Dominic Morea is senior vice president of advanced solutions and innovation at First Data Corporation.
Dominic Morea of First Data shares how the future of the retail industry is going beyond the transaction.
Interview conducted by Vinod Baya and James Russell
PwC: Dom, can you please tell us about the group and function you lead at First Data?
DM: Sure, I’d be happy to do that. I lead what we call the advanced solutions and innovation team here at First Data. The ASI team acts as the incubator of innovation and next-generation ideas for the company. We are driving a handful of initiatives that our strategy has deemed to be transformational or disruptive or both.
We’re responsible for the company’s mobile commerce or universal commerce strategy. We are also very focused on personalized marketing and the next generation of loyalty as it relates to merchants and financial information, identifying—as best we can—where payments, commerce, and shopping are headed.
PwC: What is universal commerce and what is its genesis?
DM: We began to focus on mobile payments about four and a half years ago. We cycled through several phases of learning and experimentation and saw the evolution of a contactless form factor, such as a fob or NFC [Near Field Communication] embedded in the phone. We realized that change in a payment transaction itself is not a seismic change. There was no real consumer value proposition there, and the credit or debit cards work very well today from a payment perspective.
What became clear is that the impact of many emerging technologies such as mobility, mobile wallet, the Internet of Things, and others is much broader, beyond the payment transaction. In retail, the new value propositions are at the intersection of personalized marketing, mobile marketing, loyalty, and improved user experience. These capabilities and their fusion with seamless payments really are where the opportunity is headed, in our view.
The effort took our thinking toward a strategic vision we label universal commerce, which very simply is commerce that happens anytime, anywhere, and on any type of device. More specifically, it is an evolving concept that suggests movement toward a future where retail activities are seamlessly integrated into a single end-to-end experience— shopping, payment, marketing, loyalty, money management, and offline and online experiences. The impact of this integration is only just beginning to be felt by merchants, consumers, and financial institutions.
PwC: How does the vision manifest itself in your products and services?
DM: We’ve reoriented the way we pursue product development and innovation. With a focus on seamlessness and end-to-end process, we account up front for the need to mash up a number of capabilities as opposed to a point solution or point product. That fuels the ability to create seamless integrations across account types, experiences, loyalty, and data access.
Our core competencies are in infrastructure, networks, connecting endpoints, and connecting players in a multisided ecosystem, so that is what we focus on. We will enable the diversity of use cases expressed as apps or devices, or websites or in-store kiosks or other scenarios. In the multisided ecosystem, we really bring together a marketplace of publishers and merchants where offers can be linked to an account and seamlessly redeemed.
We are opening up our capabilities to allow merchants and publishers to take advantage of our infrastructure to deploy end-to-end seamless experiences. Cloud-based technology simplifies integration while allowing us to provide many value-added services. For instance, the open application programming interface [developed by CardSpring] has allowed hundreds of developers and offer publishers to use the OfferWise solution to create innovative new types of e-commerce, loyalty, daily deal, and mobile experiences to help retailers create new value-added relationships with their customers.
PwC: What new capabilities will you add to your infrastructure in the future?
DM: The future is really about going beyond the transaction by understanding and facilitating the end-to-end experience. We want to tie together what the consumer is doing before, during, and after a transaction. Today, the “during” piece is where the online payment networks come into play. We are creating the ability to see the consumer on a longitudinal basis and add value to a merchant at a basket level. For example, one of the capabilities on our road map is to go to the line item detail in a transaction, so merchants can build a more insightful engagement with their customers.
PwC: What are some examples of new experiences in universal commerce?
DM: One emerging example is Red Tomato Pizza in Dubai, which has changed the ordering experience by making it as easy as pushing a single button. Red Tomato Pizza provides its customers with a refrigerator magnet that has a button on it. When a customer presses the button, a preprogrammed pizza order is submitted via a Bluetooth connection to a smartphone or tablet [which relays the order over the Internet]. Upon receipt of the order, Red Tomato Pizza transmits a confirmation text message to the customer with options to cancel or change the order. There is seamless interaction between the physical action of pressing a button and the virtual action of placing an order.
In another example, global home furnishings retailer IKEA has released a catalog app that extends the print catalog experience. Customers can hold their smartphones and tablets over mobile-enabled catalog pages and gain access to rich content, such as videos, images, and 3D product models. You can imagine that in the future, customers could see how a product is assembled, the ease or complexity of it, and take that into account in their decision making.
In both these cases the value proposition to the customer goes well beyond the transaction.
PwC: It seems that the consumer experience is fragmented across devices, online or offline channels, and so on. How much of a concern and problem is this?
DM: Fragmentation of the experience is a significant challenge, and we need to address that. If the multichannel experience is not fluid, I think it’s not useful. And by the way, this fragmentation is not just in the shopping experience. It is across the full lifestyle. We are seeing progress today where sessions and data captured on one device can be seamlessly accessed on a different device to continue the experience. So if I’m shopping at home on a connected device—say a wired device—and I didn’t finish what I started, but now I’m at work or I’m out and about with a tablet, I can continue from where I was and then maybe even take that into the store.
The ability to do something online and then be able to carry that experience to the physical store is really important. Take couponing, for example. As you know, consumers love coupons, daily deals, and other discount offers, and merchants rely on them to attract new customers and return visits from existing customers. However, redemption of these offers is usually paper based—a cumbersome and inconvenient process for both the consumers and merchants.
Our OfferWise solution simplifies offer redemption and makes it seamless, by letting consumers link their discounts to a payment card or mobile wallet and redeem them automatically at a participating merchant’s point of sale. Merchants can take advantage of this solution with no changes to their points of sale, operations, or infrastructure— and more than 500,000 merchants can accept these card-linked redemptions.
This capability is valuable, because it removes the clunky nature of paper. It delivers real value to consumers, who now don’t need to clip coupons or print out paper that proves they bought a deal, registered for a loyalty program, or have a certain number of reward points.
PwC: What is the greatest challenge in what you are doing and what is the greatest benefit?
DM: For a long time, there has not been a cost-effective way to deliver insight back to the point of sale. Most point of sale systems use old technology, and it’s fairly costly to change that. In addition to the point of sale devices, what has held us back is the fact that the outermost edge is a very narrow and highly specialized network service. It does authorization and settlement—a two-part message or a one-part message. Sure, it does that for a number of account types, but only these few things.
The opportunity with universal commerce is much broader and deeper. We now have this data in the cloud, and the work going forward is how to deliver the acknowledgments that help our merchants and their consumers get a much richer level of engagement, relationship, membership, and insight into the end-to-end experience. We’re just at the early stages of that. We think it’s critically important in the mobile channel and the future.