"The banking system today is going to be totally blown up in the next 10 years.”
That was the prediction from Gray Taylor, someone who’s part technology and petroleum guru and part futurist.
At the turn of the century, Taylor was overseeing commerce systems at Tokheim Corp., a fuel-equipment company that would eventually be acquired during a wave of consolidation in petroleum hardware. But his fascination with technology and consumer engagement has propelled him into a position in which he interfaces with his two passions.
Today, Taylor is executive director of PCATS (Petroleum and Convenience Alliance for Technology Standards), which operates under the NACS umbrella. Against a legacy of closed financial systems, PCATS advocates for open, transparent standards for payment and mobile commerce.
In the session “Commerce in a Mobile Age,” Taylor offered an engaging picture of what the future could hold beyond the present, which is littered with anachronistic systems and bifurcated solutions.
One such example, he said, is the banking system. Bank branches are dying, a bloated patchwork of brick and mortar moving at an elephantine pace toward digital. And that’s a real problem. “You’re going to see growth of the virtual bank,” Taylor said, asking rhetorically when the last time members of the audience went to a bank, other than perhaps to access its ATM.
These new banks will not be a Bank of America or Citi. Instead, they could be major retail brands with extensive platforms. “Walmart is probably the biggest bank you never heard of,” he said. In fall 2012, the world’s largest retailer launched Bluebird, a new financial product that’s an alternative for consumers with traditional bank accounts. The program offers secure depositing services but does not lend and as such is not governed by traditional banking regulations.
Walmart’s solution is but one example of a future in which new currencies and alternative banking vehicles, coupled with more open standards, will “take down monopolies,” Taylor predicted.
Mining Mobile
It’s easy to forget that the first website went live only 21 years ago and that just 16 years ago an audacious online bookstore called Amazon was born. Today, Amazon is among the five largest companies in the world, and the online arena seems more like a reliable old tool than a device just entering its second generation.
The world of e-commerce and mobile communications is now racing toward a dizzying array of mobile devices and apps. By 2015, roughly four-fifth of adults in the United States will have cellphones, vs. only 56% just a few years ago. And coupon usage via smartphones will quintuple from 2010 to 2015.
While some wonder where that will leave the brick-and-mortar space of convenience stores, Taylor believes he knows the answer: “This is an opportunity for c-stores. You guys own the last mile.”
Instead of worrying, seize the opportunity. Instead of fearing Amazon, become its partner. Look at Walmart.com and how customers can order online and pick up their orders at a local store. Likewise, in the world of digital purchasing, c-stores can become familiar pickup points.
There is another advantage c-stores have over the likes of Amazon: cash. Despite the abundance of conversation about the decline of hard currency, cash remains a critical staple and is something that Amazon cannot yet accept.
Thus, c-stores will continue to survive and potentially thrive in the new economy. But the channel must adapt because it has to in order to remain a vital participant, Taylor said.
Location retains value but is swiftly becoming the second most important ingredient. More significant is customer engagement and consumer loyalty. “You’re not just competing on four corners anymore,” said Taylor. Increasingly, online businesses are selling many of the items carried at c-stores. Thus, he said, tomorrow’s c-store must embrace mobile communications, e-couponing and transacting in a fundamentally consumer-centric way.
An App for That?
Fifteen years ago, c-store retailers were told: You need a website. While some delivered compelling online programs to complement their traditional retail offerings, most delivered a one-dimensional billboard that amounted to little more than a glorified Yellow Pages ad.
The same goes for smartphone apps. “You need an app,” Taylor said. “But what you really want to do is own the customer and reinforce your brand … to have your customers looking at your app every day.”
But there’s a twist, Taylor said. Consumers are “over-apped.” The typical app lasts only two weeks and the average smartphone device has 22 apps. And a phone’s home screen is much like the proverbial front page of a newspaper: If it’s not on the front, odds are the reader isn’t going to read it. So smartphone real estate is critical.
This is why Taylor insists that a retail-branded app makes sense only if the offering is compelling, delivering unique promotions and special services.
In building a mobile app, Taylor identifies four potential customer buckets:
▶ On the Road: This is the transient customer, someone driving out of town looking for a fill-up or a bite to eat.
▶ In the ’Hood: Your core demographic, those who live in your backyard and who are brand-focused.
▶ On the Pad: This shopper focuses on fuel and may go into your store, but only if you’re courting this shopper, perhaps through free Wi-Fi or in-store discounts.
▶ Moment of Truth: Taylor describes these as “beacons” in a store: digital shelf talkers.
While the large chains can effectively develop their own app, most operators should explore partnering with a third-party vendor and integrate an app into a social-media strategy that may include Facebook, Foursquare and/or Twitter.
Securing Payment
Included in an e-strategy is e-payment, also known as the mobile wallet. PCATS is working strenuously for an open system that is safe and secure. But while the challenge remains, cloud computing and increasing dependence on smartphones as payment systems will foster new opportunities and challenges.
For one, passcodes are moving from a 13-digit computer requirement to a four-digit entry on mobile phones. This may lead to greater security threats, but it also underscores the transformation of the smartphone as both communication and portable payment vehicle. And it means the institutional power of the banking system must give way to a new, consumer-centric model of payment and security steps.
Or, as Taylor bluntly put it, “In a world of pigs, how can we do clean transactions?”
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