Payments Today 101


As Moroku grows it’s important that the team understands the domain we’re in. Banking and payments is a complex beast and it’s changing fast as technology and financial services collapse into one to create a new industry, FinTech. In order to assist the team get up to speed so we build relevant innovative products I wanted to start summarising the structure and the opportunity.

Social, cloud, mobile and lean business models are reducing many of the traditional barriers of entry into banking and payments. In a recent report by Cap Gemini and the RBS, traditional banks’ market share in non-cash payments is projected to decline to half of the forecast 800 billion non-cash transactions that will be made in 2024. The central banks report that non-banks already handle almost 300 billion transactions every year, the bulk of which are retail payments. These volumes are so significant that the impact on the way we consume public services, business activity and go about our day to day lives will be widely felt as the provider mix as well as the products themselves change.


Whilst non-banks have been participating since the 1950s with charge and credit cards, the trend towards non-banks is being pushed along by:

  • banks as they outsource more and more of their payments and technology services
  • customers who seek alternatives to the banks and do so online
  • regulation and compliance costs incurred by banks that non-bank providers may be able to limit through partnerships or jurisdictional selection
  • innovations such as digital currencies and P2P that create new opportunities and that are more readily responded to by non-banks

Non-banks are organisations whose main business is not related to taking deposits from the public and using these deposits to make loans and gather revenue through net interest income – the difference in the interest rate between deposits and loans. The internet and mobile have provided a large opportunity for non-banks to enter banking and payments by:

  • reducing many previous barriers to entry, such as location which has enabled digital only banks to form.
  • changing the shape of the landscape and therefore new entry points, such as mobile.

Where non-banks, such as telcos and mobile operators have existing and large volumes of existing customers, the opportunity seems hard to ignore. Orange, Vodafone and Airtel have all demonstrated this with their mobile payments platforms. So too it was when eBay’s rapid land grab as an ecommerce portal provided a fabulous launch pad to scale out fast by buying the 4 year old PayPal for $1.5bn in 2002. As well as paving an opportunity for existing players, technology is also providing an opportunity for new players, such as Square and Mint to enter existing markets.

When it comes to payments, non-banks are getting involved in a variety of payment types including cards, transfers, direct debits, e-money, loans and remittances. They can also participate in a range of functions, operating at the front end, providing services directly to consumers and businesses, operating at the back end by providing services such as clearing, settlement, fraud detection and anti-money laundering services to banks, operating retail payment infrastructures (e.g. Visa, MasterCard, China Union Pay) or play right across the spectrum, such as PayPal.

P101bThe choice of position is largely dictated by a selection of which step, or steps, in the process they choose to engage. The diagram to the right illustrates the various stages of the process at which a provider may play.

Digital money providers have an ability to play right across the process and do. This end to end control makes it highly attractive to new entrants as they don’t have to engage, pay or rely on anyone else.

Outside of digital money, most non-bank providers tend to focus on the pre transaction phase with banks picking up the clearing and settlement stages before handing back post transaction services to the initiating provider, according to research done by the Bank for International Settlements (BIS).

Payment flows are often described using a four corner model, identifying the traditional relationship between customers and their banks. Two participants in a transaction each have their own bank who ultimately settle the transaction between the parties, creating 4 parties and therefore the 4 corners to the model. In this depiction, front end providers insert themselves between banks and the customers, while back end providers would sit behind the banks, un-noticed by the customers. In each and every one of the components depicted, non-banks providers can and increasingly are providing services.




End to end providers collapse “Payer’s Bank and Payee’s Bank into one “three corner model” and eliminate the need for any 3rd party clearing and settlement services. The rub under a 3 corner model is that there still needs to be a mechanism whereby money can enter and exit the system. M-Pesa is a great example of such a three corner model, whereby Safaricom owns the airtime that is exchanged by payers and payees but people still need to rock up at an Agent and handover or redeem cash. Digital currencies and P2P present great examples of where banks are largely removed from the entire process, other than as an initial funder or exiter of the system i.e. pay in or pay out.


New entrants will look to enter the payments space if they believe they can derive economies of scale or scope from a new platform. Economies of scale derive from releasing incremental profit as more units are sold. Economies of scope derive from increased profit as additional products or capability are added to the platform. Such scale and scope can however be hard to achieve in the short term. As a network service, payments is highly dependent on the famous network effect, made famous by the telephone and latterly the fax machine – they only become useful once a lot of people, or at least the people that matter have one too. This requires either significant capitalisation or partnering to cover the gap of time or capability between launching a product and lots of people using it.

These models provide ideal lenses through which to identify new business opportunities. Economies of scale can be derived by non-banks by specialising and therefore becoming very efficient at just one thing as opposed to banks who by necessity must be jack of all trades. Scale can also be derived by selling a service to more people including banks. Square is a good example of this, but having a laser focus on their mobile payments offerings and targeting a global market. In Australia Cuscal, provides payment economies of scale to the 100 or more credit unions who server over 7 million consumers. These credit unions have been able to deploy technology solutions to their customers that rival the big four, by amalgamating their resources and effectively outsourcing it to Cuscal. Individually they would have almost no chance to compete.

Most of this spells opportunity for banks and non-banks alike. Banks have an enormous amount of trust. When it comes to handling large volumes of payments and money, such as that tied up in retail mortgages and business lending it is hard to imagine a world where the history and governance of banks and the central banks that hold them together are no longer warranted, or valued by large swathes of the population. It does however spell a new world of competition and cooperation between banks, non-banks, old guard and start-ups. As banks are faced with the competing challenges of running day to day operations and hitting quarterly returns, smart movers such as BBVA are embracing non-banks and start-ups in particular to create new businesses at a pace and scale they can’t match. This is particularly likely in areas that are new or complex, technically or regulatory, such as mobile payments and digital currencies. How for example does a bank launch a digital currency when so many of the central banks are highly sceptical, seeing them as the preserve of crime and the whole concept appearing somewhat counter preservationist? On the flipside ItBit has just raised $25 million in funding and become the first virtual currency firm to receive a charter from New York state’s financial regulator, enabling the exchange to open its doors to customers throughout the US.

In Payments 102, we’ll look at some of the regulatory conditions under which the systems operate and why risk management is a fundamental part of not only how banking operates but how it will either block or enable banking and payments to occur going forward.


We are on the hunt for software engineers with Ruby and mobile skills to come join us at our beachside Fintech Lab in Manly

If you know that working with great people is key to how you grow and are looking for a change or know someone who is looking for a change please reach out and tell us your story here


Money. It seems to make the world go around or at the very least it goes around the world. It gets many of us out of bed every day in our search to acquire more of it. Somehow it allows us to do the things we want to do. In an ideal world we’d all be doing the things that felt like our purpose and great value would automatically flow. However, in case you haven’t already figured it out, the world is not a perfect place and often life just seems to boil down to having to acquire money and getting to big dreams later. Even if we are in the flow and doing “our thing”, money will end up being a way in which we end up measuring our success: Colin Slade’s decision to walk away from the All Blacks for $800,000 a year to play rugby in France is testimony to that.

As we look at ourselves and how we are motivated we realise that our understanding of what money is to us, is very important. Our concepts of money are also important at a social and political level. Vast numbers of us live in poverty or close to it. More than 1 billion people live in deep poverty, “destitution”, living on less than $1.25 a day.  50% of us live on less than $2.50 a day and 80% less than $10 and 805 million people worldwide do not have enough food to eat. And the poverty is not solely located in the developing world. 2.5 Million Australians, 45 Million Americans and 80 Million Europeans live in poverty.  For these people it’s not a matter of trying to figure out perfect career paths and living your passion. Its quite simply survival.

Clearly there is a lot at play here and much that our political leaders need to and are attempting to do through the World Bank and UN. Their aim’s are not purely altruistic either: The less people in poverty, the less help they will need and the less likely they are to be engaged in domestic terrorism (at best).

I’m also not here today to solve world. The purpose of this blog is to ensure we all appreciate the very important nature of money in our lives. Our beliefs around money have a very big impact on how we feel about money, which in turn has a massive impact on what we do about money. Understanding this cycle and how it kicks around is not only fabulous individually but is also incredibly useful as we start thinking about building supportive financial services. The poverty angle is just to shine some light on the scale of the issue.

We know that money is important to us based on how agitated and upset we get about money. It really is a physical manifestation of who we are. As the currency of life, I have come to believe that it’s can be there to teach us about ourselves. Its not there just to be spent. It can be a fabulous teacher to you. You’re the one who goes out and works for money. You’re the one who gets paid each month and decides whether you save, spend, or waste it. If you don’t have the money that you want in your life, that feeling is not there to tell you to want less. Perhaps there’s a message there for you about why you are going without and how you value yourself. When we view money as a teacher some great insights can be revealed. If money represents our value and we shy away from money, perhaps we can question why we’re afraid of discovery, getting after our purpose in life and being highly valued. Our feelings about money are very worthwhile paying attention to.

The truth about money is this: There’s nothing complicated about money. What’s complicated is the relationship that we have with our money. What makes it complicated is when we care more about the things that money can buy than we do about money itself. There’s a constant threat that we define ourselves to others by how we look, the clothes we wear, the cars we drive and the homes we live in. We let these things define us to others.

But if we felt great simply because we had more money in the bank than clothes in the closet, if we got more pleasure out of saving than we did spending, if you understand you define who you are, that money will never define who you are, then your relationship with yourself and life really can start to change powerfully.

All of this is very important to understand for those of us in the business of building innovative banking solutions. If we believe that our company’s success is predicated on our customers success, and that their success is saving money and not living a life with a pile of debt, but rather in achieving their savings goals, then ensuring people have great beliefs about money will be fundamental.

The first point therefore is this. We all should investigate our own beliefs around money and our relationship with money if we want to have any chance of getting ahead with it. If you don’t – that’s fine too, there are plenty of other people lining up to get ahead. I’ve got started on this path and once I did things started to get a whole lot easier, once I started getting curious about what I was feeling and doing as a result of those money feelings.  Once we start looking at how we think about money, and how that thinking affects our relationship with money which in turn has a massive impact on how much or how little of it we have, we start to get empowered to do great things with the insights.

The second point is for those that want to leverage this insight for how to build businesses around money. As we start to drill into financial literacy, we know that it’s not just knowing about what to do that is important. Lots of people know that it’s better to get a cheaper term loan than to crank up a large credit card debt, but what do they do? They crank up large credit card debt. Why? Because getting structured about it would involve admitting defeat or some other deep issue that is much easier to ignore whilst they build a perception around their friends that they are in control of life based on what they are wearing.

As with so many things in life it boils down to what we do, not what we think. Though what we believe, impacts what we think, which impacts what we do and then how we feel and the cycle perpetuates. All of this means that if we want people to save for their futures, pay debt off, then we need to do more than just provide them the simple tools to do these things. We must first work on ensuring they have empowering beliefs around money and begin reinforcing the correct behaviours around the actions so that they feel good.

If we don’t, then the old habits will prevail.

Pay Day Lending

ASIC and the ABC are on the hunt for unscrupulous Pay Day lenders. Pay Day lending is the provision of small, short terms loans to people that require financial cover to pay day. Annual Percentage Rates (APR) can exceed 1000% as advertised by

“£230 borrowed for 28 days. Annual interest rate of 292.2% (fixed). Total amount repayable by one repayment is £281.52. 1297% APR representative”

PayDay1In Australia, Good2Go loans get going pretty fast with a 50% establishment fee as evidenced here.

The National Consumer Credit Protection Act 2009 (National Credit Act), features a number of measures to improve protection for consumers who borrow money for personal, domestic or household needs and to deter predatory lending practices. Under the act, credit contracts for $2000 or less that have a term of up to 15 days (referred to as a ‘short term loan’) are now prohibited.

This hasn’t stopped many people finding Pay Day loans – i.e. loans that provide cover till “pay day”. Even when that “pay day” is a social welfare benefit. Multiple providers can be found preying on the financial disadvantaged with massive consequences as highlighted in this week’s Four Corners episode – The Game of Loans.

To be fair to ASIC they have been doing their best to weed out the crooks. Since 2010, ASIC has netted close to $2 million in refunds to over 10,000 consumers who have been overcharged when taking out a payday loan and have commenced proceedings against seven companies identified as behaving systemically non-compliant with the law.

Last year ASIC successfully took civil penalty action against The Cash Store Pty Ltd and Assistive Finance Australia Pty Ltd for wholesale responsible lending failures and engaging in unconscionable conduct. ASIC held the view that The Cash Store provided unaffordable loans to a large number of their customers who were on low incomes or receiving Centrelink benefits. In addition, the company acted unconscionably and unfairly in selling insurance for these loans to these customers when it was unlikely that they could ever make a claim on that insurance.

A research project conducted by the regulator identified  2/3 of 288 files reviewed to have failed the suitability criteria for a pay day loan, 54% of the borrowers were found to be return customers and 8% were likely to default.

But its largely a game of “whack a mole” with new entrants, often sexy social mobile versions such as Nimble with their “$1600 in 60 minutes” campaign, K24, Cash Convertors and others doing their best to get money to people “in need” as echoed by the CEO of Cash Convertors, Peter Cummins, on the 4 Corners episode

“There are 10 million Australians that don’t have access to a credit card. Where are they going to get credit?”

PayDay3For me this is the crux of it. Regardless of the number, there are good reasons people can’t get access to credit Mr Cummins and as a financial services provider we’d be hoping you understood this. There are safeguards put in place by the regulators and the banks to ensure that people don’t get in over their heads in debt. There’s plenty of evidence that the regulators and the banks need to keep a close eye on the situation.
Australia leads the world league in terms of leverage and personal debt as the graph next outlines, charting household debt/disposable income over time. The pink line shows Australia’s increasing dependency on debt and 177% is a big number. Total household debt stood at $1.84 trillion at the end of 2013, equivalent to $79,000 for every person living in Australia. Unfortunately when we add the New Zealand trend it’s not the worm from the Cricket World Cup.

Westpac was called out for funding many of the PayDay lenders, such as Money3 and The Cash Converters, to the tune of billions of dollars. Meanwhile some bright spots are emerging. The NAB has been backing Good Shepherd MicroFinance. Adam Mooney and his team are providing financial advice for people caught in the Payday lending trap and helping them dig out. Adam says the human impact of payday lending was damaging for everyone in Australia. He advises people caught in the trap to consider taking out a no interest loan that was backed by state governments and the National Australia Bank. Instead of paying up to three times the value of a fridge, furniture or bed through a fringe lender, simply pay the cost of the item itself over 18 months with a no interest loan, backed by the Australian and State governments and NAB”


We know that the digitisation of these types of services is only going to increase. Digital Providers like Nimble have got slick design skills that provide very slippery on boarding processes and guide customers to move the bar to the right.

There is no doubt that the regulator needs to be resourced and enabled to protect the highly vulnerable in this area. It is also incumbent on the traditional providers, particularly those that press a strong corporate and social agenda to do two things:

1/ Ensure they are not providing wholesale funding for a marketplace hungry for these pay day services

2/ Provide digital banking services that are truly focussed on customer success and designed to help people get their financial lives together.

In one of the world’s wealthiest nations it’s not good enough that the average debt load is $80,000, and that the average super annuation balance at retirement is $130,000.


Summary: The web will remain an organisation’s brand showcase for the foreseeable future, providing a single platform to serve up content across all screens. However, when it comes to doing stuff, the majority of banking transactions are going to be on mobile and the best mobile experience is native.

With ever present budget constraints building apps for web and mobile platforms is not always feasible or desirable. Sometimes we may have to choose which one we do first. So how do we navigate the challenge around web vs mobile?

First up let’s agree that you’ll always need a website: It’s your brand showcase. It’s where you share information about who you are and how you educate customers about the brand and its offerings. We have been living in a mobile world for 2 years. This means that regardless of the discussion round web vs mobile you have to have a web site and your web site must operate well across mobile as well as desktop for the foreseeable future. With so much traffic coming from mobile, your website has to be mobile or tablet enabled (responsive).
Where the debate arises around web versus mobile is around the applications; the things you want your customers to do, and whether those applications are best delivered via web apps or mobile apps.

The insights to guide our decision making here primarily evolve around customer behaviour.  First up is timing. News sites and their apps are a big category and are run by people obsessed with data. Let’s face it we all should be obsessed with data but due to the light touch nature of the relationship with their customers these folk have to be. At CNN mobile traffic remains pretty consistent throughout all seven days of the week, but desktop drops by half on weekends, reflecting industrywide trends. Desktop and the web is becoming a “niche platform” with massive numbers mainly between 9 a.m. and 5 p.m, when people are in front of the PCs at work, surfing as a distraction. Outside of these times its all mobile. It turns out banking is a little different because we don’t do our banking as  a distraction. We do it to take care of our bills and our finances. We’re increasingly busy and the customers that banks want are the very busy ones. This means that there’s a bit of banking done during the day times but most of it is outside work hours. The most common time for people to log on to their mobile banking app is on their morning commute.  Santander has pinned down its peak-use time to 6.55am. This means its’ customers are doing their banking just as their morning alarm goes off. The next most popular is 4pm on a Friday, as people weigh up their potential weekend spending.

Speed is critical. Time is money and customers don’t use slow sites. A one second delay in page time equals a 7% loss in conversions, 11% fewer page views and 16% decrease in customer satisfaction. Faster is better and your website and web-based applications need to be lightning quick or you will lose customers and revenue. This is important because with people dialling in at specific peak times you better make sure you’re up to the task. Having peak loads serve up lots of apps may not help you. Having them all pre-installed as apps just might.

Within three years, it is estimated 60 per cent of all transactions will be done on mobile – phones or tablets. This is because it’s the most convenient platform to use when we have time to do it. This is why Bill Gates has adopted a mobile first banking strategy. The Gates Foundation predicts that by 2030, the 2 billion people who currently don’t have a bank account will be making payments and purchases with their mobile phones, with our without banks. Mobile banking enables us to provide rich experiences to people outside the branch and with massive penetration, phones are a great acquisition platform: This is why Bill is getting after 2 billion new customers with his mobile banking play. With the majority of the transactions being done on mobile your mobile strategy better be first class.

Like Bill, banks around the world are adopting a mobile first strategy. Some, like St George are going Mobile Only. This is because as far as anyone can foresee mobile is the future. What wins mobile, wins the Internet. Right now, apps are winning and the web is losing because of how mobile apps engage customers according to the latest data from Flurry: Native apps beat mobile web apps hands down for engagement and stickiness.


This stickiness runs very real for Santander. Younger people are, unsurprisingly, leading the way. Tech-savvy and likely to have the latest gizmos, the typical user is around 27 and uses their native banking app about 20 times a month. Thats a lot! But the older generation are catching up. Over-55s now make up one in ten of Santander’s mobile banking customers, with most using their app between five and ten times a month. Mobile apps are changing the face of banking.


Commonwealth Bank of Australia highlighted the growth of digital interactions in its submission to the financial system inquiry. CBA processed more than 400 million transactions via the internet in FY2013 with more than 60 per cent of NetBank logins via mobile devices. Its new CommBank smartphone application launched in December last year has been downloaded by a million people and the bank said for 40 per cent of people using the app, it is the only way they interface with the bank online

HTML5 and Responsive design techniques continue to present an opportunity for cross platform development and there are a lot of people who say everyone should be doing it now to save money and time.  If the toolsets and standards were truly cross platform and allowed you to build great experiences across iOS and Android they’d be right. Unfortunately native apps have the edge in some very critical areas for banking:

Interactivity/Gaming– The popular apps are all native because of a greater ability to build in interactivity – Think Angry Birds or Farmville.

Complex Calculations or Reporting– If you need something that will take data and allow you to manipulate it with complex calculations, charts or reports (think banking or investment) an app will help you do that very effectively. Web app performance is always dependent on network and browser connectivity whereas mobile apps with native plugins for performance management are always faster and operate better when those annoying network dropouts occur – Yes, even in 2015!

Experience Expectations. Building cross platform apps (web apps) means you need to build for the lowest common denominator and a design that deploys across iOS and Android. The problem here is that Android and iOS designs are very different and the users have come to expect that difference. There are a bunch of things that happen very differently across the two platforms. Each platform comes with a set of reusable components that can be built into the app to help the app “look and behave native” to the user.

Platform Specific: There are plenty of platform specific things you might want to take advantage of that are hard if not impossible on cross platform: Location services, fingerprint authentication, eliminating typing and integrating OCR and scanning capabilities. You can design around it but the outcome is not as clear as if you are to build natively for the platforms. Mobile apps are always faster and more efficient, as they work in tandem with the mobile device they are developed for. In February this year JP Morgan Chase announced that it will shut down around 150 of its 5,602 branches this year, and another 150 in 2016 as customers continue to shift to digital channels, particularly mobile, for basic transactions. The JPMorgan Chase app now has 19 million users, representing a 20% year-on-year rise. In 2014 the bank’s mobile cheque deposit feature that utilises the camera was used 45 million time, 25% up on the previous year, while the P2P payments service was used 30 million times, an 80% rise.

Banking customers expect more than an excellent mix of products: they are looking for superior customer experiences that fulfil basic expectations while providing added value. In 2014  EY discovered that customer experience is the most common reason for opening and closing accounts, more so than fees, rates, locations and convenience. If you agree that the majority of transactions are to be conducted on mobile and if native mobile apps give you greater execution and control over the mobile experience, we highly recommend a mobile app first strategy.

7_ guernica whole

Who’s your favourite genius? Goethe, da Vinci, Pascal, Wittgenstein, Gates, Bonaparte, Mandela, Hawking? All of these folk would certainly rise to the top of such a discussion, creating works that were both original and exemplary.

There’s a great article in this month’s Scientific American magazine by Dean Simonton that looks into the science of genius; how to measure it and some of the processes involved in creating fabulous, innovative breakthroughs.

Amongst the insights are the circumstances that must exist for geniuses to produce the great outcomes for which they are known. There is much discussion on nature versus nurture the outcome of which is that it’s a lot about both. There needs to be an inherent genius mind but it takes a lot of time to hone those skills, with 10 years of intensive work generally being regarded as the gate before imminence is likely to appear. There would appear no short cuts for acquiring knowledge and capability.

Another insight is that geniuses engage in a wide range of interests and hobbies. Anyone who has watched the “The Theory of Everything” the highly recommended movie of Stephen Hawking, will see how this played out for him. Sure he was born clever and worked hard but he also loves music and play time with his family. Einstein slept more than the norm but also took time to play Bach and Mozart on his violin with these activities often delivering the breakthrough while his mind rested. Whilst nurture has a huge role to play, an inherent interest in the arts and music are attributes many geniuses portray along with tolerance for ambiguity and change.



Perhaps this is why Einstein famously said that imagination is more important than knowledge. Whilst domain expertise such as advanced problem solving strategies may be essential for delivering the outcome it does not generally lead to the generation of novel, useful or surprising ideas. There’s a fascinating review of Picasso’s “Guernica that reflects upon the process of trial and error that the creator must commit to get the breakthrough, increasingly known as “Blind Variation and Selective Retention” BVSR.  The blindness refers to the fact that the end outcome or usefulness of the endeavour is not necessarily known as the journey of discovery is embarked up. Trial and error is a necessary component of figuring out the worth of something. A variety of ideas musty be generated many of which will turn out to be useless. As part of this the creator may often find himself backtracking, returning to a previous idea, originally discounted then re-investigated.  The Bulls head within Guernica is a classic example of this where by a whole series of more realistic sketches were done before returning to a more simplified yet abstract bull form was finally created.

This process of trial and error and commitment to venturing blindly into the unknown and an openness to retracing ones steps was illuminated by the reflections of physicist Hermann von Helmholtz

An alpine climber, who not knowing the way, ascends slowly and with toil, is often compelled to retrace his steps because his progress is stopped; sometimes by reason, and sometimes by accident, he hits upon traces of a fresh path, which again leads him a little further; and finally, when he has reached his goal, he finds to his annoyance a royal road on which he might have ridden up if he had been clever enough to find the right starting pint at the outset.

The cyclical nature of idea generation and testing does not come naturally to the modern corporation where performance management systems reward success and penalise failure. We have been conditioned to be critically dependent on clarity and to fear ambiguity and the unknown in case the budget overruns and still delivers nothing. Yet hundreds of years of creative genius shows us that it is only commitment to blind variation, a preparedness to back track and explore that will provide ground breaking innovation and leadership.

Of course not everyone has to be a leader. There are plenty of successful businesses that are built on being a follower. The answer on what’s best for you depends on who you want to be and be known for.


ANZ has appointed Scott Collary as CIO. Previously Collary was responsible for consumer banking technology within Citi’s North American operation and where he introduced a ‘digital first’ technology strategy. Many banks are adopting a digital first strategy but this has substantial risk in turning the customer relationship in a backwards direction. More here from my post on the ABC today




A recent report by RFI Consultants suggests that there is $60bn of cash in circulation. But where is it all? Apparently mostly under people’s beds and most of those beds are off shore.

Apparently there are eleven $100 denomination banknotes on issue for each man, woman and child in Australia, whereas the majority of the public do not use or hold this denomination, and very few ATMs dispense it.

The Reserve Bank seems to have to create 4 times as much cash as intended for primary usage to cover all the other usages that it attracts




Air New Zealand nail it again by making it fun


On Sunday afternoon I had a sundowner at our local micro-brewery. “Sundowner” is local speak for a couple of beers as the sun goes down. I was invited out to meet with some small business owners and talk to mobile app best practices. At the end of the Sundowner I was asked if there was a whitepaper or website to read that summarised much of the conversation and pointed to some of the best practices. I said I couldn’t think of one but that I would write it. So here we go.

Do what You do

There are plenty of stories around of successful apps and even more stories of unsuccessful ones. We don’t hear much about the later group, because the list is endless and uninteresting. Like apps, so it is for people’s careers; the things we choose to do, or perhaps are chosen for us. We walk through life with a set of skills and passions that draw us to people and others to us, to activities we enjoy and find rewarding and away from activities and subjects that bore us. These circumstances and events aren’t as random as we might think and provide us with the light to understand and follow. They illuminate the value we  provide others, the activities that fulfill us, the things we are good at and the things we should do more of.

Doing things for money’s sake will never deliver the results you are after, because you can never really determine what success is, how much money is enough, and you will chase your tail trying to figure out what to do, usually trying to copy other people’s ideas which you will never really emulate because you aren’t them.

Do what You do. Look at your life, the things you love, the places where you provide value and look for problems to solve and value to provide. Use this to illuminate the apps you should build.

Start with the end in mind

Stephen Covey coined this famous lesson and it applies to anything we’re attempting to build and particularly when it involves people. When it comes to apps take the time to write down the outcomes for both yourself and your customer. Being clear about the outcome for both of you along with all the things that need to occur in order for those outcomes to materialise will crystallise many of your design principles and keep you locked on the target.

One of the examples we discussed was an app for helping people learn music. There are lots of questions here?

  • Who is the customer? Is it the student or is it the music teacher? Is it both of them?
  • What does success look like? Are the students playing at the local microbrewery on a Sunday afternoon? Do they have a Master’s Degree in music?  Are the teacher’s classes full of engaged students having fun learning?
  • What are all the things that need to happen for that success to materialise? Do the students need good theory? Do they need good performance skills? Do they need courage to go get gigs?
  • What’s the plan for the app? Is it to make money? How much? What style of money? Passive income streams or to build a business that has massive value? How will you do that?

Very rarely do people have an unlimited amount of money to spend on app development. Often the very opposite is true. In order to sustain the app and take the journey with it you will need customer success and revenue. Spending time getting clear about the model is very important. If you don’t you will blow dough.

Make it compulsive

The apps that go viral are compulsive. There are lots of things that people could be better at in their lives and certainly, mobile apps have much to add in terms of being able to help people. But all apps have to compete for individual attention and if it’s not compelling and the hooks built in to keep it sticky, your app will join the millions of apps that are downloaded, used once and then deleted to make room for the next bouncy ball app.

Go through the mobile apps you have on your device and list the ones you love and use as well as the ones you don’t. Next, delete the ones you don’t. Then write down the things that keep you going back to the apps you love and think about how those attributes may apply to your app idea.

Fitness apps have been massively successful as the new gangbuster category, propelled by wearables and data collection (heart, speed, calories etc). But these apps haven’t been successful because they help people get fit. They have been successful because they trigger the brain’s learning centre, the hypothalamus, leveraging the dopamine release that occurs when we do things that are fun and compelling and motivate us to return to that activity. There are lots of resources on Dopamine and how it works including an introduction here on our website. Indeed we have spent a lot of time researching human motivation, game theory, behavioural economics and other cool things. At the heart of all of this, in our mind, is a very simple truth: “people rarely repeat things and become good at them unless they are fun”

So, you better find a way of making your app fun. This is the classic half art, half science challenge and depends amongst other things on knowing your customer. What’s fun for me, may be fun for you, but maybe more or less so. Going back to rule 1 and figuring out who you player is and what pushes their buttons is a great place to start.

Communities and Social

Now that Facebook has become gigantic and LinkedIn, Pinterest and others have become enormous we have stumbled on some old wisdom that was articulated very clearly by Maslow: We are massively gregarious. What’s happened over the last 16 years as us geeks have been building the internet is that we have increasingly dehumanised the joint. Jump on a bus, wait in a queue, go to a pub and you will see people in social situations ignoring each other as they are glued to their phones, tablet, phablets and wearables.

We all know it, so make it very much a part of your design thinking. There’s lots that can be done, such as

1/ Don’t create separate logins for your product – Use Social – Login as Facebook, Google Plus or LinkedIn – That should get you away for the large part unless you are deploying to China

2/ Build groups and teams within your app. Can people group together in any way?

3/ Post and Publish. If your app involves achieving anything, let people share that via social media in a way that gets both them and you kudos

Freemium and Making money

Here are a couple of home truths

  • People want everything for free
  • If you want people to pay for stuff they have to realise the value

If you price your app at $8.99 and expect to sell it by a few screen shots on iTunes you’re mad. Give the thing away and get people using it.  This is how all of the best grossing apps make their money.

This will generate the feedback you need to figure out if the app delivers any value or not and then you can think about making money.

You have bunch of options once you have customers and have very few, until you do:

  • Charge for in app purchases e.g. the Uzi to shoot down the monster
  • Charge for upgrades to the “Professional” version
  • Embed advertising e.g. Google Adwords

But be clear, you will have very limited monetisation opportunities until you first establish value and build your community

That’s it for now

Please do provide comments and I’ll keep the list alive and hopefully build it as a Go To

Have fun




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