Will Banks Become Ad Networks?

Much seems to have changed over the last 12 months in the mobile payments business, one of the trends being the thinking about where the big revenue streams exist. For most in the mobile payments or mobile wallet spaces, the upside now is seen to be advertising and marketing, not transaction fees, though some participants remain focused on that part of the business.

Sopheap Lao, Mobexo CEO, runs a mobile payments company. For retailers, revenue, loyalty, lower collection costs are the value, he says. But “advertising is one of the revenue upsides,” he also says.

Talking about the ways bankers view mobile payments, former Bank of America executive John Thomas says bankers are not sure what the business model is for mobile payments and mobile commerce in general. Bankers are not sure whether mobile servicing, payments or advertising should be the primary focus.

On the other hand, there is a growing sense that marketing services, particularly advertising, represent the upside. It might be a startling notion, but there is a growing sense that, of the opportunities now available, the business with the highest profit margins is advertising.

Think of a bank’s network of online or mobile customers as a media audience. Then think about how a large bank could become an advertising network. That’s the potential opportunity. That isn’t to say the idea is universally welcomed.

Some bankers might resist the notion that the business consists of becoming “a big billboard.” Others might say there is nothing especially outlandish about that business model, especially if existing businesses start to experience severe gross revenue and profit margin issues.

“For a sample $100 in revenue, the return seems highest in advertising and credit operations, less so in rewards programs and lowest for debit operations,” says Thomas. That is one reason bankers Increasingly will be looking at advertising revenues as a growth opportunity.