be far more careful as they roll out the technology.
CurtisFranklin   What's in Your (Customer's) Wallet?   3/2/2012 3:32:20 PM
Re: Interesting Arc
@David, it's interesting to see how quickly processes and technologies move through the phases from "We're offering this for our customer's convenience," to "We're providing economic incentives to use this because it's more efficient for us," to "We're charging extra for this because it costs us money to provide it." In many ways it's another side of the same arc, but it's one that is getting far more scrutiny because of recent moves by major banks to increase revenue.

These services really are becoming competitive differentiators for banks -- I'm looking forward to seeing how the process shakes out in the electronic wallet space.
Gigi   What's in Your (Customer's) Wallet?   3/1/2012 11:07:04 PM
Payment by Bio metric method
Curt, today's imagination is tomorrow's technology. So there is no wonder that tomorrow you may able to make any payment by punching your fingers or by recognizing your face. Some new developments are happening in back end for similar payment mechanism by linking the bio metric details/images with the credit/debit cards.
David Wagner   What's in Your (Customer's) Wallet?   3/1/2012 7:21:12 PM
Interesting Arc
I never really thought of the "Possible, allowed, required" arc before. That really is a common thing, especially in banks isn't it? It is similar in the way technology changes in the IT department, too. You can see it old school stuff like the password ("Can we secure this with a password?" to "change this password every three months and it must have letters, numbers, special characters and drawings of your aunt mildred in it").

I think the process sneaks up on us a lot of the time. As a user or a customer, I think I'm going to become more aware of this and maybe push back some.

The blogs and comments posted on EnterpriseEfficiency.com do not reflect the views of TechWeb, EnterpriseEfficiency.com, or its sponsors. EnterpriseEfficiency.com, TechWeb, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.

More Blogs from Curtis Franklin Jr.
Curtis Franklin Jr.   5/30/2014   10 comments
A good community can teach you a lot. And Enterprise Efficiency has been one of the best.
Curtis Franklin Jr.   5/26/2014   41 comments
Today is Memorial Day in the US, a day for remembering those who gave, in the words of Abraham Lincoln, "the last full measure of devotion" for their country and its citizens. It is a ...
Curtis Franklin Jr.   5/22/2014   35 comments
You're about to know precisely where your customers are and what they're doing. Are you ready for Big Data Advertising Everywhere?
Curtis Franklin Jr.   5/6/2014   19 comments
PHP is a great tool for building web pages that access databases. It's pretty nifty for pwning an enterprise site, too.
Curtis Franklin Jr.   4/30/2014   36 comments
BASIC turns 50 this year. Many IT pros wrote their first line of code in the venerable language, but is the ability to write code even important at the top of the IT ladder?
Latest Archived Broadcast
We talk with Bernard Golden about accelerating application delivery in the cloud.
On-demand Video with Chat
Register for this video discussion to learn how tablets can provide true business usability and productivity.
E2 IT Migration Zones
IT Migration Zone - UK
Why PowerShell Is Important
Reduce the Windows 8 Footprint for VDI
Rethinking Storage Management
IT Migration Zone - FR
SQL Server : 240 To de mémoire flash pour votre data warehouse
Quand Office vient booster les revenus Cloud et Android de Microsoft
Windows Phone : Nokia veut davantage d'applications (et les utilisateurs aussi)
IT Migration Zone - DE
Cloud Computing: Warum Unternehmen trotz NSA auf die „private“ Wolke setzen sollten
Cloud Computing bleibt Wachstumsmarkt – Windows Azure ist Vorreiter
Like Us on Facebook
Twitter Feed
Enterprise Efficiency Twitter Feed
Site Moderators Wanted
Enterprise Efficiency is looking for engaged readers to moderate the message boards on this site. Engage in high-IQ conversations with IT industry leaders; earn kudos and perks. Interested? E-mail:
Dell's Efficiency Modeling Tool
The major problem facing the CIO is how to measure the effectiveness of the IT department. Learn how Dell’s Efficiency Modeling Tool gives the CIO two clear, powerful numbers: Efficiency Quotient and Impact Quotient. These numbers can be transforma¬tive not only to the department, but to the entire enterprise.

Read the full report
The State of Enterprise Efficiency in the Virtual Era: Virtualization – Smart Approaches to Maximize Gains
Virtualization is a presence in nearly all enterprise data centers. But not all companies are using it to its best effect. Learn the common characteristics of success, what barriers companies face, and how to get the most from your efforts.

Read the full report
Informed CIO: Dollars & Sense: Virtual Desktop Infrastructure
Cut through the VDI hype and get the full picture -- including ROI and the impact on your Data Center -- to make an informed decision about your virtual desktop infrastructure deployments.

Read the full report
A Video Case Study – Translational Genomics Research Institute
e2 Video

On the Case
TGen IT: Where We're Going Next

7|11|12   |   08:12   |   10 comments

Now that TGen has broken new ground in genomic research by using Dell's storage, cloud, and high-performance computing solutions, the company discusses what will come next for it and for personalized medicine.
On the Case
Better Care Through Better Communications

6|6|12   |   02:24   |   11 comments

The achievements of the TGen/Dell project could improve how all people receive healthcare, because they are creating ways to improve end-to-end communication of medical data.
On the Case
TGen IT: Where We Are Now

5|15|12   |   06:58   |   6 comments

TGen is breaking new ground in genomic research by using Dell's storage, cloud, and high-performance computing solutions.
On the Case
TGen IT: Where We Were

4|27|12   |   06:45   |   10 comments

The Translational Genomics Research Institute wanted to save lives, but its efforts were hobbled by immense computing challenges related to collecting, processing, sharing, and storing enormous amounts of data.
On the Case
1,200% Faster

4|18|12   |   02:27   |   12 comments

Through their partnership, Dell and TGen have increased the speed of TGen’s medical research by 1,200 percent.
On the Case
IT May Improve Children's Chances of Survival

4|17|12   |   02:12   |   8 comments

IT is helping medical researchers reach breakthroughs in a way and pace never seen before.
On the Case
Medical Advances in the Cloud

4|10|12   |   1:25   |   5 comments

TGen and Dell are pushing the boundaries of computing, and harnessing the power of the cloud to improve healthcare.
On the Case
TGen: Living the Mission

4|9|12   |   2:25   |   3 comments

TGen's CIO puts the organizational mission at the heart of everything the IT staff does.
On the Case
TGen Speeding Up Biomedical Research to Save More Lives

4|5|12   |   1:59   |   6 comments

The Translational Genomics Research Institute is revamping its computing to improve speed, storage, and collaboration – and, most importantly, to save lives.
On the Case
Computing Power Helping to Save Children's Lives

3|28|12   |   2:13   |   3 comments

The Translational Genomics Institute’s partnership with Dell is enabling them to treat kids with neuroblastoma more quickly and save more lives.
Tom Nolle
The Big Reason to Use Office

3|18|14   |   02:24   |   46 comments

Office and personal productivity tools come in a first-class and coach flavor set, but what makes the difference is primarily little things that most users won't encounter. What's the big issue in using something other than Office, and can you get around it?
E2 Editors
SPONSORED: Mobile Security — A Use Case

3|4|14   |   04:27   |   16 comments

New mobile security solutions can accommodate a wide array of needs, including those of a complex university environment.
Tom Nolle
Killing Net Neutrality Might Save You Money

1|16|14   |   2:13   |   16 comments

The DC Court of Appeals voided most of the Neutrality Order, and whatever it might mean for the Internet overall, it might mean better and cheaper Internet VPNs for businesses.
Tom Nolle
The Internet of Everythinguseful

1|10|14   |   2:18   |   19 comments

We really don't want an "Internet of Everything" but even building an Internet of Everythinguseful means setting some ground rules to insure there's value in the process and that costs and risks are minimized.
Tom Nolle
Maturing Google Chrome

12|30|13   |   2.18   |   25 comments

Google's Chrome OS has a lot of potential value and a lot of recent press, but it still needs something to make it more than a thin client. It needs cloud integration, it needs extended APIs via web services, and it needs to suck it up and support a hard drive.
Sara Peters
No More Cookie-Cutter IT

12|23|13   |   03.58   |   21 comments

Creating the right combination of technology, people, and processes for your IT organization is a lot like baking Christmas cookies.
Sara Peters
Smart Wigs Not a Smart Idea

12|5|13   |   3:01   |   46 comments

Sony is seeking a patent for wigs that contain computing devices.
Tom Nolle
Cloud in the Wild

12|4|13   |   02:23   |   15 comments

On a recent African trip I saw examples of the value of the cloud in developing nations, for educational and community development programs. We could build on this, but not only in developing economies, because these same programs are often under-supported even in first-world countries.
E2 Editors
SPONSORED: Is Malware Evading Your IPS?

11|18|13   |   03:16   |   4 comments

Intrusion prevention software is supposed to detect and block malware intrusions, but clever malware authors can evade your IPS in these five main ways.
Sara Peters
Where Have All the Mentors Gone?

9|27|13   |   3:15   |   38 comments

A good professional mentor can change your life for the better... but where do you find one?
Tom Nolle
SDN Wars & You Could Win

9|17|13   |   2:10   |   5 comments

VMware's debate with Cisco on SDN might finally create a fusion between an SDN view that's all about software and another that's all about network equipment. That would be good for every enterprise considering the cloud and SDN.
Ivan Schneider
The Future of the Smart Watch

9|12|13   |   3:19   |   39 comments

Wearing a bulky, oversized watch is good training for the next phase in wristwatches: the Internet-enabled, connected watch. Why the smartphone-tethered connected watch makes sense, plus Ivan demos an entirely new concept for the "smart watch."
Tom Nolle
Cutting Your Cloud Storage Costs

9|4|13   |   2:06   |   3 comments

Cloud storage costs are determined primarily by the rate at which files are changed and the possibility of concurrent access/update. If you can structure your storage use to optimize these factors you can cut costs, perhaps to zero.
Sara Peters
Do CIOs Need an IT Background?

8|29|13   |   2:11   |   23 comments

Most of the CIOs interviewed in the How to Become a CIO series did not start their careers as IT professionals. So is an IT background essential?
Ivan Schneider
The Internet Loves Birthdays

8|27|13   |   3:25   |   69 comments

The Internet has evolved into a machine for drumming up a chorus of "Happy Birthday" messages, from family, friends, friends of friends who you added on Facebook, random people that you circled on G+, and increasingly, automated bots. Enough already.