Mobile Commerce Is Ready for Prime Time

Global Corporate Venturing Logo As seen in Global Corporate Venturing, March 2015 issue.

We live in fast-changing times, and it is fascinating to be part of the financial services world as technology transforms our business. Many of us remember the friendly teller being replaced by the much more convenient ATM. But what's going on now heralds an entirely new way of doing business that goes far beyond simply automating a cash-dispensing service. The "bank" of tomorrow is not going to look much like the bank of today, and innovations in mobile commerce and payments are already taking hold. Do I pay for my groceries with my watch or my phone?

Among the interesting turn of events for me is how longtime market leaders are collaborating with innovative startups to share insights and figure out the best solutions.

Silicon Valley Bank recently joined Citi Ventures, Citigroup's venture capital arm, to bring mobile commerce leaders together to talk about the opportunities and challenges ahead in a session titled "The Future of Commerce in A Mobile World." In addition to the hosts, panel participants included representatives of Facebook, Stripe, and Square, and the audience included major retailers, venture capitalists and payment services.

The big takeaway is that mobile commerce is critical to a seamless consumer experience and ready for prime time.

In fact, reflections on the discussion had barely sunk in when Google in late February jumped on the market opportunity. Google Wallet will now be built into Android smartphones offered by major U.S. wireless carriers. Apple Pay already comes embedded in the latest Apple mobile software. When two of the world's richest companies have their eyes on the same prize, you know they are on to something big. For some context, PayPal remains the leader, by far. It accounted for nearly 80% of digital payment dollars in November, according to Investment Technology Group. The group measures all online payment methods. Apple Pay and Google Wallet combined accounted for 5%.

At Silicon Valley Bank, our clients include many fintech startups that are developing cutting edge products and services. Financial services, and by extension payments, are a heavily regulated space and hard for startups to navigate. We have teamed up with MasterCard to create an accelerator program, Commerce Innovated. We are finding creative entrepreneurs through this program, helping them with fraud prevention and compliance, for example, and connecting them to major payment players.

As Reetika Grewal, my colleague who heads SVB Payments Strategies and Solutions, says, we consider disruption our friend. Payments and fintech historically may have been more incremental compared to other tech sectors in bringing innovations to market, but that is no longer the case. SVB bets on innovation because the entire payments ecosystem will benefit from the most inventive solutions that make commerce easier, faster and more secure.

As Reetika sees it, much of the promise of digital payments lies in the trove of data that is collected with each financial transaction. We don't just mean how businesses use that data to sell us more things, but from a consumer's point of view, we all have more power with transparency: We can track our spending, check our balances and be smarter consumers – all in real time.

Silicon Valley Bank also is a sponsor of FinTech Sandbox, a Boston-based non-profit initiative coming soon. FinTech Sandbox has recruited major business partners that are offering data and support services and investment and banking expertise to fintech startups. Major partners include Thomson Reuters, Amazon Web Services, and Fidelity Investments. Participating startups will get access to a broad range of real data to use to develop and test their products and services – free of charge. To buy this kind of data would be prohibitive for these startups. The goal is to speed up innovation and get the most promising products to market faster.

As we discussed at the "Future of Commerce" event, speed is imperative in the innovation economy, but so is simplicity and trust – the latter especially so in financial services. The challenge facing the industry is to prove the benefits of sharing data, such as customization and saving time and money, while improving transparency of data use and, of course, security. To that end, new security technologies, such as transferring one-time tokens instead of actual card data for each transaction, are gaining traction.

No single company can figure out all the answers. That's why it is so refreshing to see the collaborations among established and new players in financial services. I can't wait to see more of the results.

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About the Author

Tracy Isacke is head of the vendor transformation office for Silicon Valley Bank. She and her team are responsible for third-party risk management, as well as building relationships with the bank’s most strategic vendors and partners to provide SVB employees with development opportunities, policy information, training, tools, support and guidance to most effectively support business partners across the organization.

Tracy joined SVB in 2014 to develop key corporate innovation partnerships and programs to connect bank clients to potential partners and investors. Before joining SVB, Tracy was an executive vice president, new business ventures, at Telefónica Digital, where she identified investment opportunities in Silicon Valley, Israel and Europe with the potential to accelerate Telefónica’s business. She also led an international global partner team to deliver unique partnerships and direct-to-bill opportunities for Telefónica across 25 operating businesses in Europe and Latin America.

Tracy started her career at Xerox, rising to be one of the first female members of the UK board of directors. Following her work at Xerox, she spent four years with an early-stage, venture-backed startup that went on to achieve a successful exit.

Born in the UK, Tracy has lived in Italy, Israel and California. She lives in Scottsdale, Arizona, with her husband and family.