Our CEO, Michael Abbott, delivered a keynote this morning at Mobile World Congress in Barcelona. His remarks and presentation are captured here.
Thank you and welcome to Mobile World Congress. My name is Michael Abbott, and I am CEO of Isis, a joint venture formed by AT&T Mobility, T-Mobile USA and Verizon Wireless.
It’s an honor to be here. I’m thrilled to have this opportunity to share my thoughts about a revolution that will transform the way we all shop, pay and save.
I’m talking about the mobile wallet.
First, I’d like to just start with a simple show of hands.
How many of you have one of these [held up smartphone]? And one of these [held up wallet]?
Five years ago, I would have received a more modest response.
Back then, the iPhone had been announced, but you couldn’t buy one. Smartphone penetration was less than five percent. And, even for an early adopter crowd like this, smartphone ownership was the exception rather than the rule.
I believe that if we meet here in five years and I ask the same question, only a few of you will raise your hands.
Not because you will not be packing one of these [held up smartphone] but because most of you won’t be carrying one of these [held up wallet].
For decades, people have imagined a cashless, cardless world enabled by the phone.
But the mobile wallet has remained elusive.
In part, it’s a testament to the enduring nature of the leather wallet, truly one of the greatest storage devices mankind has ever devised.
Wallets have been with us for a very long time. The leather sack that Perseus carried Medusa’s severed head in is usually translated as “wallet.” And for most of us, leaving home without our wallet would be a lot like leaving home without our heads.
Over the centuries, the wallet has evolved a bit. During the Renaissance, a gentleman would tie a wallet-like pouch to his belt for coins, bills and a few daily necessities. In the nineteenth century, Americans carried cash and dried meat in their wallets.
Today, most of us have settled on the bi-fold leather wallet with slots for cards. And this version has been with us for more than half a century, since credit cards were introduced in the 1950s.
So there’s a reason why those Capital One commercials in the U.S. that ask “What’s in your wallet?” are so successful. It’s not because we’re afraid we’ll look like a bunch of bumbling barbarians if we don’t have the right card. It’s because our wallets are a deep, personal, emotional expression of who we are and what we care about.
You don’t have to be Sherlock Holmes to sift through the cash, cards, receipts, photographs, and scribbled notes in a person’s wallet to piece together a pretty good picture of who they are; where they live and work; who they care about; and what they’re supposed to pick up from the store on the way home.
There’s a lot of valuable information in our purse or back pocket. And that’s the reason why nothing has come along to replace it.
The value just hasn’t been there. Neither has the convenience.
It’s not a technical problem. We’ve had the technology to create the mobile wallet for a long time. Near field communications, digital credentials, mobile Internet access, contactless terminals. All have been around for years.
But no one is leaving their leather wallet at home in favor of some supercool digital equivalent.
Not yet. But that will soon change.
I believe, right now, we are witnessing the beginning of the end of the leather-based personal storage device and the dawn of the mobile wallet.
The signs are all around us.
- In Japan, more than 50 million Felica customers have NFC-enabled phones.
- One third of all smartphone owners have downloaded a banking app.
- One in four has used their smartphone to scan a barcode to compare retail prices.
But what showed me the tipping point was a survey of 18-34 year-olds in the U.S. and the U.K. It found that two-thirds feel more naked without their mobile phones than they do without their wallets.
So, why now?
Why does this look like that moment right before the ice box gave way to the refrigerator, or the typewriter was supplanted by the word processor?
I believe it’s a convergence of factors:
- A decade ago, few people bought online. Today, few don’t. We’re okay paying with something we can’t “touch.”
- Five years ago, mobile payments were a downgrade from plastic. Today, it can be a rich, interactive experience.
- Today, the average U.S. consumer has 14 loyalty cards in her wallet. We need help.
And there’s one more factor: the smartphone.
Think of how wallet-like the smartphone already is. Like your wallet, it’s a deeply personal expression of who you are and what you care about.
So… what’s in your smartphone? Contacts, pictures, music and calendars probably. Perhaps a reminder or a shopping list.
But this is not just about trading one personal storage device for another. The truth is that the switch from this wallet to this mobile phone is a transformation in how we create value. It’s the beginning of a revolution as profound as the switch from cowrie shells to coins; or from paper to plastic. And, it will be a hell of a lot more convenient.
Think of a typical consumer scenario in the U.S. It’s Sunday morning and you’re sitting at the kitchen table sorting through the pile of ads and circulars that come with the Sunday paper, checking for specials, clipping coupons.
Later, you head to the store with a shopping list and a wallet full of coupons. You’re heading up and down the aisles, matching deals to products. Making sure you have the 15-ounce bottle of ketchup. Checking to see if your loyalty card gives you an offer on brand X or brand Y.
When you’re done shopping and get to the checkout, you reach into your purse or pocket and pull out your loyalty cards. Meanwhile, the cashier scans your purchases. Next comes coupon roulette. You fumble through that wad of coupons you’ve clipped. Twenty-five cents off here. Two for one on something else. You hope you have the right size, the right brand and the coupon hasn’t expired. Then, it’s back into the wallet one more time for a debit or credit card. And enter pin.
Finally, the cashier hands you your reward… a receipt with a dozen more coupons printed on the back. So you jam that into your overstuffed wallet and the process starts all over again.
Is this 21st century commerce?
Is this smart shopping?
Is this the best way to reward loyal customers and attract new business?
Think of all the missed opportunities.
For the consumer, the experience is complicated, awkward and inconvenient. Saving money depends on organizational genius and pure luck.
As for the retailer, they spend millions upon millions of marketing dollars to get you into the store… But guess the first time they know you’re in the store. When you leave.
Now imagine what would happen if your wallet wasn’t just a repository for physical objects. What if it held cards, loyalty cards and coupons? And what if it was a rich two-way communications channel between you and the businesses you want to connect with?
Suddenly, all those cards are a source of incredible value.
Check your balance instantly or see how close you are to receiving a reward. No more guessing. Collect and manage coupons easily and redeem them automatically. No more missed sales. But this just hints at the possibilities.
The real value comes when you receive offers and information based on who you are, what you want at precisely at the right moment. Now you check-in using a simple tap, receive offers customized just for you, cruise the aisles reading reviews and checking for discounts, even pass along savings to your friends… the possibilities are endless.
If you are a retailer, you can now connect with your customers when they walk in the door. And you have a channel for delivering relevant offers at the moment of retail truth, when information meets intent and purchasing decisions are truly made.
The question is: are we ready for the mobile wallet revolution?
At Isis, we’ve been doing a lot of work to figure that out. When we sit down with customers in focus groups and ask if they want a mobile wallet, only about 15 percent say they are interested. But if we ask them if they’d like a safe and secure way to use their smartphone to manage their money, loyalty cards and offers, 70 percent say yes. Yes to a product that does not even exist yet.
So the stage is set for the mobile wallet revolution. The trends are all aligned. Smartphones. Security. NFC. A generation that would rather leave their wallet at home than their smartphone. An economy that places a premium on value and savings.
But while the mobile wallet may feel inevitable, we still have a lot of work to do.
This opportunity is vast. But the reward will not be captured by any of us unless it is captured by all of us. For that to happen, we must proceed based on a common foundation and a shared set of principles.
First, choice. Just like today, when a consumer changes pants or a purse, they must be able to take their wallets with them. Across operators. Across phones. Across the globe.
Second, privacy. The mobile wallet will be a treasure-trove of valuable personal information. But it’s one pocket we don’t want to pick. A wallet should never spy on you – otherwise this revolution will crash before it ever begins.
Third, simplicity. The same simple tap has to work everywhere: every store, every restaurant, every merchant. And consumers must be able to pay using whatever method they prefer.
To achieve this, we’ll need a common set of standards that span merchants, banks and mobile operators. All of this will take a lot of cooperation from an ecosystem of companies and industries that generally spend more time competing than collaborating.
But the numbers are huge and opportunities immense: billions of consumers and trillions of spend. There are a lot of reasons to work together.
And at Isis, we look forward to working with everyone in this room to make this revolution a reality.
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