New Markets Advisors
  • About
    • Our Distinct Model
    • Team
    • Join Us
  • Services
    • Develop Growth Strategies
    • Uncover Jobs to be Done
    • Build Innovation Capabilities
  • Industries
    • Arts and Culture
    • Consumer Goods
    • Financial Services
    • Healthcare
    • Social Innovation
    • Technology
  • Past Work
    • Success Stories
    • Recent Clients
    • Testimonials
  • Our Thinking
    • Books
    • Working Papers
    • Articles
    • Blog
    • Leading through the Coronavirus Crisis
    • Speaking Engagements
  • Contact

New Markets Insights
​
Strategy and Analysis from Innovation Specialists

Finding the Market for Mobile Payments

4/13/2010

 
By: New Markets Advisors​
Picture
Citigroup has quietly declared defeat. In 2008, it became the first major American bank to experiment with mobile payments — using cellphones to buy products and transfer money. 
But the envisaged uses of this service, called Obopay, did not materialize. The technology is trivial, but consumers saw little need to pay their restaurant bills by cellphone, replacing cards and cash which are familiar, reliable, and easy.
​
What can we learn from this failure?

Citi seems to have embraced mobile payments like a bank, trying to force-fit an intriguing technology into existing applications. Organizations often err this way — look, for instance, at large solar energy projects being subsidized to generate power for the electrical grid, rather than in off-grid, small-scale applications. People initially viewed the telephone as competition for messenger boys. The examples are endless.
​
What the bank found was that people used Obopay to meet other, unmet needs. Up to half of users were parents providing a weekly allowance to their children. Another big source of usage came from small business owners who did not accept electronic payments but wanted to replace cash. These were surprises.

​I lived through a similar experience in commercializing Celpay, the first mobile payments service in Africa. Because our parent firm was a large cellular network, we thought first about subscribers topping up their prepaid airtime with our service. Indeed, this was the number one consumer use of the service, because it was more convenient to push a few buttons than to go out and buy a scratchcard. Yet other uses did not materialize — as in America, people saw little reason to pay their restaurant tabs, or buy groceries, with a cellphone. Fortunately, we had launched at a small scale, and had room to experiment. While we saw that grocery stores were largely uninterested in the service, we found that firms delivering to these stores were intrigued. They transacted with cash, which was typically counted 8 times between the time it was paid and the cash was banked. Reconciliation was a nightmare, as was fraud. Celpay re-directed to focus on this business-to-business market, and now transacts up to 10% of some countries’ GDP through its systems.

Market research is valuable, but it likely would not have told Citi about allowance payments, or Celpay about how to pay for a truckload of beer. These offerings would probably never have been imagined when the research brief was constructed. The only place to make these discoveries was in doing real business.
So the lesson of Obopay is twofold:

  • Do not be entranced by technology. Think foremost about what customers need, and how your offering honestly stacks up along the success criteria that they define. As we came to say at Celpay, “A convenience service actually has to be convenient”
  • Bring disruptive innovations to market fast, quietly, and at a small scale. Be extremely open-minded about learnings, and unafraid to quickly re-direct your efforts

Politically, this strategy can be challenging for innovation’s champions. Senior management often has to charter big innovations, and may be unused to such an entrepreneurial approach. Yet the alternative can be to persist, like Citi, for two years down the wrong road, only to kill the program entirely rather than reshaping it to meet the real need. It helps to have a formalized system for considering game-changing innovations, so that management’s interactions can be governed by a set of rules appropriate to this context. If that system does not exist, the innovator has to set expectations early on that the firm will learn by doing. When the context is laid out clearly, and a few examples are used to show how this might work in practice, management frequently buys in to this approach.

Serial innovators come to realize that, as elsewhere in life, humility is a useful thing.

Story by Steve Wunker.


Comments are closed.

    This section will not be visible in live published website. Below are your current settings:


    Current Number Of Columns are = 3

    Expand Posts Area =

    Gap/Space Between Posts = 10px

    Blog Post Style = card

    Use of custom card colors instead of default colors =

    Blog Post Card Background Color = current color

    Blog Post Card Shadow Color = current color

    Blog Post Card Border Color = current color

    Publish the website and visit your blog page to see the results

Picture

ABOUT
Our Distinct Model
​Team
​Join

SERVICES
dEVELOP growth strategIES
UNCOVER JOBS TO BE DONE 
BUILD INNOVATION CAPABILITIES


​​

INDUSTRIES
Arts and culture
​consumer goods 
financial services
healthcare
Social Innovation
Technology

​

PAST WORK
success Stories
recent clients
Testimonials

OUR THINKING
Leading through the coronavirus
books
working papers
articles
blog
SPEAKING ENGAGEMENTS

NEW MARKETS ADVISORS
50 Franklin Street
​Second Floor
Boston, MA 02110
United States

Tel. +1 617 936 4035

Contact Us

New Markets Advisors: Empowering Companies to COMPETE DIFFERENTLY ​© Copyright 2021. All Rights Reserved. Terms of Use. PRIVACY POLICY.
  • About
    • Our Distinct Model
    • Team
    • Join Us
  • Services
    • Develop Growth Strategies
    • Uncover Jobs to be Done
    • Build Innovation Capabilities
  • Industries
    • Arts and Culture
    • Consumer Goods
    • Financial Services
    • Healthcare
    • Social Innovation
    • Technology
  • Past Work
    • Success Stories
    • Recent Clients
    • Testimonials
  • Our Thinking
    • Books
    • Working Papers
    • Articles
    • Blog
    • Leading through the Coronavirus Crisis
    • Speaking Engagements
  • Contact