MCX’s announcement in mid-May that it was shelving the rollout of its CurrentC mobile wallet app was somewhat anticlimactic.
The retailer consortium generated plenty of intrigue upon its late 2012 formation, boasting deep pockets and impressive point-of-sale reach, and promising a merchant-driven payments scheme with the unspoken yet clear goal of slashing acceptance cost.
But while three years passed with no sign of a product, Apple Pay beat them to market and seized control of the narrative, exposing tensions within the coalition.
Last October’s news that MCX had partnered with Chase Pay seemed to foreshadow an exit ramp. Sure enough, MCX CEO Brian Mooney’s recent announcement cited a shift in focus to “other aspects of our business, including working with financial institutions.”
Plenty has been written about MCX’s missteps and fundamental flaws. But with Apple Pay adoption running well below initial expectations and Samsung Pay, Android Pay, and CU Wallet lagging even further behind, a troubling sentiment is emerging.
Some credit union executives have been heard to grumble, “Do we really need to keep spending time reacting to every new financial technology announcement?”
It may be a rhetorical question, but my response would be an emphatic “Yes!” for a wealth of reasons.
A 2015 study I conducted with the Filene Research Institute confirmed that the best product strategy for most credit unions is a “fast follower” approach.
Credit unions (and most banks) lack the investment dollars to go toe-to-toe with the research and development budgets of the behemoths or unicorn fintech startups.
While select early-stage alliances with the latter are worth exploring, generally keeping tabs on the market’s pulse and being prepared to act at the first meaningful signs of adoption will usually do the trick.
Most members don’t expect their credit unions to perch on the bleeding edge of technology. But neither do they want their credit union to lag far behind the curve once a new product demonstrates its usefulness.
One interviewee in our study sagely countered, “That’s fine, but how do we decide who to follow?” This is where a keen awareness of the landscape becomes critical.
I doubt any financial institutions outside of the top 10 banks have more than a sliver of a full-time employee devoted to tracking the likes of CurrentC and Apple Pay.
A regular scan of the trade press can provide a foundational level of knowledge. CUNA and credit union service organizations are valuable sources as well.
The goal for fast followers is not to have a granular plan in place, but rather a framework for action when it is deemed necessary and the ability to determine when that threshold for action has been met.
Such tasks are part of basic blocking and tackling for a best-practices product management function.
Finally, I’d dispute the notion that the cycles spent following the likes of CurrentC and Apple Pay amount to wasted effort. Fintech’s evolution is rarely linear, and there’s as much to be learned from the bumps in the road as from the successes.
Through recent mobile wallet tribulations we’ve learned plenty about near field communication, about what doesn’t work to spur consumer adoption, about the importance of education and signage at the point of sale, and about the limitations of mass market awareness campaigns.
We’ve also seen that QR codes may still have a future at the point of sale, and that LoopPay’s mag swipe-riding technology—which many initially relegated to the “too ambitious to take seriously” bucket—may actually have legs given proper resources and a logical ecosystem.
More immediately, the lessons learned from CurrentC provide a head start in understanding the Chase Pay proposition, which leverages portions of MCX technology and remains slated for a mid-2016 release—notwithstanding a surprising level of recent silence.
Chase Pay may have done the best job yet of assembling the requisite building blocks:
• Merchant acceptance through the MCX retailer network;
• Consumer access through Chase’s 94 million credit cards in market and a promised one-touch activation process;
• Simplified merchant pricing; and
• A robust set of aspirational features—although it remains to be seen how many of those will be available in version one.
Perhaps this will be the digital payments solution that hits, triggering those fast-follower plans.
If not, its road will still provide us with valuable lessons.