Image copyright Gregory James Van Raalte

Financial institutions are embracing digital offers out of necessity because revenue from current sources is in decline. The future of the payments industry is shifting quickly to monetizing consumer relationships — particularly through mobile devices — and away from extracting new value from the payments value chain.

What many do not know is that credit card companies have experienced significant pain as a result of the capping of their lucrative interchange fees by the Durbin Amendment, which became effective in 2011. Faced with declines in what had previously been a significant form of revenue, credit card companies know that they need to open new sources of revenue. This need is becoming ever more urgent with companies like Google and Paypal joining the mix and leveraging their unique assets — novelty, retailer relationships, and extensive technology infrastructure.

The opportunity here is massive — total real-world (not online) retail commerce is $4 trillion a year in the U.S., and eMarketer just reported that mobile advertising is expected to increase by 180 percent in the coming year to reach $4 billion. Credit card companies looking to take their fair share of this revenue need to figure out how to leverage their great relationships with consumers to open up new sources of revenue.

Here are my suggestions for strategies that will help credit card companies come out ahead in 2013:

Stop chasing Chase. Instead, start acting like a media company.
To open new sources of revenue through media and technology, banks need to add new DNA that is not focused on traditional banking concerns such as regulatory compliance, security and fraud. Of course, I am not suggesting that they stop complying with regulations, or that they abandon security. But banks must become more nimble at attacking new revenue opportunities — particularly in consumer offers. At Google and other companies in Silicon Valley, teams still pull all-nighters to release alpha versions of products for consumers and partners in a matter of days to test an experience, an approach that is antithetical to the banking world. Yet if banks want to succeed in the media world, they have to figure out how at least part of their organization can play in an API-driven ecosystem that encourages collaboration and rapid product releases. First test for the C-suite at banks: Have you developed and released anything new to consumers in a single quarter?

Play ball with the competitors.
Consider the value of the ecosystem in growing your mobile offers initiative. In order to succeed in delivering a great mobile rewards program, the key is having a rich supply of merchant offers upon which to layer targeting. No one company is going to assemble enough, so think instead about collaborating with all the other players and getting the network effects of a larger audience and a bigger pool of offers. An interesting model for this kind of collaboration is WEVE in the UK, in which three mobile operators — EE, Telefonica UK (O2) and Vodafone UK — have banded together to form a large consortium. The individual companies behind the consortium still compete to acquire subscribers, but they now collaborate with a common platform for monetizing those subscribers through marketing.

Turn that marketing focus inside out.
Now that you have a great offers program, the biggest challenge is getting enough customers into it to move the needle. Each card provider today has marketing teams that focus solely on signing up new customers for their credit cards. Yet somehow, these are not the folks developing new digital offerings. These customer acquisition teams are digital media experts. Imagine focusing that valuable marketing experience on getting consumers to opt into new and sophisticated customer reward programs, and to download their new rewards apps. It is customer acquisition, pure and simple.

Don’t wait for big data.
My last and most controversial suggestion for 2013 is to let go of the obsession with big data! Many banks are building huge databases for micro-targeting customers with niche offers. Microtargeting is cool, but believe me, media is a war of attrition and all of that big data-based targeting will yield a customer segment of just a few people. Brands do not want to target only a select handful of people with their offers; they need to reach a million people in order for their investment in creating and distributing that offer to make economic sense. Silicon Valley has managed to convince enterprises that massive amounts of data will build a program that really performs in terms of offers and sales; but ultimately, microtargeting is not monetizable at scale until there are an equally large set of available offers. The real way to success is to provide a great experience with lots of offers for your entire customer base. Yes, there are a handful of important variables that should be considered, including location, time of day, gender, interests and even retargeting; but other data on top is gravy and too much is at odds with reaching a large enough number of people with relevant offers. The “big picture” is not always based on big data. (Hint: You might derive as much value from customers by asking them what they want instead.)

The Long View
As Bob Dylan said, “you don’t need a weatherman to know which way the wind blows.” Credit card companies can no longer hesitate while other companies race forward to make a profit on this kind of consumer spending. If credit card companies employ the strategies I propose, they will be real contenders against the likes of Paypal, Google, Apple and the mobile operators. The weather forecast is clear for mobile offers: Sunny, with billions of dollars blowing in the wind. It’s up to each financial institution to figure out how to get to market faster and catch some of it.

Alistair Goodman is the CEO of Placecast, where he leads a team of mobile, technology and marketing experts who have created the most scalable, proven, location-based marketing system currently available. Alistair has more than 20 years of experience working in marketing and product development efforts for media and technology companies.

The iPhone exclusivity deals are fast becoming an anomaly, with Apple inking more multi-carrier distribution agreements in markets it first entered with a lone partner. The latest to undergo the transformation: Germany.

Come November, Deutsche Telekom’s three-year run as the iPhone’s exclusive German carrier will end, as rivals Vodafone and O2 add the device to their smartphone lineups.

Which means iPhone carrier exclusivity is a phenomenon now limited to countries like the United States and China, and even there it seems to be on its last legs.

Rumors have been circulating for months now of new partnerships with China Telecom and Verizon (VZ) that would make both countries multi-carrier, which is in Apple’s (AAPL) best interests financially as it tends to dramatically increase sell-through.

Deutsche Telekom (DT)-owned carrier T-Mobile’s iPhone exclusivity deal with Apple (AAPL) is nearing expiration and has not been extended. People familiar with the matter tell The Wall Street Journal that the company’s exclusive rights to sell the device may end as soon as October, opening the door for Vodafone and O2 to begin selling it as well. Discussions between Apple and both carriers are said to be underway and deals are expected to be signed in time for the holiday shopping season.

According to Whitmore’s survey of 100 iPhone 4 retail outlets (Apple, AT&T, Best Buy, O2, Orange and Car-Phone stores in the U.S. and U.K.), 60 percent of Apple Stores were sold out by Thursday evening, as were 100 percent of retail-partner stores. Supplies were replenished overnight, but by end-of-day Friday, quite a few stores were reporting stock-outs. And that number only grew on Saturday.

“Our checks carried out on Saturday revealed that Apple retail stores which were stocked-out on Thursday/Friday were unable to replenish stocks with ~95 percent of stores contacted experiencing stock-out situations. Further, most Apple representatives were not certain about the iPhone 4 stock replenishments and comments such as ‘We’re out of stock’, ‘Don’t know when we will have them in store’, ‘We sold out just minutes ago’, ‘No, we don’t know when we will be getting the phone’ and ‘Your best bet is the online store’ were cited frequently,” Whitmore reported.

“In addition,” according to the analyst, “retail stores which had iPhones in-stock cited long lines (2 to 3 hours) outside the stores. Comments such as ‘We have very limited numbers, we should be sold out in a couple of hours’ and ‘Please give us a call just before you leave home to make sure the iPhones are in stock’ suggested waning inventory levels.”

Whitmore figures Apple (AAPL) sold more than one million iPhone 4s over the weekend, but notes that shipments could have been dramatically higher if there was more supply.

“While the strong start is encouraging, we believe the long-term opportunity for growth of the iPhone is even more significant as near-term shipments are being gated by supply constraints,” Whitmore wrote. “We estimate Apple to sell 44 million iPhones in CY10 (8.5 million in the June quarter) and 55 million in CY11.” (See chart below; click to enlarge.)

Dell hopes to launch the five-inch Streak in China, said Amit Midha, the company’s president for Greater China, Tuesday. He didn’t give a time frame for when the device will be available. The company launched the tablet in the U.K. this month and has said it plans a U.S. launch later this summer.

The Streak has 3G connectivity in addition to Wi-Fi and Bluetooth, but it can be bought without a wireless service contract for 399 pounds ($589) from O2 in the U.K., according O2’s website.

The Streak, which uses Google’s (GOOG) Android operating system, would face a market in China already crowded by small-screen devices sold at Chinese gadget bazaars. But those devices, some of which are knock-offs of Apple’s (AAPL) iPad, rarely have a smooth control interface or a wide range of content such as games and applications for download.

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The merger of France Telecom’s Orange and Deutsche Telekom-owned T-Mobile will create the largest mobile phone operator in the U.K. with about a 34 percent share of the market, just ahead of current market leader O2, which claims about 28 percent. It will also reduce the number of carriers in the country, which critics argue will reduce competition and raise prices.

Orange and T-Mobile disagree, of course, and claim the deal will give subscribers better coverage and improved customer service. We’ll see, I guess.

Oh, no word yet on the combined company’s name.

In an interview with the Financial Times, O2 CEO Ronan Dunne said the company has seen an 18-fold increase in data traffic since the beginning of the year, most of it driven by super-smartphones like the iPhone. “Where we haven’t met our own high standards then there’s no question, we apologise to customers for that fact,” Dunne said. “But it would be wrong to say O2 has failed its customers en masse.”

Well, that’s one way of looking at it. The thousands of smartphone users who lost data service just a few days ago might see things a bit differently, though. Anyway, O2–like AT&T in the U.S.–is doing its best to contain the public relations damage arising from such outages. Dunne says the carrier has added an additional 200 mobile base stations in London to help it meet data demand and has been working with its infrastructure suppliers on network tweaks to improve data service.

Wise moves. Best to act quickly and get out ahead of issues like these, which can become PR nightmares very quickly. As AT&T recently learned, network congestion issues make great fodder for the advertising campaigns of rivals. Wouldn’t want Vodafone (VOD) running its own version of Verizon’s (VZ) nasty “There’s a Map for That” commercials, now would we?

Sadly, the same cannot be said for demand abroad. According to Mobile Today, U.K. sales of the Pre have been disappointing. So much so that O2, Palm’s (PALM) carrier partner in the country, has begun sending sales specialists to its retail outlets in a bid to juice holiday sales. Seems the iPhone juggernaut is as formidable an opponent in the U.K. as in the U.S.

“We have sold 20 times more [iPhones than Palm Pre handsets],” one O2 retail manager told Mobile Today. “The iPhone is a more established brand and there has been more advertising. They are both good handsets but, with such a small price difference, customers take the view they might as well go for the iPhone.”

An unfortunate take on Palm’s prospects in the U.K. That said, it’s not the only one. In a research note issued this morning, UBS said its checks indicate that the Pre is doing “okay” internationally and that it expects webOS handset sales to track largely in line with expectations on a sell-in basis. Here’s hoping we find out if that’s the case when Palm reports second-quarter results next Thursday.

The retailer, which offers cell service through its Tesco Mobile joint venture with O2, will begin selling Apple’s super-smartphone “shortly” through its Tesco Phone Shops and online via Tesco Direct. Said a spokesperson for the company: “We would love to get it in our stores before Christmas and would love to bring a bit of Tesco value to the iPhone and offer something very different to what is out there.”

Sounds like the U.K. can expect a bit of an iPhone price war in the next few months. A nice move for Apple (AAPL), which will obviously benefit from the increase in distribution and the resulting sales.