There was an interesting article about big data based businesses of major credit card companies in Korea. According to Korea Economic Daily, two major card companies, Shinhan and Samsung, see big data as a new business opportunity while Hyundai Card is skeptical about it. Recently Shinhan and Samsung are each driving their data based services. Those services provide more sophisticated consumer preference based on their purchase history, which can be applicable to retailers for customer targeting and promotion.
At this point, Ted Chung, CEO of Hyundai Card, contradicts others’ approach in a way that there is actually no demand in a market for those services. He added that there is no difference between big data and CRM which most card companies adopt for customer database analysis. Interestingly, it is difficult for card companies to know SKU level data due to regulation in Korea. As a credit card user, what I know from a credit card website is how much I spent at which retailer. This hurdle often drives major card companies and retailers collaborate together and makes them compete against each other. In addition, when it comes to mobile payment and its data services, there is one more important player in big data services in payment market – carriers. They tried many kinds of payment services and big data platforms for several years. SK Telecom, the largest carrier in Korea, launched Geovision service, which combines data of cell phone users with geolocation to build marketing platform.
Those attempts have not been successful until now. Like Ted Chung said, big data is a kind of “hot issue” without substantial outcome. Nevertheless, we cannot ignore its potential. Especially, American card companies have a different stance from those in Korea in the sense that they can have SKU level data. However, they are not that aggressive as Hyundai Card. Bill Gajda, Visa’s head of mobile, said in an interview that they have not launched the service even if they are capable of providing analytics.
This is suggestive in a way that the main issue delaying data play is not originated from technical issues. Visa can do it, but they don’t. It seems that the big data market is not ready. Card-linked offering based on big data can be attractive if consumers are highly involved with that offering service. There is no way to make this service possible except through mobile. That is why payment, specifically mobile payment, is becoming more important in the near future. It may not be a simple payment but can be expanded to new contact point to customers. Google Wallet and Apple Passbook have prepared mobile channel to change customers’ physical wallets with their virtual ones. From this perspective, Apple Pay may contribute to accelerating the advent of new businesses based on big data analysis under this stagnant situation. As you can see from the following chart, people have more interest in Apple Pay compared to wallet services.
It is too rash to say that token-based payment can be a game changer for commerce and payment industry. However, it is the most realistic and plausible attempt to change the paradigm that plastic cards have dominated. This change will be naturally connected to big data. Now is not the time to be obsessed with big data itself but to focus on understanding mobile payment and customers’ usage pattern.