Mobile payments: A new key to success
New innovative banking solutions were on show at the recent Temenos Community Forum Innovation Jam in Lisbon. PaymentEye sat down with the eventual winners, PayKey, to find out more about its radical keyboard function that allows consumers to make payments from their mobile banking app on social platforms.
You are a complementary product to banks’ digital products, not a competitor. How did the decision to go down that route come about?
The idea was to look at improving payments through the eyes of the banks, that are currently experiencing a lot of disruptive technology in their sector. Rather than be disruptor ourselves and compete with the banks for consumers we decided to take our ideas and help by the bank by developing the technology that would enable them to compete in the new era of social networks and social banking.
That was the strategic approach that we took, and thankfully it has proven to be very successful, because of the tech we have been able to develop. We have created a white label solution that we sell to banks, since we launched the company we have created a great funnel of banks who are working with us, and have commercial agreements with banks in place in Norway, Colombia, Australia and in Turkey.
Are there any competitors to what PayKey is bringing to the market?
The competitive landscape starts with other alternatives for social payments, of which there are plenty. There are peer-to-peer solutions which are nonbank solutions and require onboarding to provide the user with the same functionality as we offer through a bank on a social platform.
In terms of developing a social payments solution which is based on the keyboard, however, which can be integrated with banks’ mobile apps, we haven’t seen anybody else that is currently doing what we are doing or can rival our product directly in any way. There are two banks that have developed a similar solution in-house with a slightly different approach, but similarly giving the user the ability to make payments from the keyboard. We believe this is
a superior product to the alternative payment apps on the market.
Have you conducted any market research that has helped you shape the product?
We recently launched a marketing survey in the UK because we wanted to get a better sense of our target users, particularly Millennials. We wanted to better understand their payment habit, and their perceptions of the banks’ current digital offerings. The results of that survey were extremely interesting, so much so that we published a whitepaper on the subject which was very well received. That whitepaper highlighted a number of fascinating conclusions we could draw from the research.
The first is that all the hype surrounding alternative payment solutions is currently just that, hype. These dedicated payment solutions for peer-to-peer captured a fraction of the market today, approximately 6%. The message coming from the data is to be careful of hype, if you look at the numbers usage isn’t that significant.
The second interesting point is that if you ask users what they think about the digital payments offerings, most of them will tell you that they’d rather use a payment solution offered by a bank because they trust the banks most. The trust is still there with the banks when it comes to payments, however the user experience doesn’t currently reflect what consumers want or indeed what they expect.
This is exactly where PayKey comes into the picture, leveraging the banks’ in a positive way for trust but helping them overcome the user experience issues of the banks’ apps. Placing the banks’ capabilities into social and messenger apps makes these payments contextual, inclusive, and part of daily life. It truly addresses the challenge.
Have you seen much specific consumer feedback or do you have data to study how the app is being used?
This is definitely a focus for us moving forward, we are looking to receive feedback on how the product is being by consulting with the bank. We don’t collect the data ourselves because the product architecture is such that we have no access to the data generated by the white label solution, but we are working with the banks to gain a better insight into the product’s engagement.
There are a number of factors we can look at in terms of benchmarks for engagement, namely how many people download or update the PayKey functionality on their keyboard, and then also how many people have used it to make payments and how often.
Adoption and conversation rates today are important, but these are affected by the marketing efforts that each individual bank is taking. Simply launching the product only the first stage in rolling it out, the banks need to educate the consumers. It’s still early stage but we’ve had lots of positive feedback, and we have focused on improving the product as the market has reacted to it.
Are there plans to develop the products further?
There are many plans to expand the product further. Initially the product was focused on offering a peer-to-peer payments service, following feedback from banks there are many other features that the product is going to be capable of completing including balance checks and cardless withdrawals. These features, together with a payment button that can be branded, enable the bank to completely customise the banking experience.
Banks have already implemented this function to push a menu to the user, and a one-time function to withdraw cash from an ATM without inserting a card by generating a code that the user can either use or send to another person to withdraw money. Other banks have put a balance check feature into the app, so peer-to-peer payments is just the first step of how the technology can be used to bridge the gap between social lifestyle apps and banking.
You completed a Series A funding round at the end of 2016. Are there any strategic partnerships that will emerge from that investment?
Yes, we are looking to develop partnerships in addition to securing the funding. Mastercard, Santander and Commerzbank were three of the investors in the funding round, we are working with all three on other initiatives around the PayKey product. We were happy to be chosen by each investor to bring solutions to the market.
Do you have any interaction with the social messenger platforms themselves?
The product works through the social messenger channel, but it does so independently. This is one of the key characteristics of the product, the fact that it is social media agnostic. Because our solution is based on the keyboard we don’t need any type of integration relationship with the social messenger on the technical or business side.
With PayKey we can make these payments happen through any social messaging platform regardless of where you are, where your friends are, you can make a payment to anybody who is in your contacts list, no matter what their preferred social platform might be.