What Uber taught Barclays about agile development

At Barclays, piloting a new product even if it’s only 70 percent ready is generally better than waiting for it to get to 90 percent.

“If you’re waiting for 90 or 95, you’re probably guessing that you got it right, and you’re probably spending a lot of money, time and precious resources hoping you got it right,” said Paul Wilmore, chief marketing officer of Barclays’ U.S. business, at Tearsheet’s Hot Topic: Mobile Payments conference Thursday morning.

Barclays, better know in the U.S. as Barclaycard, is going through a rebranding as it expands its business beyond credit cards and savings accounts — which have been the bulk of the digital-only bank since it came to the U.S. in 2004 — and prepares to launch online personal loans next year. Being a credit card issuer, for the most part, its brand has lived in the background of its card partner in the US, which include the National Football League, JetBlue and, most recently, Uber. As it builds out its bank offerings (the company recently hinted it might introduce a digital investment service down the road), it’s learning the value of agile product development.

Partnerships have a great effect on the bank’s learning process, Wilmore said. For Barclays, partnering with a brand on a credit card and getting it to market generally takes about a year, he said. Uber, with whom Barclays launched a co-branded credit card last month, has helped push the Barclays team out of that mindset.

“We go to pitch Uber… and they said, ‘we want to launch in six months,’” Wilmore recalled of the initial stages of the partnership. “We said, ‘that’s really ambitious,’ we gave all the caveats we could. The guy that led the program stood up and said ‘look, we don’t have one project here at Uber that goes more than six months.’”

Uber needed to get board approval to allow the Barclays project to go as long as seven months — which is “phenomenal” for a bank to hear by Wilmore’s account: “It gives you some sense of the speed of development of where they want to go. It was absolutely unbelievable.”

He also said moving at such speed is something the bank hopes to apply to the rollout of its bank products. Though he’d rather move faster and pilot a product with a small group every time, he said, the reality is there’s a lot of product control at a bank.

If the pilot is contained, however — if he can convince people that all he wants to do is a pilot on no more than 100 people, who could be employees — the risk is minimal and his ability to get it past “the gauntlet of regulation and legal” is easier.

“I’ve got a million people telling me ‘no,’” Wilmore said. “I still need to go through all those gauntlets to actually bring it to commercialization but that’s fine because then I’ve learned a lot and I can actually determine if it’s worth the investment to commercialize something or not.”

Uber is launching a credit card

Uber is going to get to know its customers a little better thanks to its new partnership with Barclaycard U.S., which will issue new, Uber-branded credit cards.

“The seamlessness is predicated on how easy it is to get out of an Uber and pay,” said Judy Zhu, Uber’s U.S. fintech and loyalty partnerships lead. “No matter where you are in the world in the 600 cities we’re in, Uber pretty much feels the same. We’ve now started to focus on the reward aspect of how to link Uber to your outside world, to the things you’re doing before and after an Uber ride.”

For most Uber customers that includes spending at restaurants and bars, travel and shopping. So Uber’s annual fee-free credit card incentivizes them to do more of those things and as a result, use Uber more to get them to those experiences. It offers four percent cash back on dining purchases, which includes UberEATS; three percent on hotel and airfare; two percent on online purchases, including Uber rides; and one percent on everything else — that is, purchases made with the physical card.

It’s a perfect reminder of how a major brand that customers like interacting with can use custoemrs’ transactional data to curate experiences that steal their attention away from bank brands, moving the financial services aspect of the interaction to the background. Barclays’ U.S. business has always been a partner-first bank, said Denny Nealon, Barclays head of U.S. partnerships.

“It’s never been about our brand, but our partners’ brands,” he said.

What’s really new, however, is that the experience is built natively into the Uber app and points are posted and available for redemption in the Uber app — immediately.

“You’re going to be in the Uber app and never [have to] leave the Uber app,” said Kirsten Osland, Barclays’ director of U.S. partnerships, adding that Barclays has been “pushed to focus on customer experience, simplicity and timeliness. You’re going to be able to do this from start to finish to the point where you’ll be charging on your card in an Uber.”

It’s one step closer to what has been perhaps the holy grail of fintech: is to transform financial services so customers never need to know they’re interacting with their finances, suggested Arman Zand, head of portfolio engagement at Quona Capital.

Along with name and Uber ratings, Uber users and cardholders will soon also see their points balance.

The onboarding process happens in Uber too. When users open the app they’ll be prompted at the bottom of the screen to learn more and apply for the card. Any basic information Uber already has on the customer appears in pre-populated fields leaving the customer to enter only what’s absolutely necessary, like a Social Security number. A decision should be ready within just a couple of minutes.

“Nobody is in Uber hanging out doing things playing around, you’re pulling it up because you’re trying to get home. So between the time you turn on your app and get a ride and get to your destination you should be finished with your process for applying for a card,” Zhu said.

Zhu maintained that Uber is still a transportation company, not a payments company. Launching a card grew out of a desire to add value to the ride sharing experience, not the need to think about a payments strategy.

“We never said we were an expert in payments, our focus was on revolutionizing transportation. A big aspect of that is the magical moment when you step out of your Uber, so we naturally started seeing role payments play,” she said.

How people choose to pay for Uber was a big part of the thought behind how to reward them. There are lots of card products in the market today, Zhu said, but for Uber to play within those confines wouldn’t have allowed it to add value to its customer relationships by learning what else they do when they’re not in an Uber.

As part of the perks attached to the card, Uber will push exclusive events and experiences to customers in certain cities — like secret concerts, secret shows, private dining experiences with top chefs. The company already knows where its customers are and will be able to serve events to them, rather than put the onus on them to go to some event or ticketing site to see what’s going on at a given time. The transactional data will inevitably help them tailor what experiences they push.

Customers also receive a $50 credit in subscription services after spending a certain amount in a year and mobile phone insurance up to $600.

Innovative as Uber has been, by making payments invisible and now by speeding up the on boarding and points redemption process, it’s also underlining the fact that most payments today still happen through cards. Peer-to-peer payments brands Square Cash, Apple Pay and Venmo all have mobile interfaces, but the payments themselves are still card payments (and they’ve all introduced plastic prepaid cards this year to bridge the adoption gap between physical and mobile payments).

Barclays wants to eventually provision the card directly into other digital wallets, Nealon said.

“Uber is all about on-demand experiences,” Zhu said. “What we want to realize is the on-demand aspect of getting that card. You’ll still have to wait seven to 10 days to get the physical card but we can instantly provision the card so you get immediate use of the card added to your Uber riders’ app and use in Eats. To the extent that you’re calling the car and applying for the card, by the time you get home you should be able to get your four percent cash back on the dinner order you just made on Uber Eats.

5 innovative IoT payment products

Ever dream of paying for a burger and fries using a fashionable glove instead of your wallet? Companies, including those without reputations as technology firms, are creating integrated payment devices that change the way we think of the Internet of Things. From purses to rings to refrigerators, customers are now presented with multiple creative products with payment capabilities. By dreaming up creative concepts and partnering with payment providers, companies are pushing the envelope of what you can use as an IoT payment device.

Here are 5 companies making innovative IoT devices with payment capabilities.

Ringly

The NYC based startup specializes in smart jewelry, combining fashion with IoT technology. While wearing Ringly products, customers enjoy features like smartphone app alerts, calendar notifications, and step tracking for fitness monitoring. Users receive alerts via discrete lights and vibrations on their rings or bracelets. In 2015, Ringly inked a deal with MasterCard, bringing mobile payment capabilities to owners of their fashionable products.

“We created Ringly to keep women connected to the people, messages and notifications that are important to them,” said Christina Mercando d’Avignon, founder and CEO of Ringly.  “Through our partnership with MasterCard, Ringly will not only be able to keep people connected, but will provide another layer to how our customers can use their jewelry while on the go. Our mission is to make women’s lives more manageable through beautiful jewelry and discreet technology.”

Ringly is still testing the mobile payment integration, and plans to release the new capability in the near future.

TOPSHOP

The iconic fashion shop has shown it’s moved into the 21st century with a variety of IoT fashionable payment devices. Currently featuring 11 unique IoT products, customers can choose from various types of smart accessories with payment capabilities, including keychains, bracelets, and iPhone cases. The range of products, known as TOPSHOP x BPay, is powered by Barclay’s BPay, creating a new type of product for both the bank and fashion retailer.

“This is a really exciting partnership with TOPSHOP and marks the first time that our bPay chip is being incorporated into a product range from a major fashion retailer.” said Tami Hargreaves, Commercial Director, Digital Consumer Payments at Barclaycard. “The collaboration shows how the worlds of fashion and technology can combine to  create a stylish and easy new way for people to pay using contactless, for everyday things – be it a morning coffee, a new lipstick or a bus trip across town.”

TOPSHOP x BPay products are available online and in stores, and TOPSHOP has announced a soon-to-be released IoT integrated jacket.

Adam Selman

Pop star Rihanna’s go-to clothing designer is getting into IoT mobile payments, too. Designer Adam Selman recently agreed to a deal with MasterCard, integrating payment chips into a upcoming fashion line. Although Selman isn’t a tech expert, he’s known in the fashion industry as an innovator and risk taker, required traits to challenge integrating payment chips into high fashion clothing.

“Usually technology’s role in fashion is behind the scenes. What sets the MasterCard program apart is that it features the technology, while still remaining invisible, yet interactive and totally functional with the wearer.” said Selman. “It’s exciting to be part of a project that is creating something new and fresh. At the end of the day, that’s what fashion is all about.”

Customers will be able to purchase from multiple products designed by Selman featuring mobile payment capabilities, including a dress, sunglasses, gloves, and a clutch purse.

Samsung

Moving away from wearable IoT payment devices, Samsung has created the most technologically advanced fridge available for retail purchase. Already established in IoT products, Samsung has released a smart fridge, known as the Family Hub. Users access the Family Hub smart features through a 21″ touchscreen that accompanies the fridge, and includes app integrations like music streaming through Pandora, recipe books through Allrecipies, and the ability to look into your fridge via cameras through Samsung’s View Inside. Notably for payments is the integration of MasterCard Groceries, allowing users to purchase groceries for delivery while standing in front of a smart fridge.

Samsung is no stranger to the mobile payments world. The company recently rolled out its Samsung Pay feature for smartphones. The integration of payments into a fridge is just one of the ways Samsung is gaining market share of mobile payments. The Family Hub is available now and costs around $6,000.

SAIC Motor

How can we not talk about the white whale of IoT mobile payments: the car? After detailing mobile payments in cars a little while back, the first internet car is about to debut. The China based SAIC Motor is releasing the Rowe RX5, with multiple online features including online navigation, communication, and music capabilities. SAIC also features YunOS, Alibaba’s 3rd party online payment solution.

The partnership with SAIC is another play by Alibaba to expand its financial services offering, ANT Financial, Alibaba’s affiliate that runs Alipay. Combined with the new AXA partnership, which will focus on distributing insurance policies through Alibaba’s online platforms, Alibaba’s showing its seriousness to expand its financial services capabilities. The RX5 is currently available for pre-order, with an intended release date of August 2016.

Photo credit: ETC-USC via Visual Hunt / CC BY

12 most mindblowing acquisitions in recent history

ey on asian fintech, jan bellens

Interesting discussion going on at 12Most regarding the most mindblowing acquisitions in history.

Obviously, the fervor around Facebook’s intention to buy photo app, Instagram for $1B prompted this list but I thought it would be a good time to get your feedback into what you think were the most influential mergers in the financial space.

To get things started, I added the $15 billion BlackRock-Barclays Global (BGI) merger which essentially made BlackRock the largest asset manager on the planet but also gave them the crown jewel in the ETF space, which just keeps growing like a weed.

What do you think are notable mergers in our space?

Vote or add your picks below:

ETFs, overindexing and the power of financial brands

Just doing some thinking about the growth and future of the ETF industry:

In my eyes, ETFs began as a second-generation of mutual funds with the following characteristics:

  • Passively managed: ETFs were passively managed (though that’s changing), building upon Jack Bogle’s success at Vanguard.  Most research at the time clung to the Efficient Market Hypothesis and academics declared that trying to beat the markets was a fool’s game.  ETFs were this vehicle.
  • Cheap: They were cheap.  If theory shows that you can’t pick stocks and win the game that way, better to index and reduce fees for better long term success.  ETFs’ passive structure enabled fund sponsors to get big and compete on price, driving prices further downward.
  • New access: Beyond their philosophical underpinnings and reduction in asset management fees, ETFs also opened doors to new asset classes (commodities), markets (Peru), and strategies (leveraged short funds) that weren’t easily accessible or understandable for retail investors previously.

Things are a’changin

Things are changing.  With Blackrock’s purchase of Barclays Global Investors iShares (BGI), ETFs are no longer seen as a pure threat to the much larger mutual fund industry.  Diversified asset managers like Blackrock and PIMCO, mutual fund firms like Vanguard and Fidelity, and online brokers like Schwab are building and buying ETFs as part of a larger smorgasboard of choices for their clients.  ETFs fit in like precious metal and international funds into a firm’s offerings.

In a sense, ETFs have now become purely productized, competing against similar strategies in different structures.  Contributing to this trend is the fact that numerous ETF offerings targeting the same strategy/geography have all hit the market. With multiple offerings for almost every market and strategy in ETF land, overindexing has blurred any and all distinctions in investors’ minds about which securities to select.  Instead of doing the work to pick the most appropriate security, brand will ultimately trump other things.

While there may be 3 general, broad ETFs for investors to get Chinese market exposure, most retail investors have no idea that they’ve been structured differently, that the compositions of the indices these ETFs track are wildly different and have led and may very well lead to different performance outcomes.

Brands, brands, brands

What this means, then, is (like most things in life), competition in the ETF space gets muddled.  ETFs compete against mutual funds every bit as much as they do against each other and with this backdrop, the emergence of the firm’s brand will trump performance and index structure.  Index composition or the race to build a better mousetrap becomes less important.  Branding will sway investor decisions and assets away from the smaller, more innovative players, towards the larger, stronger brands.

Like everything commercial, brands wield power.  So true in the financial sector as well.