You open up Glamour magazine at the dentist's office and spot a green leather tote you desire to buy then and there. So you fire up a mobile app that detects the product and directs you to purchase and ship the accessory within a couple of taps. The app is not from Amazon or ShopBot it's powered by a bank.
That's the future of shopping U.S. Bank is envisioning.
The Minneapolis bank is creating technology that allows consumers to quickly purchase via a mobile app a product they see in print or on television or hear on radio. The broad idea is to make shopping quicker for on-the-go consumers and for the retailer partner to know who bought what and why.
"Don't think of us as a bank," says Dominic Venturo, chief innovation officer for payments at U.S. Bank. "Think of us as commerce. We are experts in payments and enable commerce."
Venturo expects Peri, the name of the software the Minneapolis bank is developing with U.K. vendor Monitise, to be piloted by a brand partner by year end in a bid to let the marketer sell products in a more data-driven way and to ensure the bank's place in a smartphone-driven shopping future.
To deliver on the vision, Peri uses digital watermarking software to detect information embedded in audio, images and printed materials. The app can read a digital watermark the way many apps today scan quick-response codes. (Peri also supports QR codes.) The app also collects and presents the retailer with data about which advertisement triggered what sale.
Mobile commerce "is a huge problem that nobody has solved well," he says. "It's very difficult to come up with a Swiss army knife that does everything everyone wants it to do."
The initiative is one of the more recent experiments in which banks are trying to simplify shopping and, in the process, generate new streams of revenue. Some, like U.S. Bank, are experimenting with technology to gain advertising dollars through partnerships with retailers. Others are hoping that making e-commerce easier will make them the bank of choice tech-savvy consumers.
"You will see more and more different types of pilots in the space," says James Plath, senior director in Gartner's consulting group. "What works ultimately is a question mark, but if you are not testing and learning and piloting along the way, you will be left out of the future."
Indeed, a recent study from fintech vendor Accenture predicts that U.S. banks could lose 35% market share by 2020 to new competitors ranging from small payments firms to Internet giants, like Google, to retailers.
Certainly, banks are making moves to broaden their businesses to avoid becoming irrelevant as more newcomers are slicing and dicing data to better determine what consumers want and when they want it. Current commerce pilots by banks, which won't always have clear business objectives other than to learn, range from streamlining mobile shopping to injecting m-commerce tech into physical stores.
Financial institutions, which have been pressed for profits and growth since the credit crisis, are motivated to try services that could uncover new revenue streams associated with mobile banking, a channel they are under constant pressure to update.
Some banks, including U.S. Bank and Regions Financial, already charge customers for mobile deposits. But forward-looking banks are experimenting with a range of new smartphone technology that they see as crucial to attracting and retaining customers especially as visits to traditional retail outlets decline.
Still, "at the end of the day, banks can't keep investing," says Haridas Nair, vice president of mobile commerce and multi-channel banking for SAP. "They have to monetize."
Monitise, which acquired U.S. mobile banking vendor ClairMail in 2012, has a bold vision that includes integrating a shopping catalog with discounts attached into mobile banking apps. In this scenario, a consumer could get pitched on relevant goods he can buy without having to key in payment data while a bank could get interchange revenue, more customer data, and money coming in from partner retailers that sell products through their bank apps.
Perhaps a checking account reveals a person bought a ticket to Tahiti, the app might feature sunscreen. The idea is to turn what banks already do facilitate payments into what consumers actually want to do: shop.
"Consumers don't think of payments," says Lisa Stanton, president in the Americas for Monitise. "They think about shopping."
Merchants only pay up when something is sold. "It's a different way for [merchants] to spend their ad dollars," Stanton says.
There's some precedent for this in digital banking. USAA, for example, lets members buy certain products through the direct bank while Bank of America distributes discounts for goods via customers' digital accounts. Citibank blogged in early March that it identifies itself as both enabling mobile retail and acting as a mobile retailer.
Still, expanding mobile banking apps into product storefronts requires fresh thinking from most financial services executives, who could feel wary of selling, say, toilet paper, and consumers who aren't used to buying nonfinancial products from their bank.