Connected Commerce: It’s Not Just For Retailers

ATM fraud

Think you can’t teach an old finance dog new tricks? Think again.

Diebold has been around since 1859, when it was founded as a manufacturer of safes, vaults and locks. In those early years, the company’s safes were some of the only ones to withstand the Great Chicago Fire of 1871, and the company was commissioned to build the world’s largest safe for Wells Fargo’s San Francisco branch in 1874. A century later, Diebold went public and got into the ATM business.

And now, after combining with German firm Wincor Nixdorf in 2016 and emerging as international software and services company Diebold Nixdorf, this old dog is setting out to redefine “connected commerce.” Spoiler alert: It’s not just about stores, websites and mobile apps playing nice together.

Imagine this, says Diebold Nixdorf’s Senior Vice President of Software, Alan Kerr: You are an antique guitar aficionado on a budget. After browsing at a brick-and-mortar store, you find a guitar you like — but the price is high, so you decide not to buy it after all. Later, however, you receive an email offer: 25 percent off anything in the store. That’s enough to get you back through the door to reconsider, at which point an associate tells you that your bank has preapproved you for a loan to purchase said guitar. Stacking those two offers cuts down the price enough for you to cave and make the purchase.

In Kerr’s vision, the financial institution (FI) plays an essential role in the connected commerce experience. For the time being, though, it is only that: a vision. That’s because retailers have so far been quick to jump on the connected commerce bandwagon. Banks, well, haven’t. Kerr says they are starting to, however, and many are excited to get there. They just don’t always know how to do it.

Taking Connected Commerce to Another Level

Getting people to move is a slow journey, Kerr said, and it comes down to both customers and executives. After all, change isn’t easy. But, he added, with many banks thinking about how to leverage technology and innovation to better serve clients, getting executives to engage has become easier.

“When I talk about my vision for connected commerce, that resonates,” Kerr said.

Kerr explained that fierce competition has forced retailers to move fast when it comes to developing an omnichannel experience. That hasn’t been the case for banks until now, as traditional financial institutions have had the luxury of taking it slow and conservative with their movements.

But banks can no longer can afford to take their time, Kerr said, and competition is heating up in the finance space. That’s largely thanks to the trend of nimble FinTech startups edging out traditional FIs. Kerr said it is also the result of some larger banks developing their own omnichannel solutions to adapt to the changing world.

“Customers don’t want us to find them another 53 ways to take cash out of a hole in the wall,” Alan Kerr said. “They want help with the journey into mobile, different payment systems and ecosystems.”

Though banks aren’t using the word “connected,” they are starting to think in terms of omnichannel strategy. Providing an integrated physical and online experience — in many cases with a mobile app as well — is the first step in that journey. Connecting banking to retail, as in the antique guitar example, takes it one step further.

Kerr wouldn’t call that recipe a “secret sauce,” though. He said the idea of cross-pollinating banking and retail is not new or even unique to Diebold Nixdorf. What is different, and what could help the company gain traction where others haven’t, is its foundation and history, according to Kerr.

A company that begins in the digital sphere — like most of these FinTech startups — is going to face massive obstacles if it tries to enter the physical world. Kerr would argue it might not even be possible to start digital and expand to physical.

But Diebold Nixdorf is going the other way. With 35 percent of the global ATM market under its belt, the company has shown it can do the difficult stuff — and do it well — and is now building on that hard-earned foundation. Bringing the two companies together in last summer’s combination positioned them to work together, ushering in an age of connected commerce in which banks are connected too.

Why Here, Why Now?

After all this foot-dragging, why is the momentum finally kicking in? Kerr said it’s hard to put a finger on why, and particularly on why now. He offers a few theories.

According to Kerr, data has become more open, and regulatory triggers have forced European banks and customers to accelerate their thinking. In Latin America, meanwhile, cash use is still heavy. In either scenario, the consequences of introducing digital wallets such as Apple Pay or person-to-person (P2P) apps such as Venmo will be similar, he said.

Maybe it comes down to regulations. Maybe the rules just offer a convenient red herring for banks that don’t know how to take the next step. Kerr said FIs often freeze up when trying to prioritize. They don’t know whether to build their own connected solutions, partner with a third party or acquire a company that’s already headed in the right direction.

Concerns around authentication in digital environments have offered enough of a counterpoint to keep some organizations from moving forward, especially since a recent data breach at Equifax compromised more than 143 million customers’ personal information.

“Everyone’s under attack, [and] security is top of the line,” Kerr said. “It’s on the board agenda at every corporation. But it won’t stop the move to digitization of all processes — it just can’t. We just need to get smarter about how we do that.”