COMMERCE NOW

Summary

On this special episode of COMMERCE NOW, Steve Kremer, Director of Sales in the Payments division at Diebold Nixdorf, and Sarah Grotta, Director of Debit and Alternative Products Advisory Service at Mercator Advisory Group, sat down with PaymentsJournal to discuss the most popular payment method, both in the United States and globally: Debit.  Listen in for a  discussion of why modernizing debit payments is crucial in both the banking and retail sectors.

Related Content: 

https://www.dieboldnixdorf.com/en-us/banking/insights/blog/get-your-message-out

https://www.dieboldnixdorf.com/-/media/diebold/files/banking/insights/qa-faq/mindshare-payments-innovation.pdf

Related Links:

https://www.paymentsjournal.com/the-time-to-revitalize-debit-rails-is-now/

LinkedIn Profiles -

Steve Kremer

Sarah Grotta

Transcription: 

Speaker 1:

On this special episode of COMMERCE NOW, DN Steve Creamer, Director of Sales in the Payments Division joins the PaymentsJournal's, Ryan Mac, for a discussion on why modernizing debit payments is crucial in both the banking and retail sectors.

Speaker 2:

Welcome to the PaymentsJournal Podcast. In here is your host, Ryan Mac

Ryan:

Welcome to the PaymentsJournal Podcast, I'm your host Ryan Mac. Now, debit is the most popular form of payment in the US and globally and it is influenced by the growing popularity of digital payments and preferences of millennials. Now, it is projected that debit transactions will continue to grow and remain the highest transaction type of consumer payment. Now, modernizing these payment systems will become table stakes. And solutions that have reusable technology that can support multiple channels are key when implemented in phases, especially when starting with one that has the high rewards and low risks, AKA debit. To unpack this further, I'm joined by Steve Creamer, who is the Director of Sales for the Payments Division at Diebold Nixdorf and Sarah Grotta who is the Director of the Debit and Alternative Products Advisory Service at Mercator Advisor Group. So, there's certainly a lot of information to unpack on today's episode.

Ryan:

So, without any further delays, let's start the show. So, Steve and Sarah, it's an absolute pleasure to have you on today's episode. And I'm really excited to talk about our subject to hear today that's really focusing around debit because of all of the interesting news and statistics that we've started to see come out of just the debit side of the paintings' ecosystem here. Now, to get our conversation started here today, we've got this fantastic chart provided to us by Mercator Advisor Group that's taking a look at MasterCard and Visa Debit and prepaid volumes versus credit and charge card volumes in the United States. So, Steven, if you could, maybe you could kind of unpack this chart for our audience here today and maybe pull out some of the kind of the key highlights or what you find interesting of what this data is representing.

Steve:

Thanks, Ryan. In seeing this data, I really had to pause for a moment and let this information sink in. It certainly is very interesting that in United States, the dollar amount spent with debit cards increased by 14% in 2020, and also that debit card transactions continued to outpace credit cards two to one, the terms of number of transactions. We may all have our own personal bias on preference between debit and credit and some of us may have a preference for using credit over debit for certain types of transactions, but we need to be careful not to our own views, to administer relevance of the data on the continued strong debit usage.

Steve:

Did the impact of the pandemic and stimulus money have some impact on increase of debit usage in 2020? I think it did, but I also think that the pandemic also accelerated the consumer migration to digital payment channels and debit is still the most popular form of retail payment, and it's not going away at any time soon. Once you really look at the information that Sarah summarized so well, it really makes a lot of sense, especially when including the influence of younger generations that are growing in importance and how debit is leveraged on a global basis. Close to 83% of younger consumers use a debit card and not credit and that's understandable at their age. Many may have not had the ability to obtain credit, and they also seen or heard so many negative stories about how credit card debt that they formulate a consumer behavior outside of credit usage.

Steve:

Given the high percentage use of debit now, and with the ever-growing payment e-commerce options, we can really see why debit usage continues to grow. An important note is that the continued popular debit is by no means unique to United States. For instance, in India, I think there are 900 million debit cards versus only 55 million credit cards. And in Europe it varies by country, but debit continues to make a very, very strong showing. From a consumer convenience standpoint, we can see the advantages of using debit over other payment rails. And then finally for the retailer, there are real economic advantages of debit based processing solutions as debit interchange fees are typically much lower than for credit cards. I think at this point, it probably be good to turn over to Sarah and allow her to provide some additional insights into her report.

Sarah:

Yeah. Thanks so much for that. And really, I liked your overview, particularly the comparison with other countries. Certainly, I think the US is somewhat unique in its history, its legacy of being very credit card-focused that isn't necessarily the case around the world. And certainly, things like the economics play into that. The fact that particularly in the US, we really, really love those credit card rewards. So, it was kind of interesting, I agree, I think this was really pushed by the pandemic when we saw the debit card volumes for the first time tip over in above the credit card numbers. And let me clarify, looking at this chart, that we are looking at debit card purchases. We did make some calculations to extract some of the debit push payments, right? So, that would be MasterCard send or Visa Direct.

Sarah:

So, we're really looking at something closer to an apples-apples comparison of just debit card purchases from MasterCard and Visa in comparison to what's happening on the credit card side. So, I think as we look forward and as we start to see purchasing habits maybe coming back to something that looked a little bit more like pre-pandemic patterns, so more things like purchases for eating out purchases, for travel in particular, I think that we'll start to see the credit card numbers start to come back up again. But I do think for many of the reasons that you pointed out Steve, I think that we will still continue to see very, very strong debit card growth for the foreseeable future.

Ryan:

Steven and Sarah, thank you so much for that. Now, to kind of just recap a lot of what was said there, obviously historically, in the US we have seen debit cards outpace credit in terms of transaction volumes. But also, then as we were kind of pointing out, in 2020, we did see that percentage gap changed dramatically with debit card volume seeing that 14% growth over 2019 numbers. Now, Steven, as you pointed out, I think that there's a fair amount of that double digit growth was related and due to the pandemic. And as Sarah kind of stated there at the end that she foresees this growth in debit being a continuing trend. But beyond the pandemic, are there other reasons that you could kind of sight or maybe glean to, of why it is that debit may remain a preferred payment method of choice for consumers?

Steve:

Yeah. Ryan, I think that's a great question. And in that, I think it's always important to keep the customer experience in the forefront. And the thing about debit is that it's a 24/7 always-on experience. Consumers expect to seamlessly get cash out of, if they're using an ATM or if they're making a purchase, they expect it to be approved right away. And that's true if it's in-person or if it's a debit being used online. As noted in Sarah's report, 40% of debit transactions, I think in US were made in a card-not-present mode. So, consumers want to make sure their cards and data are safe and that they can quickly pay for what they want. But what we're hearing from our customers, both banks and retailers, but primarily the banks, are that the debit networks are being challenged with new payment types and they're spending a lot of time and money on the overall upkeep and maintenance of their debit networks.

Steve:

As you know, the debit system has been around since the early 1970s and many of the systems that are used to process these cards have really not changed since, or if they have, it's been for band aid updates for their old technology. Legacy debit payment platforms were designed to quickly and securely approve and process of payment or withdrawal, which has always been authenticated with a card. The future payments is not so straightforward. The method of authentication may be different based on the channel, for example, tokens, biometrics, things like that. And the funding could combine payment methods including 'buy now pay later', or other variations. Modernizing this payment infrastructure, and not necessarily just the debit side, is really the key for banks to remain relevant.

Steve:

Diebold Nixdorf has been a global leader in the processing of debit-based solutions for the last 40 years. And now we're leveraging this experience with our Vynamics payment solution. Vynamics payments is a modern system that it's built using cloud-native technology and microservices architecture that allows banks and processors to not only improve their debit channel, but quickly and efficiently handle other newer payment types and innovations like request to pay and buy now pay later. Which is where we see things moving, will help kind of perpetuate the predominance of debit going forward. Just time out. I'll turn it back over to Sarah for her insights on that same question.

Sarah:

Yeah. I think that the whole idea of core and payment modernization is really very interesting. And sort of tying that back to debit, it is kind of interesting even though to your point, debit has been around for a really long time. There are still things that we can do as an industry to improve that user-experience, that kind of dovetails into the ideas and concepts around modernizing the infrastructure. So, I talk to issuers about things like making sure that they can digitally issue debit cards as an example, so that they could really make that seamless transition for immediate account acquisition or provide a really great experience should a debit card ever get lost or stolen, or for whatever reason needs to be replaced. So, I think that's a very interesting part of the payment ecosystem right now, is sort of the intersection of things like debit cards and more modern infrastructure.

Ryan:

Yeah. So, I think that it's really interesting. And one of the keywords that I kind of hear a lot is that the modernization side of things here, and obviously as we continue to look as Sarah pointed out to kind of add enhancements to kind of really improve that consumer experience here. And then Steven, at the end of your commentary, you had broadened up a little bit about your organization, Diebold Nixdorf here, and how it's kind of going through a little bit of modernization here and what it's doing to help their consumers. So, I want to dive into that a little bit more because I think it's certainly fine to talk about it at a high level, but I really kind of want to get into some specifics. And with your insight into the industry, maybe you can give us a few more examples of what you're seeing that your customers are doing to revitalize kind of their debit rails, so to speak.

Steve:

Yeah, that's a great point, Ryan. Thank you for asking. Really when, when Diebold Nixdorf set out to develop our next generation payments platform, we try to approach payments with a fresh perspective. We ask where would it make the biggest impact and provide the greatest opportunities for our clients? And as you ask, as an example, we recently began a multi-year, multi-phase implementation with a top 10 US bank. This bank is using Vynamic payments to deliver substantial TCO benefits to their organization. They are currently using our terminal software as well as our device handling in the Vynamic's platform for approximately 16,000 ATM's. And the bank has also started to deliver on their roadmap to provide switching and cloud processing as the next phase in their migration to Vynamic payments.

Steve:

And by doing this, they're taking a modular multi-phase approach and we have successfully maximized their greatest opportunity, which in their case started with the debit rails. And now, we have laid a foundation to scale for the future. In the age of technology, limitations on handling the current demand of transactions and the expense for trying to keep it up-to-date has oftentimes made the debit network the best place to start. And at Diebold Nixdorf, our cloud-native microservices architecture has enabled new functionality, such as handling the card-not-present transactions and digital wallet-based transactions.

Steve:

We also add the ability to reuse certain components or services such as authorization, routing, and authentication, that provides a single platform that can easily transition to credit or real-time payments or other payment rails. It's truly a build once but use often design that will reduce over-operational costs and pre-speeder market for alternative payment methods. And I'll turn over to Sarah for her perspective on that.

Sarah:

Yeah, actually, I think I've got another question for you given those comments, if you don't mind. I hear a lot of financial institutions in particular, talking about the need to modernize their technology infrastructure so that they can be more responsive, particularly at the user-experience layer, thinking about things like breaking down silos to better manage data and better manage data for fraud. But when financial institutions are thinking about modernizing their infrastructure, do you see that payments is often an instigator for a lot of these modernization demands or the idea that financial institution wants to move forward with a modernization project?

Steve:

Sarah, I think it does. And I know I threw on this term 'build once, use often' is kind of a code word for modernization, and it does sound simple enough to build once and use often. However, really the benefits are very, very powerful and widespread. As we talked about with mobile and contact-less payments, continuing to grow and support for QR codes, digital currencies, request to pay and peer to peer payment applications are added, many larger banks are opting to build separate in-house silos to process these new payment types. And given the large number of dedicated channels that are required to process this vast array of payments, it quickly becomes a very complex undertaking that generates significant cost to support.

Steve:

Meanwhile, smaller banks are tackling the same challenge by outsourcing services to vendors. While this may work in a short term, it too, can become very expensive and really stifles differentiation and creates barriers to innovation with this 'build once, use often' as the goal to consolidate these single use channels by deploying a payments platform, it is built with the microservice architecture and API connectivity. These platforms really do enable banks to realize the desired end state of building once, but using across multiple payment rails. And to be a bit more specific, if a bank's priority is to start with the modernization of their debit platform, which is part of our topic today, and by the way, often is a logical place to start given that 1st Generation debit payment platforms are quite cumbersome and channel specific.

Steve:

And really these older debit platforms are edging closer to critical [Inaudible], and effectively the end of life. There are many ways that 'build once, use often' methodology yields significant benefits to the deploying institution. And some examples of that is to add credit to the same system that's used for debit, the settlement and clearing services can really be reused. Another example is in the fraud area where fraud mitigation and some of the limiting safeguards can be implemented once and then used often across multiple channels.

Steve:

So, with Vynamic payments, we're able to later on the promise of 'build once, use often'. And Diebold Nixdorf is really kind of moving digital payments processing to a new era, introducing an open APIs integrating with best of breed FinTech solutions across banking and retail, and really delivering seamless customer-centric journeys on a state of the art platform. So, quite simply, it is a great time to speak with Diebold Nixdorf about the future of retail payments.

Ryan:

Excellent Steven, I think that was absolutely fantastic. And I think we'll end it there on that note. Oh, so, Steven, Sarah, thank you so much for taking the time today for speaking to us about the debit rail here and also the very interesting consumer changes that we've seen in the industry of the debit versus credit. And I hope to have you both back on the podcast real soon.

Steve:

Pleasure.

Sarah:

Thanks Ryan.

Summary

On this episode of COMMERCE NOW Jens Audenaert, SVP/GM of Payments at Diebold Nixdorf, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group sat down with PaymentsJournal to discuss the current trends in the banking industry and how traditional banks can use these trends to remain relevant in an industry full of new technology.

Related Content: 

https://www.dieboldnixdorf.com/en-us/banking/insights/blog/blurring-the-line-between-transaction-and-payment 

https://www.dieboldnixdorf.com/-/media/diebold/files/banking/insights/qa-faq/mindshare_cryptocurrency.pdf

Related Links:

https://www.paymentsjournal.com/traditional-banks-are-getting-a-digital-makeover/

LinkedIn Profiles -

Jens Audenaert

Tim Sloane

Transcription: 

Speaker 1:                        On this special episode of Commerce Now, DN's Jens Audenaert, SVP and GM of payments, joins Payment Journal's Ryan Mack to discuss how traditional banks are being forced to adapt in order to remain relevant in an industry full of new technology.

Speaker 2:                        [00:00:30] Welcome to the Payments Journal podcast. And here is your host, Ryan Mack.

Ryan Mack:                      Welcome to the Payments Journal podcast. I'm your host, Ryan Mack.

                                           Increasingly we're seeing the payment become implicit in the transactions of all kinds of services. To be explicit, the payment is being made invisible. You can get a ride, a coffee, and a lot more, without pulling out your cash or a credit card.

                                           As more and more services start to offer their [00:01:00] own payment schemes to ease friction for consumers, introduce loyalty, lower costs, and generate additional revenue streams, traditional banks, processors, and card issuers are being reduced or even eliminated. This trend heralds the tipping point in the ongoing struggle for banks and issuers to remain relevant. The new business model being forced upon the traditional banking stalwarts is making them rethink everything from time to market, to which emerging payment methods to accept.

                                           As payments become more frictionless, the banking industry struggles [00:01:30] with how to cultivate and maintain customer loyalty. Consumers can choose from multiple payment alternatives, even when their bank doesn't offer it as a service. So to unpack this topic in further detail, I have Jens Audenaert, who is the SVP and GM of payments at Diebold Nixdorf, and Tim Sloane, the VP of payments innovation at Mercator Advisor Group.

                                           There's certainly a lot to unpack on today's episode, so without any further delays, let's start the show.

                                           So Jens and Tim, it's an absolute pleasure to have you on today's episode, where [00:02:00] we're taking a deep dive into an important question that's going on in the industry, and one that I don't think I would've ever thought that I would have had to ask here, and it's banks maintaining relevancy in this new payments landscape.

                                           So Jens, I want to start with you for the first question. So taking a look at the payments industry, what are some of the key trends that you're seeing in banking and payments today?

Jens Audenaert:              Sure. And first of all, thanks Ryan for having me on the podcast, Tim, it's great to be here with you.

                                           I think when we think [00:02:30] about trends in the payment space, there's obviously a lot of them, but one of the key trends that we've been seeing for a number of years now is really the dramatic rise of digital payment vehicles and the associated transaction volumes. And like many things digital, that's been accelerated in the last 18 months because of the COVID pandemic. We've seen contactless transaction volumes go through the roof. But again, it's been an underlying foundational trend that we've seen for a number of years.

                                           And a lot of it has to with [00:03:00] consumer expectations, really. If you think about how people buy goods and services these days in many instances, you don't even think about the payment anymore. You can buy a coffee through an app, you can get a car service through an app. And so consumers have really started to expect these very seamless, integrated payment experiences.

                                           And I think that's very relevant for retail banks, because a lot of those experiences are being delivered by fintech, by neo-banks. And [00:03:30] so for retail banks, they really have to think through, how do we remain relevant when a consumer doesn't really necessarily associate their card or their primary bank with that payment transaction? That's obviously a threat to retail banks, but it's also an enormous opportunity for them to think through, how do we adapt in a way that we can actually offer these additional services to our consumers?

Tim Sloane:                      I totally agree with that. As payments become invisible and merchants want to make [00:04:00] payments invisible, you see the card on file volume starting to move to an environment where automatic acceptance is done. You also have voice payments taking place in an increasingly large environment, where they talk to their Amazon Alexa or their Google speaker, and they're asking for something to be delivered, it's delivered automatically, and the payment becomes invisible. So [00:04:30] how a financial institution can drive itself to be top of wallet in those environments is critical. And that's what's happening now. Further off, we see things shifting to IOT type payments where it's entirely automated and decisions are being made by the machine.

Ryan Mack:                      Yeah. And one thing to kind of point to there. I mean, Tim, you brought up in terms of invisible payments, and I certainly think that that is a very interesting component of this as well too. But every time I hear the term invisible [00:05:00] payments, I also think invisible brands as well too. Which, to Jens, you were talking about there as well too, kind of from a financial institution perspective. And it is okay, well, how do we ensure that our brand still remains relevant to our audience and our clients and our members today? So the next question then that I've got for you, Jens, if I could start with you, is how do you think banks will really maintain their stickiness with the consumers when the trend is really kind of moving away from, as we were talking about there, even being associated with the payment [00:05:30] part of it?

Jens Audenaert:              Yeah, it's a great question. And Tim, I loved how you phrased that as well.

                                           I think for a bank it's really around, when you think about remaining relevant, it's making sure that you're actually funding and processing those transactions for your consumers. And so it's really staying abreast and keeping up with the innovation that's expected of the banks.

                                           And sadly, if you think about the ever increasing rate of change in the space, if banks look internally, many banks are actually realizing that they have a decades old infrastructure, [00:06:00] old code, very monolithic, millions of lines of code, and it's really, really hard to adapt to the trends in the market. And so I think this is where banks really have to think around what's the infrastructure that I need so that I can very easily adapt to the changes that we see in the market and that I can actually meet consumer expectations. And that's really hard with the old technology.

                                           So this is where having technology that can be deployed in the cloud, if it's microservices, [00:06:30] architecture enabled and API first, things that are really easy to adapt, that's really what's going to be important here. At the end of the day, it's about being able to test and design and deploy new services for your consumers in a matter of weeks or months. And many retail banks today, that could be a process that takes over a year. And so it's really that agility that banks have to work on and have to look at when they think about modernizing their technology infrastructure.

Tim Sloane:                      I totally agree with you. If you take [00:07:00] a look at what it costs, when Uber was on the rise, you saw Capital One, Discover, Amex, offering $20 or more if a consumer would put their card into that mobile app. And that's a significant amount of money that they're trying to use marketing dollars to become top of wallet. But that's not sustainable. Those cards are going to churn, not just at the end of the card life, but when [00:07:30] lost, stolen, or something else happens and the card has to be replaced. And so if they haven't moved to a tokenized infrastructure that enables that card on file to remain active, despite the physical card having been broached, you're in trouble. If you're not providing services that better guide the consumer as to what cards are on file and how much they're spending, then you're going to be usurped by a financial institution that [00:08:00] has that capability. So there's a lot of ways they've got to sharpen their game.

Ryan Mack:                      Yeah, I certainly have to agree with that there in terms of just the top of wallet conversation that we're having here. And the importance, I really kind of feel within the next year or so, that you're going to see a lot of financial institutions question about, just because of all these new technologies that are coming into play and the new ways that people are able to pay, again, to kind of the point we were putting out there earlier of just, it becomes a little bit more, the payment becomes more [00:08:30] invisible. But having that top of wallet status, obviously, like I said, it's going to be very important. But then Jens, to the point that you were making though, in terms of kind of the millions of lines of code and the infrastructure changes that need to happen here, do you really think then that banks are now ready to make this change to modern technology for their payment solutions?

Jens Audenaert:              I think it's more a question of willingness over readiness. So I think that whether it's CIOs or business operatives at retail banks, they see the trends that we're talking [00:09:00] about. They obviously understand some of the operational benefits of maybe having a cloud native infrastructure over a hardware, on prem infrastructure that's going to be much more costly. They get all of that. But at the end of the day, payments is very core to what a bank does and so switching out your payments platform is a very risky endeavor. And so that's where some banks have been waiting.

                                           Now I do think Ryan, to your point, that that is going to change in the near future. And we've talked about some [00:09:30] of the reasons why. But first of all, I do believe, and we do see, that the change, the pace of change, is increasing. And so it's becoming as a result, harder and harder for banks to stay up with what's expecting, both from market and consumer expectations. Also from regulatory requirements, with that old infrastructure.

                                           But I think the second reason is what Tim was talking about. You really want to be top of wallet, and so the competitive pressure [00:10:00] is also increasing. There are fintechs, there are neo-banks, that are delivering these delightful more seamless payment experiences. And so now is the time for traditional retail banks to really make sure that they don't have their lunch eaten.

                                           And then lastly, I would say because it is a risky endeavor, I think some banks were taking a wait and see approach, and we are seeing large retail banks now really embracing a cloud strategy and really modernizing their technology [00:10:30] infrastructure, and doing it very successfully so with great results to show for it. And so I do believe that there's going to be many banks now following suit.

Tim Sloane:                      So, we see a huge trend in the payment processing space where those payment processors are moving to a payment as a service model, and are using Visa Direct, MasterCard Spend to be able to send funds directly to an account in close to real time, and provisioning wallets [00:11:00] in close to real time as well. And so the bar is being set pretty high and financial institutions have to really start to consider the way they're processing payments now and recognize that consumer expectations for the way money moves is changing as well.

Ryan Mack:                      Yeah. If I could, when we're taking a look at modern payments and payments infrastructure, a few key words come to mind. So we've got obviously [00:11:30] like leveraging cloud, modern technology stacks, microservice architecture, APIs, things like that. But Jens, from your perspective, what does a payment solution need to really be innovative nowadays?

Jens Audenaert:              Yeah, that's a great question because you used all the buzzwords, and you hear them all the time. But it can't be technology for technology's sake. So, I think we talked a little bit about some of the operational benefits, but for me what makes a payment [00:12:00] solution innovative is really that it's future-proof. There is a lot of things that are changing in the world of payments, and so you can pretty much put a solution in place, a payments platform in place that can cater to what we see today, but the world is changing and it's changing fast.

                                           And so if you think about what processing a payment means, it's authenticating the consumer, it's routing a transaction, it's then authorizing it. You have to be able to do all of these things in a number of ways and adapt [00:12:30] to what's expected.

                                           Authenticating used to be a pin code, or maybe just an online ID and a password. But what about biometrics? What about, Tim mentioned tokenization. You really have to be able to allow any kind of authentication, to route any different way. If you think about open banking and the opportunities that that creates for banks to maybe route outside of the traditional international schemes. Accepting new modalities [00:13:00] and new ways of payments. What about crypto? What about peer to peer?

                                           I think that's, for me, what an innovative payment solution is about. It's really allowing banks to adapt quickly to what we're seeing in the market today, but also what's yet to come. And so that's what things like an API first architecture, microservices architecture, will allow banks to do. Tim, would love your thoughts on that too.

Tim Sloane:                      I'm totally with you. I mean, you can't underestimate how much payments are changing [00:13:30] right now. We have PayPal who's enabled crypto. Visa announced a billion dollars crypto spent at the point of sale over their network. We have been consulting with financial institutions that are looking at custodial services to help consumers buy, hold and sell crypto. And you have the US government that is shortly going to be announcing their position on central bank digital [00:14:00] currencies. And that doesn't look like it's off more than a couple of years where that could significantly change what's going on. Facebook is also introducing their new currency DM real soon. So there's so much in play right now. Not to mention, faster payments, pay by bank. There are so many new ways to pay it's kind of mind boggling.

Jens Audenaert:              Yeah. See, you can't really prepare for everything, but what you want in your solution is a solution [00:14:30] that can adapt to what is to come.

Tim Sloane:                      Absolutely.

Ryan Mack:                      Yeah, so speaking of that Jens, if we can, from your perspective, what does a roadmap really look like? Because we covered a lot of ground here and we're kind of like, look, there is a lot of change that's coming and that's already started to begin here. So then, where does an individual really start as they look at all of this change? Where would you say, okay, here's kind of the beginning part and then you can slowly kind of ramp up from there? I'd love to get your thoughts.

Jens Audenaert:              Yeah. I mean, that is what we're doing at [00:15:00] Diebold Nixdorf with some of the banks that are on our payments platform, is really making that a seamless transition for them. And that really starts with having the right technology infrastructure in place that allows you, piece by piece, to really move pieces of your overall payment infrastructure onto a new platform that is much more flexible, that is much more adaptable.

                                           So that's the beauty of a modern architecture that is microservices based. You can really think of [00:15:30] functionality piece by functionality piece and slowly but surely migrate over to a new system. And very quickly as you test, move back and forth between your existing infrastructure and what you are moving towards. So, part of the appeal of new technology is also that there is a very attractive migration path for banks that really decreases the risk to move over.

Tim Sloane:                      Our research indicates that while there's been a significant increase in trust in the cloud and that more financial [00:16:00] institutions are considering it, I'll admit that not enough have gotten there. That they really have to investigate and understand how far the cloud has gone, and how many configurations there are that let them control it and manage it effectively and secure it. That if they actually did that they would start to realize, now's the time. They can't be holding onto that infrastructure with all of the changes [00:16:30] that are ahead, unless they're ready to make a huge investment into that payments processing platform. And most financial institutions can't afford it.

Ryan Mack:                      Yeah. For a final question before we wrap up, and I think you kind of alluded to this in your last response, but I really want to make sure that the point is driven across for our audience here. So why then is Diebold Nixdorf venturing into the payment space? And what makes your approach different?

Jens Audenaert:              Yeah. We're obviously new to this space, but Diebold Nixdorf has been around [00:17:00] for a long time and really understands the banking and the retail world, both through our hardware and our software businesses. I think based on our relationship with banks, based on our existing businesses, we really understood the pain point that banks are facing. And honestly, part of what's the issue here is that you have a mature industry that's not moving forward, it's almost kind of reinventing and disrupting itself. So we saw the pain point [00:17:30] and we're looking to address it in how banks really replace some of their old infrastructure with a very modern technology solution that very few letters in the market are really pursuing today or offering to their retail bank customers. So that's what we're trying to do here at Diebold Nixdorf. it's an exciting new growth opportunity for us. And we are live with a number of banks that are seeing great results so far.

Tim Sloane:                      It's great to have such a trusted name helping to move payments along at this very exciting time. [00:18:00] Welcome to the party.

Jens Audenaert:              Well, thank you, Tim.

Ryan Mack:                      Excellent. Well, I think we'll end it there. So again, Tim, thank you so much for taking the time today for speaking about banks maintaining the relevancy in this new payments landscape, and I hope to have you both back on the podcast real soon.

Jens Audenaert:              It was a pleasure. Thank you.

Tim Sloane:                      Thanks, Ryan. Thanks, Jens.

Summary:
In this episode of COMMERCE NOW, Anja Popp and Bill Inzeo help you get to know your shopper types and offer the right customer journey.

Related Content: 

https://www.dieboldnixdorf.com/-/media/diebold/files/retail/insights/mindshare-shopper-journey.pdf

Related Links:

https://retailexperience.store/

LinkedIn Profiles -

Anja Popp

Bill Inzeo

Transcription: 

Jerry:                     Hello everyone and thanks for listening in. I would like to welcome today's guest Bill Inzeo Product and Solutions Global Strategy for Zebra Technologies. Welcome Bill. Thanks for joining me today.

Bill Inzeo:            Thank you for having me.

Jerry:                     And we're also fortunate to [00:00:30] have Anja Popp with us. Anya is our senior analyst in Market Intelligence here at Diebold Nixdorf. Thank you Anya for joining us.

Anja Popp:          Thank you, Jerry. It's my pleasure to be here.

Jerry:                     So let's get started. Retail in the shopping experience has changed tremendously during today's challenging environments. Some changes were brought on by technological advances with the now common mobile devices. Other changes were forced by a global pandemic as consumers rethink their own shopping needs. Regardless of the reason we've experienced accelerated changes to [00:01:00] the consumer and staff journeys that retailers need to contend with. Let's start with the technology portion. Are shoppers drawn to certain technologies that a retailer provides? Bill, what's your take?

Bill Inzeo:            Yeah, I think that's absolutely the case. Technologies that can provide really any level of convenience to the customers can be a draw and look no further than the checkout experience in retail in particular. There's customers that are going to select a retailer or certain retailers, not only for the types of products that they sell, but also for the [00:01:30] way in which they can actually conduct their shopping trip, especially in a post-pandemic environment where options like self-checkout are going to appeal to a subset of customers in a way that looks different today than it did in 2019, because there's a whole personal safety aspect and element to that decision-making.

Jerry:                     Interesting. Anja, what are your thoughts on it?

Anja Popp:          Yeah, that's a great question, Jerry. And thanks for the insight from Bill as well. I would say yes, shoppers are drawn to certain technologies. At least if retailers manage to build an experience [00:02:00] that corresponds with each shopper's core motivation behind adopting a solution. So maybe if I may add a little color to my response, so we were specifically digging into technology adoption in the grocery segment. We had 15,000 grocery shopper voices from 15 countries in there. And based on all these data points, we were working with Nielson as our research partner to conduct a segmentation analysis. And that analysis actually returned five core motivations that influence [00:02:30] shopper interest in retail technology. And that would be ease. So really ease of use, simplicity.

                                The self-sufficiency part. So some shoppers really have a core motivation to be very self-determined in their shopper journey. It's the information part or the information motivation, and both self-sufficiency and information are actually also have a strong correlation to efficiency by the way. There's trust, as the fourth motivator. And then there's new and exciting experiences. [00:03:00] There's also one strong obstacle that I see that retailers need to overcome for technology adoption. And that is simply long-standing habits. That always has to be put into the equation as well.

Jerry:                     Those are great insights. It's always interesting to see the march of technological advances and how it affects consumers and retailers alike. What about force changes now? COVID forced all consumers to rethink their needs, journeys, and what their expectations are. What's been impacted the most from this? Anja, what interesting findings [00:03:30] did we find with the Diebold Nixdorf/Nielsen survey learned from consumers? Did we see a change when we surveyed before COVID versus a year later?

Anja Popp:          I would say yes, absolutely. First of all, it seems that many retailers saw the sign of the times and they leveraged technology to provide a response to the challenges that were raised by the pandemic and consumers noticed that. So when we asked grocery shoppers about their experiences during the pandemic, the perception that retailers have promoted new technology based ways [00:04:00] to shop that protect people, like for example, self-checkout concepts, those usually ranked within the top three responses about these experiences that shoppers were making during the pandemic. Self-checkout, by the way, that was definitely a winning solution across the pandemic.

                                So we saw double digit shares of respondents that have turned to self-checkout for the first time during the COVID pandemic, even in countries where the technology is already established for quite a while. So maybe I can [00:04:30] use the US as an example here. So we saw well over 20% of our respondents stating that they started using self-checkouts since the pandemic, and that's bringing total adoption in the US up to over 80% actually. The core reason for that remaining small group of non-users was actually that they are simply used to the staff checkout. So you remember, I stated in my first response to you that longstanding habits are a motivation that retailers always have to put into the equation for designing successful [00:05:00] roll-outs.

Jerry:                     I really love this data and I get to see it happen all the time. My wife can't stand self-checkout, but during the pandemic I think she followed your data. She went to it because of those concerns and she changed her behavior based on that. It was something she didn't do before and afterwards she tends to do more often. We learn more and more every time we ask the consumer direct questions. I love it. Bill, what are you seeing today?

Bill Inzeo:            What Anja and I have been seeing [00:05:30] is very similar. When we're talking to our customers at Zebra and hearing from them, the challenges that they're helping their customers with, we continue to confirm, I think what everybody's keenly aware of, which is that the pandemic has been an accelerator of nearly all aspects of our lives generally. And that includes the tech savviness of the customers and the shift in how they are interacting with the retailers and how they're shopping. And that shifts in business to online shopping. And then beyond just the shift [00:06:00] to online shopping to the in-store or curbside pickup modalities, really out of necessity for our personal safety was the equivalent of a once in a lifetime accelerant. Well, we hope once in a lifetime.

                                And I think the motivation behind ensuring our own personal safety and the pathway to that being technology has changed not just how the customers think about how to leverage technology, but it's also putting the retailers in a position where they're starting to reconsider how they're going to leverage technology in the new normal, [00:06:30] and then help their customers along the way. And that additional layer of options for those customers, both to shop online and then pick up in the store in several different ways has created a new complexity for the retailers at their operation that they're still really wrestling with right now. And technology is going to be one of the many and probably the leading solution to that new complexity.

Jerry:                     Yeah, totally agree. There's no doubt the benefit technology brings to the shopping experience and store operations. However, and this is personal to me, [00:07:00] I'm a big believer in focusing on adoption rather than just implementation. You want consumers to prefer this new method. And that means taking it beyond just installation and technically working. How should retailers adjust their thinking to achieve success? Bill, as one of the leading technology providers what insights can you share from your experiences?

Bill Inzeo:            Well, I can tell you that at the end of the day, it's all about value. It always is, and it'll always be about the value of the technology to the customer. [00:07:30] As we've been discussing, we've seen a level of technology adoption sooner than we would have had we not had this global pandemic occur. And that adoption level that we've seen in the shift that we're monitoring, and we're starting to see continue to show up in our customers, is likely to maintain and if not continue to expand. So from there, it's really just a matter of building on that new adoption. So the building blocks will be comprised of value components. And Anja talked to some of these, convenience, [00:08:00] personal safety, which has a completely new definition to customers. The financial value, so how can the technology bring savings to the customers? And the ease of use. If it feels like unnecessary bells and whistles, it may feel too incremental to ensure adoption. So they need to make sure that it's purpose-built and very intentful in what the technology is there to help with.

Jerry:                     Very true. That's a better way to take it. And the retailers really need to pay attention to those kinds [00:08:30] of tasks and insights. Anja, a question for you. Should a retailer focus on a particular type of consumer and their preferences? If so, who could that be?

Anja Popp:          Yeah, thanks for the great question, Jerry, but actually to be very honest, I mean, the who is certainly a question for each retailer's marketing or strategy department. And we see so many retailers doing a great job here, for example, with stronger diversification of store format and such things like really responding to the target [00:09:00] groups that are most important to them. But based on our findings, I will definitely recommend to retailers to consider the motivation before they design a shopper journey. And Bill mentioned that just in the answer that he provided. So ease of use, let me pick up on that because it's been one of the motivations, or one of the values as Bill calls it, that Bill mentioned. And I think it's a great example. Ease was actually the one motivator that I'd recommend as the starting point of any journey design. So it's important to understand that shoppers whose [00:09:30] primary trigger is ease, are not interested in innovation or technology per se.

                                And this is one of the largest segments we found based on our survey. So what they want is actually a solution in a specific moment of need. They are turning to self-checkout specifically when they are facing a long queue at the staff checkout. And when we asked those of them who had already turned to mobile journeys, for example, about the device preference, whether they prefer smartphones or retailer [00:10:00] owned devices, for example, it's really the feeling of comfort that influences that choice. So one half of them actually prefer the smartphone because they felt familiar with the technology, and the other half stated that they did not want to be bothered with downloading and installing another app. So you see, in that case, it's really highly important to think about ease in the sense of simplicity, comfort, and problem resolution. So retailers should also factor in store associates as evangelists to such journey designs [00:10:30] because they can create tremendous value in creating that required level of comfort.

Jerry:                     That is really important. Staff needs to be involved and they need to be a proponent of these new journeys, so consumers feel comfortable to try them and that they will be supported. It's critical. Too many times, I feel self-service in air quotes is the total lack of staff. And that's not necessarily the case until the consumers are trained properly and are comfortable with [00:11:00] your technology and your journey that you're providing.

                                We've had a super computer in our pocket for over 15 years. It's changed a lot of our behaviors and expectations. How is it altering the retail shopping journeys? Anja, you mentioned some of the mobile journeys. Does the data show a mad dash to mobile usage or a mixed bag of who wants what and when?

Anja Popp:          That's an interesting one, Jerry. So when we just look at the big picture, I think it is really fair to say that [00:11:30] mobile has become something like a core expectation to consumers. And I hope, I guess that Bill would agree to that. But when we asked independently for the connection to a retailer's mobile solution, it's not uncommon that 50% or 60% of shoppers tell us they are using a mobile device in store, at least from time to time. But quite often, I mean, that's about when they're checking a price point or when they have made some notes on their smartphone actually for their shopping list or topics like [00:12:00] this. It's really getting more nuanced when we look deeper into the data, like which device is preferred? What is the adoption level of specific solutions that retailers could provide? And I felt there was one very interesting aspect.

                                And you might remember that I mentioned information as a motivation to adopt technology for a specific segment. And we found that this motivator very often goes hand in hand with a high savviness for mobile technology. So things like checking product availability ahead of a store visit. [00:12:30] Checking on product information, like the source of origin. All these topics resonated very strongly with that information driven segment. So when you consider such preferences and maybe you add in that context that mega-trend of sustainability to the equation, that more and more retailers actually have to react to, I feel that inflammation can become one really interesting playground in retail.

Jerry:                     Oh, most definitely. Bill, you are deeply into mobility for retailers, staff, and consumers. [00:13:00] What's your take?

Bill Inzeo:            Jerry. If we reflect, mobile has I think it's not even arguably it's confirmed, it's already changed retail fundamentally. It used to be that a mobile first approach, if I do mobile first in air quotes, that was an aspirational strategy that retailers were driving toward on their innovation technology roadmaps. The reality is mobile is foundational now. As Anja mentioned, it's core. And so the retailers are using mobile devices to conduct almost all components [00:13:30] of their daily operation, inventory management, pricing and promotions, customer interactions, checkout. Mobile is definitely here and here to stay in my view. And I think we're going to see increased focus and adoption around customer mobility and how that can be leveraged to deliver to the customers those value-add experiences that encourage the adoption that we've been discussing earlier. Inclusive of convenience, inclusive of personal savings, and a personalized interaction with the retailer that they're shopping, whether they're [00:14:00] shopping virtually, or if they're shopping in real life.

Jerry:                     Let's follow that up and go a little further. This is what's happening today, and even in our accelerated pandemic world. What do you think it will do to disrupt the future of the retail industry? Anja?

Anja Popp:          Actually, I think the good news, at least for brick and mortar retail, is that to consumers mobile seems to be more of an enhancement to the in-store experience. So at least in grocery, the majority of consumers tells us that the physical [00:14:30] store remains their primary channel, but yet we see retailers becoming more data-driven. We see shoppers demanding support in their individual moments of need. So I see mobile as really the glue in between to that. So it's really providing shoppers the specific information that they're looking for in the moment that they need it. Now, whether it may be a price information, whether it might be a product information, whether it's the loyalty coupon that they want to collect, that is so much more convenient [00:15:00] than actually carrying these paper-based topics with them and so on and so forth. So this is really where I see the role of mobile in a more and more data-driven world.

Jerry:                     Bill, your thoughts on both consumer and staff using them?

Bill Inzeo:            I'll say that, I think as we mentioned earlier, mobile has already had one round of disruption in retail and certainly more to come. And I think what comes next is likely to be rooted in two things. So for the customers, how can the retailers remove as much friction as possible [00:15:30] from the shopping experience, leveraging mobile technology, but still maintaining a core shopping experience that has become the expectation of those customers, both in store and online? So how do you augment without taking something from them that is valuable to them? And then for the retailers, how can they build on the mobile foundation that they now have in place?

                                As we mentioned, mobile is now a core fundamental components of retail. So how do we build on that mobile foundation that they have in place to drive more efficiencies into [00:16:00] their operations so they can unlock that labor that they're currently spending on what you can argue are low value tasks and reallocate that labor and time to higher value tasks like customer interactions? And really that's I think that the two prongs that are going to really drive the next level of disruption and adoption with mobile.

Jerry:                     All great insights, thanks to you Anja and Bill. I think that's a great place to close. Really appreciate you sharing your thoughts on the ramifications technology has [00:16:30] on consumers and the retailers that we serve. To say the least it will be interesting to watch expectations change in the coming years. And thanks to you, our listeners, for tuning in to this episode of Commerce Now. Download a free copy of the white paper we have done with Diebold Nixdorf and Zebra on mobility. You'll find the link in the show notes.

Summary:
In this special episode of COMMERCE NOW, Elliot Maras, editor from Kiosk Marketplace and Matt Redwood, Director of Advanced Self-Service Solutions at Diebold Nixdorf discuss the continuation of innovation in retail self-service and how self-service can offer a better customer experience.

Related Content: 

https://www.dieboldnixdorf.com/en-us/retail/solutions/self-service/innovation

Related Links:

Kiosk Marketplace.com - https://www.kioskmarketplace.com/podcasts/expert-offers-insight-on-how-self-service-improves-the-customer-journey/

Retail Customer Experience.com - https://www.kioskmarketplace.com/podcasts/expert-offers-insight-on-how-self-service-improves-the-customer-journey/

LinkedIn Profiles -

Matt Redwood
Elliot Maras

Transcription: 

Speaker 1:                           In this special episode of COMMERCE NOW, our very own Matt Redwood, Director of Advanced Self-Service Solutions, joins Elliott Maras, the Editor of Kiosk Marketplace, where they will discuss self-service innovations, and how [00:00:30] retailers rely on self-service for a better customer experience.

Elliott Maras:                       Welcome to self-serve kiosks. The innovation continues. The consumers have spoken. Not a day goes by that a new self-service solution is not introduced.

                                                In recent years, restaurants have taken a very visible role, introducing self-serve kiosks. In addition, retailers, from high-end department stores to supermarkets [00:01:00] to convenience stores, are relying on kiosks to serve customers faster and offer a better customer experience.

                                                This past year, COVID-19 avoidance of human to human interaction has pushed retailers to offer more self-serve kiosks. I'm Elliott Maris, the Editor of Kiosk Marketplace. Joining me today is Matt Redwood, Director of Advanced [00:01:30] Self-Service Solutions at Diebold Nixdorf.

                                                Matt, how did we get here? What did retailers see, that made self-service journeys so necessary?

Matt Redwood:                I think one word really kind of encapsulates the journey that retailers have been on with self-service, and that's flexibility. When you look at the journey that we've been on as an industry with self-service, in the very early days, it was very much about [00:02:00] removing cost, removing labor, from the front end.

                                                If you look at why retailers are really deploying self-service now, and how they're deploying them, it's really more focused on how they can deliver a much more flexible operating model within their stores. So rather than stripping staff out of the stores as a cost saving, they actually redistribute those staff. Because what they've realized is we've got to a critical mass now, where consumers want, demand, and expect a self-service offering in the [00:02:30] store. They very much see it as a faster, easier way of checking out in a store, that gives them much more control over the interaction with that retailer.

                                                And that's a very, very important point, because if the consumer is demanding that, the retailer no longer has to push that as an offering that that is being driven by their own demands, and what that means is they can then take staff that would ordinarily be serving the customer, and they can put them into other parts of the store, to deliver the best consumer [00:03:00] experience. So if you look, a lot of data, particularly around self-serve kiosks, some of the bugbears of consumers is that they have to queue to check out or interact at the front end, or there isn't staff where they want it, either in the aisles or in the main body of the store, where they expect a good level of service. And self-service really ticks those box, because it allows retailers to put higher density of checkouts or order points [00:03:30] within the store. That in turn will reduce the amount of queues, increase the throughput through the store, so you get a better consumer experience, and it frees up staff to then go and provide a different functionality within the store, or a consumer experience, better consumer experience elsewhere in the store.

                                                So it really delivers against the two big bugbears of the consumer, as well as gives the retailer much greater flexibility, and I think the flexibility piece has really been [00:04:00] key over the last 18 months, in terms of, if you look at the different changes in rules and regulations and shopping habits and consumer trends that retailers have had to contend with, the self-service device has really given them much greater flexibility to be able to deal with those changing trends on a daily basis.

Elliott Maras:                       Are successful retailers done, after they've implemented self-service across their footprint?

Matt Redwood:                Absolutely not. So, the [00:04:30] really interesting thing about self-service, is that it bridges two very fast-moving industries.

                                                One is consumers, consumer expectations, consumer trends, and the second is technology, and if you think about those two entities, they both move at an incredibly fast speed, and what that means is the retailer has to constantly move. They have to constantly change. They have to constantly adapt. They have to constantly upgrade and evolve their experience [00:05:00] within their stores, to keep up with both technology that's moving extremely quickly, but also consumer demands, which evolve extremely quickly. So I don't think there's ever a self-service environment or deployment that sits still for a very, very long period of time. It's a constantly evolving, constantly changing landscape, and retailers have really got to stay on top of that.

                                                If you look at the marketplace today, it's very much about differentiation. So it's [00:05:30] not just about putting self-service devices into a store. It's now about putting the right self-service combination for your store, and actually tailoring that offering to that particular store. But more than that, what other innovation or other technologies can you bolt on to self-service, to enrich that consumer experience even even further? And I think there's a bit of a race at the moment for differentiation and consumer experience, so retailers are constantly looking, constantly evolving, [00:06:00] constantly adding to the self-service experience, to try and differentiate themselves and their brand from their competition.

Elliott Maras:                       If expectations from consumers are to be more in control and achieve greater speed and efficiency, how can a retailer improve an existing self-service journey?

Matt Redwood:                So I think there's a couple of things to look at here. Obviously, a retailer will always want to sweat the asset for as long a period as possible, [00:06:30] but trends change. As I said, consumer trends change, technology trends change, and just expectations in terms of service offering changes within a store. So there's a lot a retailer can do to constantly evolve the self-service devices that they currently have in store.

                                                I always say, which is sometimes an unpopular opinion, that the technology is easy, but getting a self-service device up and running is the easiest bit. Operationalizing that technology is the bit that really delivers the most amount of value. And if you [00:07:00] think about the moving parts associated with operationalizing a device within the store, it may be changes to staff, or efficiency of staff, and maybe different consumers, different proficiency levels, different times of the day, therefore different peak or different stresses on that particular store, and there's a lot that retailers can do operationally to improve the performance of the devices within the store.

                                                The second piece is evolving the actual technology, and if you think about [00:07:30] a common trend that's talked about a lot, cash, the demise of cash, everyone talks about the demise of cash, but if you look at cash utilization from a global perspective, it's disappearing or not disappearing at different rates in different markets, different geographies, even regionally within certain countries. So retailers have really got to think about how they evolve the technology over a period of time, to react to some of those changing trends.

                                                [00:08:00] The third piece, I think probably the most important, is really a shift that we've seen in the last 18 months, which is a diversification of what we would consider self-service, and if you think five or 10 years ago, retailers had the choice of a cash card self-service device or kiosk and a card only version.

                                                Now, if you look at the technology landscape, you've got mobility, you've got personal devices that the consumer may want to use and shop within the store. [00:08:30] You've got mobility, you've got kiosks, you've got traditional self-service, and you've got everything in between. So it's extremely difficult now, I think, for a retailer to find the right combination of technology for each one of their stores. So even retailers that may have "a legacy estate" can still do a lot to actually introduce new variants of self-service device, maybe focused on different consumer shopping journeys, or shopping habits, really with the view of driving more [00:09:00] to a hundred percent self-service stores, and driving more self-service utilization.

Elliott Maras:                       All right, Matt, which retail verticals or segments are most proactive in introducing self-serve kiosks?

Matt Redwood:                So from a kiosk perspective, it has to be hospitality, so the fast food environments, where it lends itself to an order and pay kiosk. If you look at some of the big brands that do [00:09:30] either dine in or takeaway fast food, they've really focused in on moving a lot of that on-site order process to kiosks. And what that's enabled them to do is really pivot, and change the focus of their staff in stores, more to the order preparation, the cooking, or serving the drive-through. So it's really enabled them to drive a much, much greater efficiency [00:10:00] within their stores, and how they utilize staff.

                                                The other thing that I think a lot of fast food retailers that have moved to an order and pay kiosk within their stores have managed to benefit from, is an increase in revenue. We see a much larger basket size when consumers are utilizing a kiosk than when they're being served by a member of staff, because you always have the up-sale option. The kiosk will never forget to upsell. It's always there, so it's always going to push the [00:10:30] consumer to spend more.

                                                So from a kiosk perspective, hospitality absolutely. But what's interesting is, a lot of the retailers that have deployed traditional self-checkout devices, so your tier zero, tier two grocers, are now actually looking at more kiosk-based technology for other areas of their store, so either in their ... if you're in a convenience offering, or clothing and home, or technology, or even customer services side, they're looking more towards the [00:11:00] kiosk business which was traditionally in hospitality, and actually using these usually larger form factor, larger screen devices, to deliver a more enriched consumer experience, in other areas where they could deliver a self-service journey.

                                                Of course, a lot of these retailers also have a hospitality offering as well, and we're seeing that overspill of self-service into hospitality in that grocery sector as well.

                                                Outside of hospitality [00:11:30] and grocery, we're starting to see a huge amount of uptake in two other sub-verticals. First is fuel and convenience. So, a big, big push at the moment to get experimental self-service kiosks into stores, not only for the kind of traditional self-checkout offering, but also for upselling purposes, for loyalty, to buy coffees, or to buy a carwash token. [00:12:00] So there's a kind of one-stop shop in one device, and then finally, in fashion retailers. So in retail environments, where it's more about the experience, and you want to deliver the best experience for that consumer, utilizing their kiosk in a large form factor, so that's about the efficiencies, which has really been the driver in a convenience of a grocery store. For fashion retailers, it's really about how do we free up staff, and how do we deliver the best [00:12:30] in-store experience?

                                                So some very strong sub-verticals that are continuing to push more self-service, and we're now seeing some emerging sub-verticals that are starting to adopt the kiosk as well.

Elliott Maras:                       Okay. Well, how important are contactless and touchless options for customers?

Matt Redwood:                I think extremely important. So if I break it down into two areas, if I may, that the contactless piece, [00:13:00] particularly around payments has been absolutely crucial for self-service adoption, particularly over the last 18 months to two years. The number one bugbear for consumers is spending or wasting time when they're trying to check out, or they're trying to use a piece of technology in store, and particularly for the card only transactions, contactless payment as a tap and go method, we've really seen a huge, huge boost in that [00:13:30] utilization, as consumers recognize it as a much faster way of transacting and getting out of that store. Obviously the shift from cash to card has also accelerated that trend even further.

                                                The other side of the coin, what we call at DM a low touch to no touch, so utilizing a self-service kiosk, but actually utilizing it in a way that drives as little contact between the consumer [00:14:00] and the device as possible, has been really important, particularly over the last 18 months in the pandemic, to a, build consumer confidence to actually use the technology in the store, but also to drive more transactions through self-service.

                                                So we've put a lot of effort and time and resource and money into working with our retail customers to actually optimize their self-service process, to reduce the amount of button presses and physical [00:14:30] contact between the end consumer and the device from a cleanliness and a safety perspective, but also, as I said, to build that confidence within that consumer, and we're now actually getting to the point where we're getting to a no touch kind of mentality, where consumers are actually really willing to use their own devices in conjunction with a self-service device in store, to even minimize that connection even further.

Elliott Maras:                       Well, at this [00:15:00] point, I'm sure a lot of our listeners would like to know, how can a retailer prepare to introduce self-service and what are the most important steps?

Matt Redwood:                It's a really good question, and it's the question that we get a lot. The common misconception, or the pitfalls that a lot of retailers fall into when deploying or embarking on deploying self-service into their stores, is they focus on the technology. So they go straight for the technology, [00:15:30] and try and get the technology up and running. But as I said before, that getting the technology integrated and working with the right level of functionality is arguably the easy bit. Actually making sure that you're putting the right technology into the right stores for the consumer journeys that exist in that store, operationalizing it and utilizing your staff in the right ways, is really, really the crucial bit, and the one thing that I would say, or the process that I would urge any retailer that's looking to embark on this process, [00:16:00] is twofold.

                                                Number one, work out what you're trying to achieve. So putting self-service into your store for the sake of technology. It'll work, but you probably won't drive it to a satisfying goal. Work out what you're trying to achieve, and more crucially, what you're trying to fix or solve within your stores. So it may be that you've got a problem with queuing, or your customer experience is not as good as it could be, or you've got a problem [00:16:30] with cost of staff within your store. Once you work out what you're trying to achieve, it gives you a goal to focus on. It also gives your supplier and all of your staff, a goal to work towards, to drive the best from that project. Once you've identified that problem statement, we would always urge to start with the data.

                                                So analyze your store data, and at Diebold Nixdorf, we have a process called Storevolution Advisory Services, where we work with retailers on analyzing their [00:17:00] stores. We understand the trends within the stores, so the throughput, the peaks, the non-peaks, and the basket sizes, the tender type, and you can very, very easily and quickly build up a view of what's happening in that store, how consumers are shopping, and therefore what's going to be important to them.

                                                It's only once you get to that point, I would then say, focus on the technology. So we've really done a lot of work up to this stage to understand what are we trying to solve within the [00:17:30] store, and how is the store currently operating, and how is the consumer shopping? Once we build out that picture, we can then put the right combination, and I say combination, because I think we've gone beyond just putting one type of self-service checkout in a bank of four within the stores, and it's very now about cherry picking the right combination of technology, and building up the right service offering, for each one of your stores. So it's very much about tailoring the technology [00:18:00] to your stores rather than a one size fits all, and you can do that very extensively in a data world, if you're using a data-driven approach.

                                                Once you've chosen and selected the combination of technology you want to deploy, I'd then really focused on operationalizing it, and there's a few points that really get overlooked. Things like staff training, are really, really crucial, particularly when you're trying to change the consumer shopping habits and customer journeys in your store [00:18:30] so dramatically. Getting the staff buy-in, getting the store managers buy-in, is extremely important, and then training those staff to effectively train your end consumer. They're the ones that deliver the good experience when you have that potential, that the experience could be bad. If you get a particular consumer that's not particularly proficient with technology, or they're not particularly confident, having a member of staff that can take them through the process on that first go, deliver that good experience, will often mean that [00:19:00] that consumer feels comfortable to come back and use that device again.

                                                So getting your staff trained, getting their buy-in, getting them focused on the fact that these devices are not there to take their jobs away. It's really in addition to them, so that you can deliver the best consumer experience, is a really, really important message to drive right away across your business.

                                                The other thing I would say is that self-service and deploying self-service successfully, is a real [00:19:30] change to how you run your stores. It's a change in the way your staff operate. It's a change in the way that you interact with your consumers. It's a complete change to the consumer journey, and it's a change in the general operating model for your stores, and you have to have that momentum within the business that this is not a technology project, where I'm going to put a piece of technology into the store, and it will get used. You really need to look at every aspect, every process within your [00:20:00] business, and make sure that self-service is dovetailed into that in the right way.

Elliott Maras:                       Well tell me, Matt, what should a retailer look for in a self-service technology partner?

Matt Redwood:                There's a couple of things to look at, and I'll start with the technology itself. As I've said before, it's a diverse landscape now from a technology perspective, so when you're choosing your vendor, it's very important that they have the flexibility within their portfolio, that you may want [00:20:30] different formats, self-service device, different self-service offerings, in each one of your stores, depending on the store format or size or location, so it's very important that they have the flexibility in their offering, that you can pick different technology offerings for each one of their stores, or different combinations for each one of your stores, without driving huge costs.

                                                So a modular hardware approach, as an example, gives retailers a lot of flexibility, in that they don't have to have the same device in [00:21:00] every single store. They can flex up or flex down the technology, the performance, the cost, depending on the store.

                                                The second aspect of that, is really around the software. So much of the consumer experience, or the good consumer experience, I should say, is delivered by the software. So having rich feature functionality software, backed up with a very, very good innovation roadmap, is extremely important.

                                                As I said before, there is a race to differentiate [00:21:30] the service offering in stores, and therefore having a supplier that has a rich innovation roadmap that you can input to and have a certain control of your own destiny, is also extremely important. But additionally to that, having things like open APIs is fantastic. It means that you can take control of your ecosystem. You can plug different technologies into the self-service platform, and really create your own offering, and that very much fits to the strategy that that Diebold Nixdorf has created.

                                                [00:22:00] The last piece and another one, it's another aspect that is often overlooked when deploying self-service, is the service element. If you're going to transition a large portion of your consumers through self-service devices, self-service devices are generally more complex than, say, a staff device. They're also bashed about a little bit more, because you've sometimes got untrained consumers, they don't necessarily know how to use them, and therefore getting [00:22:30] a service offering that means those lanes are up and running for the maximum time possible is extremely important, and that really goes hand in hand with the technology. You've got to have the right technology, it's got to be deployed in the right way, and then you've got to have the right service wrapper wrapped around it to make sure that that technology is up and running for the maximum time possible.

                                                If you're pushing 70, 80% of your transactions through three or four self-service devices in your store, and one of those lanes goes down, you've lost 25% [00:23:00] of your capacity. The knock-on effect of that is you're going to get queues build up, it's a poor in-store experience, you're going to get disgruntled consumers, they're not going to come back to your store because it was a bad experience. So you've got to really make sure that you've got a very, very solid service wrapper wrapped around the technology, to drive the highest lane availability.

Elliott Maras:                       Well, I think this takes us to the end of our allotted time. Matt, thank you for that excellent input. I thank our listeners for joining us.

                                                [00:23:30] This has been Self-Service Kiosks. The innovation continues.

Speaker 1:                           Thank you to all of our COMMERCE NOW listeners, and if you're looking for more podcasts just like this one, log on to www.commercenowpodcast.com

Summary:
In this special episode of COMMERCE NOW, we dive into the 25 year partnership Diebold Nixdorf has with America First Credit Union. Manish Choudhary the Sr. Vice President, Software for DN talks about how important connected commerce remains for banks and credit Unions.

Related Content: 

https://www.dieboldnixdorf.com/en-us/banking/portfolio/software/payments

Transcription:

Mike:           Welcome to our show and on today's program, we have Manish Choudhary from Diebold Nixdorf, Manish, How are you?

Manish:           Very good. Thanks Mike, for having me here.

Mike:           Oh my gosh. You're very welcome. We're talking today about your partnership with America First Credit Union, and Diebold Nixdorf, and just to kind of get a lay of the land here. Can you tell us about your partnership with America first and what you guys are doing?

Manish:           Absolutely. Mike, so as you know, Diebold Nixdorf, is a global technology company enabling connected commerce for banks and retailers across the globe. Serving top a hundred financial institutions, top retailers. America First is a federal credit union with almost 81 years old institution with 128 location. It has the eighth largest credit assets in the US. It's the sixth largest credit union with almost a million and one members. Diebold Nixdorf and our partnership with America First is a 25 year old partnership where we recently announced our payment software, which will drive the payment transactions and payments switching capabilities with America First. 

Mike:        Wow.  You guys have been with them for 25 years. Oh my gosh. That's quite a relationship. Well, I mean, that's congratulations right there for sure

Mike:           So let's get back to the software part of it. So how does the software, how does this work for America First? How does it benefit them?

Manish:            Yeah, so think about, I think if I were to double click on the payment conversation, so payment industry, as you know, is getting disrupted, it's getting disrupted because of new cloud technologies. It's getting disrupted because there are new real-time payment types, new contemporary payment types, which are evolving. There is innovation in speed of deployment, speed of consumption in the payment platforms and binding payment, which we've been working on is absolutely the right answer. And I'll tell you why it is probably one of the most contemporary payments, software implements payment, new payment types at speed and scale faster than anywhere else. It is a API first pure cloud native architecture. It is one of the most secure enterprise payment software available with scalable microservices. So from the credit union's perspective, it actually future proof, the technology and as the consumer behaviors are changing the credit unions as the, the consumers of the credit unions are looking for more and more new contemporary ways of doing transactions. This actually addresses today's needs, but it also addresses the future needs for America First and how the customers are going to consume some of the new payment technologies. 

Mike:           I mean, as you well know, I mean, it changes by the second. I mean, by the time this interview is done, something major will have happened in the payment space. So it's got tp be  future-proof is such a key, key aspect of technology today.

Manish:           Yeah, you're right. If you think about, you know, by the time we started talking and now there are millions and millions of new digital payments, which got processed and the banks really wanted a scalable infrastructure to actually handle those peaks and loads and balances.

Mike:           So, so how is this going to help America First, obviously, obviously they're planning for the future. They're planning, they're being flexible. How else does it help them, you know, obviously be more attractive to members and, and whatnot.

Manish:           Absolutely. So if you think about, as I mentioned, the, the consumer expectations are changing. We believe credit unions are competing with the large banks, and they're also competing with the tech coming in from mobile wallets and, you know, E transactions and others. So we at Diebold Nixdorf believe we really want to be at the right intersection of how to provide the right experience to our customers, to have them provide that experience to their customers. And in some ways, and I do believe like any other industry, the competition in credit unions that extremely high consumers switch between credit unions or banks and their, their experiences are changing. We believe the, the new payment platform really provides them. So for example, doing cardless transactions or non card based transactions, or enabling instant loans and instant payments in future or access to modern payment types,, you know, and I believe if the credit unions do not provide that somebody else will.

Manish:           So in some ways we believe that this whole payment platform and future proofing, the technology opens up all of those avenues. So while it opens up the avenues for payment, it also seamlessly extends the traditional capabilities on the ATM side. So for example, America First is, is going to use the personalized marketing campaign to serve its customers, the seamless security, which is connected to the platform on the ATM side, also comes along with it. You can walk to a ATM and without the card, you can actually do transactions by using video technology. So there's a lot of enabling technologies and options that you get created with this new platform.

Mike:           I'm liking the, what was the, the video technology with the ATM. And you can actually, how does that work?

Manish:      Yeah, so the, the, the other part of our software is the modernizing the entire ATM stack. And we call them as digital value added services. So I, you know, I usually walk to an ATM and sometimes I have my debit card and sometimes I leave it at home. I can actually walk in, press a button, talk to a teller, verify my identity, do transactions and transactions and not just deposit and withdrawals. I can E-Verify. I can possibly look at opening up an account or doing some mortgage applications, right. With the channel. Then I'm able to talk to somebody or even a better example. I would say, Mike is if you're in New York city and you have you own 10 restaurants at the end of the day, you really want to get all the cash deposited into your ATM account, without giving passwords, pin numbers and account numbers. To those 10 employees, you can actually set it up on your mobile phone, give a QR code. And the 10 people can actually deposit all of the money and they can withdraw next day morning. And they're going back to open up the restaurant. So it's just enabling these small and medium businesses and the new use cases as self-service and digitization is becoming more and more common, especially after the pandemic. 

Mike:           I was just about to ask you, have you, is this all a result? I mean, this was stuff was going to happen anyway, but it really sounds like everything was accelerated because of the pandemic, all these really cool digital offerings out there right now.

Manish:           Absolutely. Absolutely. We are seeing it globally. One of the advantage we have is, you know, the fact that you operate in a hundred countries, we can assemble the use cases and our learnings or what we are seeing. So pandemic definitely shifted. So the recent lockdowns banks migrated close to 70% of their deposits from teller to self service. And out of those 70%, almost 50% of those that actually aggregate get ATM's. Now that's a huge shift. That's a huge shift, which wouldn't have been possible. So this acceleration of digital transformation at credit unions and ATM, and I think we are at the right intersection and the technology is really, really helping in terms of accelerating those things. 

Mike:           And getting back to America First, and this is what America First is taking advantage of right now, right? So this is what they're going to be doing.

Manish:           Absolutely. I think we are really, really excited about the implementation and our teams are jointly working together. As we think about getting the lining payments, modernizing the payment infrastructure, modernizing the ATM and enabling a lot more capabilities for future like cash recycling. You know, we're extremely excited about the opportunities, which a self-serve integrated platform is able to provide you

Mike:           Good stuff, man. Any, any, anything else to wrap up? Because this is a very timely conversation obviously, and a lot of credit lines are going through this right now. Maybe not to the extent of that America First is, but I'm hoping that they will, you know, a lot of them are, a lot of them are on their digital journeys. Let's just put it that way. And, and a lot of them accelerated their digital journeys last year, but it sounds like really America First is really taking advantage of the technology out there to be not only attractive to their members, but to really, you know, compete with the big folks too.

Manish:           Right. Yeah, no, absolutely. I think the only thing I would add to wrap up is I think, you know, we are extremely excited about this partnership. You know, we believe our, our teams, you know, my, my ambition is to really, really creating the most sophisticated payments software stack in the industry and writing payments is absolutely the right product, the right enterprise software, exactly the right time. Cloud-native scalable, faster to deploy faster, to consume back lines, enabling new payment types and security. You put all that power together in the right appropriate time and digital transactions really, really blooming. So excited about the partnership, excited about the dividing payments and what we've we're doing. So thank you for the opportunity. 

Mike:           Oh my gosh, anytime. This is exciting stuff for credit unions out there and you guys are right there at the front of it and helping create things. So we appreciate it, man. Thank you so much. Appreciate the time. 

Summary:
In this Special Podcast Zebra Technologies and Diebold Nixdorf come together to discuss how retail is being disrupted on multiple fronts while trying to meet demanding consumer expectations. Retailers need to simultaneously transform their it landscape ensure high availability, align well-orchestrated staff processes and offer the ultimate consumer experience across all channels all while trying to keep profitable. Retailers are investing in mobility solutions to ensure satisfying and safe consumers and staff journeys.

Related Content: 

https://retailexperience.store/

Related Links:

LinkedIn Profiles -
Jerry Langfitt
Philippe Dauphin
Mark Thomson

DieboldNixdorf.com
Zebra Technologies

Transcription: 

Jerry Langfitt (00:16):

Hello everyone. Thank you for joining us today. I'd like to welcome. Today's guest Philippe Dauphin VP global retail solutions from Diebold Nixdorf.

Philippe Dauphin (00:25):

Thanks Jerry and thanks for the invite I am happy to be here.

Jerry Langfitt (00:29):

And also from Zebra Technologies, Europe, Mark Thomson, director, retail, and hospitality. Thank you for joining us today, Mark

Mark Thomson (00:36):

Jerry. Thanks for the welcome thanks for having me. I am very happy to be here to talk about where retail is right now.

Jerry Langfitt (00:45):

Great. Let's dive right in. Retail is being disrupted on multiple fronts while trying to meet demanding consumer expectations. Retailers need to simultaneously transform their IT landscape ensure high availability, align well-orchestrated staff processes and offer the ultimate consumer experience across all channels all while trying to keep profitable. Retailers are investing in mobility solutions to ensure satisfying and safe consumers and staff journeys. Philippe let's dive in. What are the latest trends you see happening in the retail industry?

Philippe Dauphin (01:20):

Yeah, I see three major trends. I'm not sure that they are new, there were there but, but they are more of use since the COVID. The first trend is really this necessity, you know, to combine the online and the offline. So we just cannot go ahead having silos if they want to be really consumer centric. This is a major, the first trend. The second one, to create some new consumer journeys and adapt. The third trend, there is a huge opportunity to digitalize some staff journey’s to bring more efficiency and in this context mobility will definitely be important.

Jerry Langfitt (02:06):

That's really interesting. Philippe, Mark, what do you think?

Mark Thomson (02:10):

Well, I can't help but agree with Philippe. And I think for me, the main driver of change actually is the consumer retailers need to be very clear about the expectations and the relationship that they have with their target customers and how those are changing. And, and it's the customer very much. Now that is demanding changes in the way that we allow them to shop. I guess technology is also an important factor here because is in a sense enabling that change, that could be anything from mobile technology, changing the way retailers get access to information. So customers, but also the ability for us as shoppers to get online and to have access to online and e-commerce shopping. So technology and customer behavior, both converging to dry some change. And Phillip is right. COVID has certainly accelerated that. But most of this is, is changed. That was already happening prior to COVID; COVID is just shine a spotlight on it.

Jerry Langfitt (03:12):

That's a great perspective Mark. Now, from the retailer's perspective, how do you see them embracing this transformation? What are the steps they're taking? How are they reacting to this?

Mark Thomson (03:22):

It's a good question because they are they're reacting differently. They're not all reacting in the same way. It's a, it's an industry like, like any others as an all industry is that there are pioneers and there are laggards. However, when you get a, a worldwide change or shock to the system, like COVID over the last 12 to 18 months, what happens is some of those laggards, unfortunately fall by the wayside because COVID and the pandemic took no prisoners. But what we're saying for the more pioneering retailers is what they're doing is they're actually accelerating transformation strategies. And some of them the best in my opinion, are the ones where they're involving not just the IT teams, because transformation doesn't start with IT. It actually starts with the whole business. And they're involving people from multiple departments from IT, HR loss prevention, as well as store operations and things like, I guess an example might be project to empower staff in the store with more access to technology or that that involves store operations. It clearly involves IT. There's potential for it to evolve HR in terms of the information that staff might have access to, etc. So what were certainly seeing and the conversations we're having with retailers is increasingly they're involving multiple teams and departments within the retailer. And I think that can only be a positive thing.

Jerry Langfitt (04:52):

It definitely is going to take a village to change that kind of culture. And within the retailer to serve the consumers better. Philippe, What do you see retailers doing?

Philippe Dauphin (05:02):

Yeah, I would agree with what thought wasn't mentioned by Mark, because at the end of the day, all retailers have very good IT departments because they want to evaluate different technologies, implement them. And so on the purchasing department to purchase at the right price. But what is sometimes missing is really to start by focusing again on the journey’s, because technology should not be the goal. It's just a way to which goal and the goal is to improve this consumer journeys. I give you an example recently, for instance, discussing with retailers, whether it be able to the COVID time to give us some technologies around the self-service checkout, you know, the low, for instance, to control the checkout via a mobile device, but the application for these two applications, one is to have a no-touch approach instead of touching the screen, you can control it from your smartphone as an example, or second usage. You can set up for handicap people, but again, technology is the easy part, the most complicated part, and the focus in that you should be on the consumer journeys or on the stature.

Jerry Langfitt (06:20):

That's an interesting perspective, Philippe. Thank you. So let's talk about the mobility technology. How do you think the industry is going to be disrupted by this arc? What do you think?

Mark Thomson (06:31):

I think when it comes to mobility in particular, I think we're reaching a level of maturity that it's going to drive change by itself. Probably getting close to a tipping point for mobile technology and retail from, from two sides. Certainly I guess from a consumer side, mobile technology smart mobile technology has been around for 12 or 13 years already. And it's now in the hands of virtually everyone, all of us carry our mobile phones with us. So we're all used to using mobile technology, not just for one thing, whether it's calling or sending text messages, the mobile device is really our point of access to information or point of access to booking flights as well as shopping online. And that ease of use is now being leveraged by retailers to start to connect staff, to enable them to perform tasks faster, communicate with colleagues and to answer customer questions in real time, so impacting the customer experience as well. And I think that simplicity that way of thinking about mobile technology and apps rather than software programs is really driving a change within a retail store that allows retailers to react to some of these challenges that they're facing in a very different way. But it also at the same time, as well as driving productivity and improving operations, it also everything that you do now is creating a digital audit, increasing the amount of data available from the store and what's happening in the store, which then in turn allows retailers to identify further opportunities to improve their processes within the store and optimize their businesses. So really, I guess all of these things coming together means that mobile technology is beginning to act as a to transformation catalyst by itself.

Jerry Langfitt (08:27):

Hmm. Yeah. Mobility is really coming and making a thing. Go ahead, Philippe. I was going to ask what you think of that.

Philippe Dauphin (08:33):

Yeah. I would complement the answer in the following way... You know, mobility's already there for years for the consumer and if you're taking the online business of the retailers, I think that fully understood this is fully implemented except ticking the box when it comes to the interactions in the store, it out I've started to experiment some seeing, which was attractive to implement, bring your own device. But we have limited that limited success of this one. So let's start understanding or so that implementing professional mobile devices for this makes sense. Yeah. And I strongly believe that this will become one more popular and when it comes to staff journeys, I think there is a huge potential there because we have several conversations with very large, retailers in Europe and abroad, and several of them want to implement a universal terminal, make sure that all employees are equipped , yeah. That they communicate, they manage that efficiency, that different tasks. Retailers should really make sure that, that the right applications that they'd have right ecosystem and that they have all the platform to manage this platforms and that is a key challenge to really benefit from this potential disruption.

Jerry Langfitt (10:04):

Mark were recently did a shopper study and found that 73% of associates feel they're more effective at helping shoppers. If equipped with mobile technology, you had mentioned a little bit about that with talking to associates and have an access, but what do you think really is the root cause or reason why associates feel that way?

Mark Thomson (10:23):

It almost goes back to my previous answer in the sense that as individuals we've been using smart technology, mobile devices for at least 12, 13 years or so now, and that survey certainly found that staff felt frustrated at the lack of technology when they actually came to work in the store, customers simply wanted to know more about products, et cetera, and staff were unable to answer their questions without going to a point of sale system, which is just not right. So giving staff access to this information via a mobile device, seemed logical and sensible to staff for years. Finally, as retailers start to understand this and start to deploy mobile technology on a much wider basis and the, the technologies behind it, such as Android as an operating system makes that easier. And we create an app based mentality. Now we see this change finally happening, and we see the, I guess, the satisfaction levels of staff improving as they feel much more equipped to do their job better in front of the customers.

Jerry Langfitt (11:32):

One would think that's true just because millennials and gen Z and whatever you want to call them were born with a phone in their hand. I think it's not necessarily just a preference they're going to have to serve and be ready to serve the next generation of what they're used to. Philippe a question for you, because talking about this, it really made me think of something. If retailers mobile technology to every associate one would think that would create new operational challenges. How should a retailer react to those challenges and try and manage expectations and four prepare themselves for success?

Philippe Dauphin (12:07):

So is this really a crucial point? And let me take some example, Many retailers who have already have something like 30 to 40,000 mobile devices in their stores and their plan to increase this number the next two years, maybe two, three years to 250 or 300,000. So think about this one would retailer for instance, consider to manage a huge inventory of 300,000 products without managing the inventory. The answer is no. So it should be the same here. If you go to this magnitude of handheld devices, the cube is not the rotation of the inventory in this context, but it's more to manage the availability of the devices and the right sizing. Because if you don't manage them, you need to purchase maybe more to make sure that these devices are available for the staff. So it's a key challenge. So where about some solutions, one of them, which is what we call the manage mobility platform to manage the outer life that second, but this is crucial. So the question is not to go on, to go or not go with Mobility. The question is how you grow.

Jerry Langfitt (13:25):

Yeah. You really need to support it. I think you had said a great point that you really need to focus on the consumer journey and not focus on the technology, how best to serve the consumer, but with that comes infrastructure ramifications. So you really need to make sure you're ready to support it because the worst thing you can provide is a poor journey for a staff or a poor journey for the consumer. That's a great place to close. Thanks, Mark. And Philippe really appreciate you sharing your insights and thoughts on how critical mobile strategies benefit retailers and consumers. And thanks to you. Our listeners for tuning into this episode of commerce. COMMERCE NOW. You'll find the link in our show notes. Thank you for listening.

Summary:
In this episode of COMMERCE NOW we discuss how retailers need, now more than ever before, more modular and flexible software, services and systems when selecting their self-service partners.

Related Content: 

Modularity Whitepaper 

Related Links:

LinkedIn Profiles -
Jerry Langfitt
Matt Redwood

DieboldNixdorf.com

Transcription:

Jerry Langfitt (00:16):

Hi everyone. Thank you for joining us today. I would like to welcome today's guest Matt Redwood, who leads our advanced self-service global solutions at people Diebold Nixdorf. Welcome Matt, and thanks for joining me today.

Matt Redwood (00:27):

Hey Jerry. Thanks for having me always good to speak to you.

Jerry Langfitt (00:30):

Now let's start off at a 50,000 foot view of what's going on in retail. There's certainly experienced a hyper compressed and instantaneous change in consumer behavior, of course, caused by the pandemic. This ended up being a massive shock to their operation and it infrastructure. The quick fixes have now turned into long terms needs and rubber banded and duct tape journeys. Now have to last longer, be more scalable and continue to evolve. As consumer sentiment continues to change, regardless of what's going on in everyone's health systems in their countries, retailers need to react with the same speed as the customer. This is more than just putting up plexiglass barriers. They have to really rethink many of their current consumer journeys while adding new ones immediately. What do you think retailers are experienced and learned about what their legacy systems and current infrastructure both can and unfortunately cannot do.

Matt Redwood (01:23):

Absolutely. So it's a great question, Jerry. So generally trends in retail happen over a period of time. It's an evolutionary step. If you take the shift to convenience store shopping as an example, that's a trend that's happened over multiple years. I think what retailers have really experienced in the last 12 to 18 months is a revolutionary step. That's been forced by the global pandemic. And what that's done is it's exposed the weakness in their infrastructure, the weakness in their current store, operating best practices and ultimately the technology that enables that. And it's really forced retailers to think very, very differently, not only about the strategy of the day, but also how they can build in flexibility for tomorrow. God willing that another pandemic doesn't happen, but this could be the start of a very volatile stage where they're retail, where retailers really have to change on the fly constantly to changing demands either from a legal standpoint or from a customer driven demand aspect. So they need that flexibility. They need that scalability, and ultimately they need the ability to change extremely quickly and to react to any demands that are effectively flipped in upon them.

Jerry Langfitt (02:42):

Now, one thing I don't understand is how did we get here? What got us to this point of difficult to change and the mobility of some it processes?

Matt Redwood (02:53):

Oh, so I think that's just honestly legacy it. So I'll ask VP of retail cause at a washing business where you buy the hardware, you buy the software, you buy the services for that particular application in isolation, from everything else and the legacy. It was a very good example of that type of infrastructure, where you had maybe a supplier who specialize in self service and now they want to kiosk another one at point of sale. And you always had these isolated solutions that existed on their own and there was no interconnectivity. So it was very difficult for retailers to really piece together. I had different customer journeys or react to new customer journeys because they either had to make changes across each touch point, which was costly, expensive and took time. Well, there just wasn't the flexibility in the infrastructure to be able to do it and really modularity and a need for openness has been driven out of this pandemic, modularity the ability to be arranged or fit it together in a variety of ways is the dictionary definition. Openness is openness. And it's the combination of these two factors. The retailers are really looking forward to make sure that they don't fall into that.

Jerry Langfitt (04:06):

What got us to this point of difficulty to change and the immobility built into it processes. Okay.

Matt Redwood (04:12):

I think honestly it was just his legacy technology. The technology environment with particularly within big retailers is a very complex one. If you think about, you've got a hard way, you've got software, you've got ecosystem, you've got services, even taking the hardware in isolation, you have different components with different life cycles. You have different stuff like compatibility. And on top of that, I think we've had a legacy situation where suppliers in the industry have created solutions in isolation and RSVP Highland limit it. The dishwasher situation. You have one provider of a piece of hardware with a piece of software and services to run it. I'm not saying closed loop system. And what it means is that retailers are almost forced to take different touchpoints with different solutions and implement them into their environment. And these solutions would also almost operate in complete isolation to everything else in the store.

Matt Redwood (05:11):

So not only does that build in complexity and in flexibility, because if you make a change on one, you have to replicate changes across multiple touch points. It's very complex to manage very costly to manage. And ultimately you're not getting that level of flexibility. I mean, two very positive things to come out of this pandemic is the retailers have really understood that actually what they need is modularity and they need openness on the Southwest side to be able to take more control of their own destiny in terms of what functionality they have, what roadmap they want to drive and ultimately what experience they want to implement in their stores and what modular hardware do they need to be able to support that. And I think we tended to really focus now instead of having these in isolation is to have an ecosystem of technologies or touch points within their stools or talking to each other. That means that they can move in a great degree of flexibility they can have at the LT and responding to trending trends or requirements that may be happening in the market. I don't want to bet they're not boxed into a corner as they've been.

Jerry Langfitt (06:19):

Yeah, it's funny. You should say that Matt, because despite the pandemic we saw progressive retailers evolving even before 2020 S Watson Tesco and others were already looking at new journeys and building greater flexibility into their operations and it processes, what do these progressive retailers see and how did they react? What did they do different?

Matt Redwood (06:39):

I mean, ultimately that shift that those retailers took, which was, I guess, proactive ahead has become dynamic. I know that they will see the pandemic catheter, but they, they witnessed the fact that retail technology is a very complex environment and it's only going to get more complex. And if you look at the landscape of self-service over the last 10 to 15 years, we've gone from really an environment where you might have point of sale and one type of self-service device within your stool. But now they have a whole plethora of options available to them from point of sale, to multiple different stuff, service touchpoints to us, mobility as well as the influence, the online is now happening. And they recognize these early movers recognize the need for flexibility in order to be able to react and obviously take advantage of as many of these touch points within their schools.

Matt Redwood (07:30):

And the shift that these retailers made really enabled them to pivot very, very quickly to be able to cherry pick the right solutions for that store today, knowing that as trends change, I may need to update and flex that model to react to future trends and that fully baked in that flexibility. So retailers that really took advantage of a modular touchpoint approach from an open software approach, but a pandemic finally not easier. It would be able to pivot and operations and react quickly to the changing trends or legal aspects that were inflicted on them during the pandemic.

Jerry Langfitt (08:10):

So it sounds like a lot of the retailers want to blaze their own path and be the master of their own roadmaps. How can a retailer like that? What kind of demands should they be giving their technology partners,

Matt Redwood (08:22):

Ultimately it's flexibility. And this trend of, of openness and modularity it's been spoken about for many years, but I don't think many technology providers have really enabled retailers have that controlling flexibility until now. You know, I'm very proud of Diebold Nixdorf as one of the first in the industry to really open up that platform and to really allow return is much more control, much more flexibility. And I want you to ultimately future proof themselves against any upcoming trends. It gives them more control to give them more and ultimately destiny of what experience they want to deliver in their stores. And it really is the convergence of everything that we've been booking over the last couple of years and tell them multichannel and different customer journeys. Technology has always been the disabler. And now we're really saying that all of those rules have been stripped back and we've got a very flexible, very open, very modular environment, which really gives retailers what they've been asking for for years, which is flexibility.

Jerry Langfitt (09:23):

Well, and I think that's one of the key points I've seen with retailers. Their decision-making processes getting much more complex because they are saddled with legacy it infrastructure, and they are concerned that any decision they make will just create the next inflexibility. So I think each retailer needs to buy into someone that has that kind of modularity. So it's like, look, I'm buying into a philosophy that says this partner will be with me later and they'll keep evolving too. It leads to, you know, let's flip the script a little bit and ask, what is the retail technology partners and providers done both wrong and right in our industry,

Matt Redwood (10:05):

I didn't necessarily think that there's a Roman a right, that cause it's all relevant to time and situation at that particular moment. But as I said previously, it has been this trend where technology providers have been, I guess, very wooden in terms of locking down the systems so that they're very closed. You have to buy the hardware, the software, the services, the innovation from one particular supply what's starting to change. And it's very much the ethos of the board next door is you provide a platform, a platform for that retailer to invest in, and then they can build their own technology touchpoints. Within that stool. We definitely combinations of hardware, software services, and innovation, and ultimately build the right in-store experience that they want within that store. And I think that's key. Sometimes we get too focused on the technology and less so on what we're trying to actually achieve here.

Matt Redwood (11:00):

What we're trying to achieve is the best in-store experience for the end consumer. And we use the technology to drive that it shouldn't be the inverse of that, which way are hamstrung by the technology. And therefore that dictate what type of consumer experience we should walk on. What, because you are experienced to retailers want to achieve in that stores, what is the right technology for them now, but also where do they see that consumer experience moving to in three to five years time and ensuring that they have the flexibility within that platform in order to Fletch change, evolve our offering over a period of time to get to ultimately where they want to go?

Jerry Langfitt (11:38):

No, I was actually going to say, you had said the best possible experience, and I wanted to add a time element to that the best possible customer experience for today for today's consumer. And one thing that's evolving, consumer trends and habits, but the other thing is, is the separation of consumers into their own journey of what each person needs in their particular mission that they're doing in their retail environment. So I might, I might have a quick trip or I just need to grab something fast, two items that I forgot, or I might be taking a longer trip. This is no longer one consumer that shops one way the same consumer can shop many different ways. And you're constantly going to have a changing need within today.

Matt Redwood (12:19):

Yeah, absolutely. I mean, ultimately if you look at your eye, it may be the same consumer that's shopping in multiple different ways, but ultimately there may be five, six, seven, 10 different customer journeys that a retailer has to deal with within their store. And rather than forcing those consumers to shop in a particular way, it's really about giving a consumers, the flexibility and the choice to shop in the way that they want to within that store, giving them the empowerment to shop that particular brand, that particular school at that particular time of the day and what experience they want, as you say, it may be the same consumer that shops on a weekend that may spend an hour in the store browsing with their family because they're picking up that weekly drop where they've gone shopping for the day and maybe the same consumers are like Tuesday, lunchtime, the coffee into the store and pick up a coffee or a sandwich to go same consumer, but very different consumer journeys and therefore very different expectations of what a good consumer experience look like.

Matt Redwood (13:20):

What we've seen during the pandemic is, is the road versus a lot of that flexibility and diverse arrange of consumer experience. So what we've really seen with the restriction of movement as a result of the pandemic is the consumers that may be interacting with a brand multiple times during a week of being forced to only shop maybe once a week or once every two weeks because of the social distancing rules on that, you know, the rules around staying at home. That's the flexibility that retailers have really had to combat over the last 12 to 18 months, moving from an environment where they're trying to be as flexible as possible to enable the best consumer journeys and multiple consumer journeys, always back to the shopping journeys of 10 years ago, where consumers would only go to a supermarket. Once every two weeks we'd buy a large amount of items. And that would be the only interaction with those consumers. Not saying that that is going to be the trend that extends into the future, but that shift almost overnight has been very difficult for a lot of retailers to contend with. And that's where ultimately they need to build that flexibility into that, into their infrastructure.

Jerry Langfitt (14:26):

One thing though that happened, happens to an it company or their department is that it departments hate complexity. That just once I have 10 different journeys, I have now have to contend with tracking and keeping 10 different technologies up. I mean, what can an it director do to try and simplify or minimize? Cause the journeys are going to stay. The consumers want this ops needs it. Everyone knows they have to do it. So what can an it department do to try and minimize the complexity they have to manage?

Matt Redwood (15:01):

So the complexity doesn't necessarily come from the number of different consumer journeys. It comes from the number of pieces of technology that enable those consumer journeys that may operate in isolation. If you've got to replicate changes across multiple platforms, multiple solutions, not only does it take time and money and resource to implement even the simplest of changes because you're having to replicate it. It's a very complex environment, very, very easy to get them wrong. And that's where we're really shifting, seeing the shift to requirements of retailers to have a platform based approach, open API APIs and an architecture so that they don't have to replicate those changes over multiple. It just happens. They make the change once and it's been applicable for all touch points within that store. So it's almost, it's not a restriction with the amount of customer journeys, but it's a centralization of the technology to enable those customer journeys in a more sustainable and easier to manage way.

Jerry Langfitt (15:59):

Yeah, it sounds like if they tried to do it the old way, which was each technology being separate, it would be complex, but if they try and implement in a much more progressive and newer way using modularity that way more tech is similar, but still supporting multiple journeys. That way that should reduce the complexity that they're they have to do.

Matt Redwood (16:23):

The other element is that retail technology is not going to get any simpler. If anything is going to get much more complex and much more diverse. And I don't say that as a negative, but if you look at the competition between retailers now take the grocery industry as an example, hugely competitive, hugely competitive space, where everyone is failing to get the consumer's attention and ultimately business. On the flip side, you're seeing brand loyalty at an all time low because the competition is so tight consumers know that if they have a bad experience with one particular brand or one particular store, they go next door, they go down the street and they can get as competitive as an offering, but maybe a better experience. Well maybe a, you know, more fulfilling journey within the store. So retail is a really, really good, a tough situation. They're battling each other for competitiveness, but they've also got to deal with the reduction of brand loyalty.

Matt Redwood (17:20):

So they have to focus on what can they do to enhance their in store experience and how can they differentiate that brand. And multi-levels it ultimately is going to result in is a lot of retailers taking bets and moving in different directions to try and differentiate themselves. And back to the openness question as why openness is so key retailers are going to want to take innovations or technology on the market and integrate it into their own ecosystem to create that own ecosystem of technology is going to enable the customer journeys and experience, but they want investors that will hopefully be different from their competitors and therefore able to differentiate themselves

Jerry Langfitt (17:59):

Well, they, and they need to make sure those are sustainable. They make a change and they get it right once and they can't just get it right once they have to keep it going always on and make sure that the customer always gets that great experience every time. So it's, it's going to be a challenge, but I think like you had said, building their needs onto a platform mentality is going to be the way forward.

Matt Redwood (18:26):

I mean, a great, a great example of that is really cash. So I felt like we've been talking about the demise of cash for years and years and years now, but ultimately what we're seeing is the long tail of cash. And even during the pandemic, when there was nervousness around, you know, safety and hygiene, and suddenly we saw a big, big drop off in the amount of consumers that you're willing to pay by cash, it didn't disappear. And actually we're now seeing cash utilization start to increase. Again, it may never go back to the level of it was, and we may be how accelerated the delays of cash, but it's still left. So what are retailers supposed to do to make sure that they can serve consumers today that want to pay by cash? Knowing that cash may disappear in three, five, 10 years, whatever the time period is.

Matt Redwood (19:18):

So they have to really look up the experience, the operations and the requirements that they require in the store today, as well as building the flexibility that that can shift and change tomorrow. And so a modular hardware platform is really important. How do we deliver the right experience today with the right combination of technology modules, but have the flexibility built within that, that can flex and change to support the customer journeys of tomorrow without throwing that investment away. And that's really, really crucial bit. How can we prolong the return on investment made in a piece of technology without completely throwing away every time a consumer trends

Jerry Langfitt (19:57):

That is absolutely correct. And it's going to be a difficult for the retailers, but they need to learn this new philosophy of being way more flexible. But thanks, Matt. I think that's a good place to close. Really appreciate your sharing, your thoughts and how critical modularity and building greater flexibility into retailers it and operational strategies and how it benefits retailers themselves and consumers. And thanks to you. Our listeners for tuning into this episode of COMMERCE NOW to download a free copy of the white paper on modularity mentioned during our discussion, please visit the dieboldnixdorf.com/self-service solution.

Summary:
In this special episode of COMMERCE NOW we team up with APIs Unplugged podcast to discuss using APIs to succeed as an incumbent in a disrupted fintech space.

Related Content: 

The API Evolution: We’ve Reached Critical Mass

APIs UnPlugged Podcast

Related Links:

LinkedIn Profiles -
Bruce Diesel
Matt McLarty

Transcription:

Speaker 1:                           00:15                     On today's special episode of Commerce Now, Bruce Diesel from Diebold Nixdorf joins Matt McLarty from API's unplugged podcast. They will discuss a theme around API's to succeed as an incumbent in a disrupted space.

Matt McLarty:                   00:38                     Hi everyone. Welcome to API's unplugged. I'm Matt McLarty, the global leader of API strategy at MuleSoft, and great to have you here as always. Mr Mike Amundsen, what's going on in Kentucky?

Mike Amundsen:             00:51                     Hey, how you doing? Actually we've had great weather in the last week, or so. It's been really enjoyable. I was just out for a walk just before we started our session here which I haven't been able to do, so I'm in a good mood, and I'm ready to go.

Matt McLarty:                   01:04                     Right. We're on the upswing. We're a year into, at least for me, lock down.

Mike Amundsen:             01:11                     Oh, yeah.

Matt McLarty:                   01:12                     I think it's almost... I think it's two days shy of the anniversary, but you never know. Things are looking up. Great. Well today we have a pretty exciting topic, and exciting guest. I feel like we've talked about financial services on previous episodes, but we haven't really done a focused episode on financial services which we're already into the second season which that's amazing because I think that API's are always rightly associated with disruption. So much of the digital economy landscape is being... There's upheaval from disruption happening, and in terms of industries financial services is a big one.

                                                                                And I think we hear a lot about fintech, fintech association with API's, open banking regulations, and so on. So I think... We've got a guest who's going to be talking from, I would say, from both sides of the disruptor and the disrupted in the financial services space, and as a fintech that's been in the industry for a while. Our guest is Bruce Diesel who is a product manager, and API subject matter expert at Diebold Nixdorf. Bruce, welcome to API's Unplugged.

Bruce Diesel:                      02:38                     Thank you Matt. Thank you for having me, and Mike, great to meet you guys.

Matt McLarty:                   02:43                     Excellent. So I mentioned that Diebold Nixdorf's position being what I would call a long term fintech provider as a global company with a big presence in the ATM point of sale, and other financial services spaces. But to start off, we always like to do this, we'd love to hear your background, Bruce. What has been your path into what we call the API economy?

Bruce Diesel:                      03:19                     I come from a traditional engineering background. I studied electronic engineering back in the 80s, and the subjects that really interested me were the software, and the software engineering side of my courses. And as I'm sure most of you know that as the end of the 80s, 90s, that was really the breeding ground of the object to oriented paradigm, and C++ was coming out. And this idea that you would have these component objects software world that really took my fancy, and it was really interesting for me. Coming out of university I started a... I was one of the founders of a software migration company, and a lot of our business was in the ATM's back in South Africa, and we were building a lot of bespoke solutions.

                                                                                I personally had always been really interested in the whole packaging of software concept, and how do we achieve the same things that we do in the digital, electronics world? These integrated circuits, IC's where we... When we look at the acceleration, and the rapid growth that digital electronics have achieved... Look at your mobile device today compared to where we were 40 years ago. And I always believed that that's where software was going to go. We could create these standard interfaces, these standard components that could be re-used, composed into better solutions, and bigger solutions, and that really fascinated me.

                                                                                I think we went through... We all know back in the UNEX days you have these utilities that you connect through pipes, and filters, and your command line, and we went into object orientation, and then compartmentation where we tried to package these things into operable components. Com, Corba, all of those, beams. But they were really complex. I think if we look back at the complexity of putting those solutions together was still to high. There was a componentization side, but also the engineering, the production process. We started improving STLC, becoming agile, and web services started to come around, and finally I think we are now belatedly getting to the point where web services, and API, or restful API's are really starting to become a day facto standard that allows things to interoperable.

                                                                                And I'm really excited about the fact that this could be finally the promise of these composable solutions. I think we've seen the promise a few times before so let's not think too many things about it, but... At DN I came through my knowledge of the industry, became a subject matter expect, but I was... Late last year I was offered the opportunity to take on board a new product portfolio. In fact, completely new product portfolio of being API as a product which I jumped at because to me we have this massive portfolio of capabilities that we jut take... There's so much friction in our ability to bring those capabilities into our customers. Big PS engagements, and that really, I thought... This just was a confluence of so many things in my career that really... I jumped at it, and I thought that this is a great opportunity to actually make a big difference for the organization.

Mike Amundsen:             07:28                     Yeah. You mentioned DN, Diebold Nixdorf. What I find fascinating in what you're telling me is you're in API product management now, right?

Bruce Diesel:                      07:41                     Yep.

Mike Amundsen:             07:41                     Your role is to help bring this API component, this API economy, all the things that we talked about... I grew up in the same space you did. It's fantastic. We've got object oriented, and [inaudible 00:07:54] explained it all. I'm going to pass a message, and it's going to be anywhere, anytime, and all the challenges we ran into, right? So here's the thing. It's taken a long time, so at DN, what is the role that API's are really playing? This sounds like this is a brand new initiative here. Have you had API's for a long time? Is this more about productizing, or it is more about API-afying? What's really going on at DN, and with API's?

Bruce Diesel:                      08:23                     No, it's about packaging, and productizing. It is not API-fying. All of our products have used API's for integration capabilities, and this is where... I call is the Swiss army knife. API's, everything. And you literally have every function of the server available through this API, but they're very complex to consume, and understand, and typically you need to know some of the unwritten rules of the game when you work with those API's. You've got to do this, and then you've got to do that, and unfortunately also we're not totally loosely coupled. We have API's that perform a lot of functions, but the coupling is still quite high.

                                                                                So essentially what this is about is how do we make these services really easily consumable by the outside world? We still see these... We have huge PS engagements, professional services to implement our products, and when a customer wants a certain function the pull-through is really high because it's... Okay, well you need this whole server infrastructure, and to use the server infrastructure you need these clients. And typically things are really quite tightly coupled to each other, and that means a high level of skill to implement them.

                                                                                The thinking is, well, that narrows down our market. That makes it difficult for us because we need a few pieces in place to be able to bring those API's to bear. So essentially the idea is how do we actually leverage what we have? We already have these things, so how do we hide some of the complexity from consumers of those API's, and how do we open up some new markets? How do we actually enable customers that done necessarily have some of our infrastructure in place? How could we bring some of those services to those customers without the "Oh, you want this services from us? Well, you've got to buy this, and this as well." And suddenly that becomes high friction to being able to deliver that service. So essentially to us this is about almost a new store front for our capabilities. The capabilities exist so essentially this is about wrapping them up, and making them easy to consume.

Mike Amundsen:             10:54                     That's very cool.

Matt McLarty:                   10:57                     I think that's a really interesting point because, I think, we've worked with a lot of organizations who maybe are just trying to get things opened up. But it sounds like you've got a level of maturity around there almost to an extreme degree of... It's not so much "we have to get access", it's after we... We have to sort out, and figure out what do we already have access to that needs to be packaged for consumers?

Bruce Diesel:                      11:21                     Yep. No, absolutely.

Matt McLarty:                   11:24                     One thing we did recently, Bruce, and we met a few months back. We did this mind share Q&A which was a fun thing where we had a question set... This was something DN put together around API's. Exploring API's. I thought one of the interesting points you made in there that was enlightening as well is that you're already seeing... This is kind of a customer demand driven thing. You've talked about your passion for componentizing, but this is a real itch that needs to be scratched for customers. I think what's interesting as well that DN is just... The coverage of capabilities that you have, and the presence that's out there around all aspects of financial services from supporting retailers in the payment space, to supporting banks in a number of areas, and even beyond financial services. Is there a particular area where there's that customer demand that's driving the API access needs, or are you seeing it across your whole customer base?

Bruce Diesel:                      12:37                     We're in an interesting position because we're a business to business consumer organization. So very often we don't actually have direct contact to the consumer piece of that equation. We have to deduce market needs, and market requirements from what our customers are asking from us that they need to deliver to their consumers. The whole financial services world is really driven through a lot of regulatory... The procurement processes are all regulated so often we need to deduce the needs by looking at what the RFI'S and the RFP's look like because that procurement process is really tightly regulated. You get onto the list of respondents to the... You almost can't talk to them directly so very often you don't have the chance to talk to those customers directly, so you have to deduce.

                                                                                And what we're seeing is the questions being asked in these RFI's and these RFP's, and you can see the level of maturity. Some of them are... Clearly they are seeing this API management platform trend in the market place, and they're saying "How do we deal with this?" Some of them are broad... "Do you have an API management platform?" Which is a really broad kind of question. It's like "Yes, sure."

Matt McLarty:                   12:37                     One definition.

Bruce Diesel:                      14:14                     Yeah. So what we are seeing though, and in the RFP's is a narrowing down, and you're becoming more specific in the questions. And I think that is a clear indication that our customers are becoming more mature in their need. And we can understand why because banks are... And we'll talk about disruption at some point, you referred to it earlier. But banks need to compose solutions. So what they need to do is lift the bar, and they don't want to be building bespoke solution right from the operating system up. They want to be composition solutions, and creating competitive advantage about composing the right solutions to their consumer base.

                                                                                Looking at what their consumers need, and being able to compose out of pre-existing services a solution that fits that market segment, or their consumer base. So that's really where we're starting to see the desire for this idea of "Okay. API is clearly... Is promising this capability of us being able to pull these solutions together." That to me is what is driving a lot of this demand that... Those composition of those solutions that enable them to address their market need much quicker, and they are asking for it now.

Mike Amundsen:             15:50                     So that leads me to go right back to this whole deal about the role of API's and everything. One of the things I like in that Mind Share piece that the two of you did was you got this line, "API's aren't just going to sell themselves." So that's the classic... That's the answer to the "If you build it, they will come" analogy. This notion that "Oh, I just need to build the API, and everybody is going to like it. They're going to love it." Diebold's got this long history of serving specific needs, and I love that you're listening to the questions.

                                                                                So my question is... That means, okay, fine, they're not going to sell themselves, but that means I still have to discover them. I have to know they're there. Discoverability is becoming an issue now that we're moving into the product space in API. So what's this discoverability story in the financial space in general, Diebold in general? If I want to do what you're just saying which is I want to not do a bespoke, I want to actually... It's a sort of a virtual cots, virtual off the shelf kind of-

Bruce Diesel:                      16:57                     Yeah, absolutely.

Mike Amundsen:             16:58                     What is that like? How does that work right now?

Bruce Diesel:                      17:04                     This is a really interesting thing because... You guys have referred a couple of times to the fintech space, and DN is not... I think if people consider the idea of fintech they consider the idea of financial services delivered through a technology medium. I can go and get a loan origination, or credit scoring capability, those kinds of services that are delivered to technology mediums. DN is... Another sort of phrase I use is we're actually a last mile provider for financial services, so we don't build those kinds of services. We don't build a loan origination platform, or something like that. What we do is we take those services, and we get them to the touch point, the end point. In cloud terminology, the edge. We actually get them into the hands.

                                                                                So we have a slightly different challenge here where, I think, most people... Most people grasp the idea, "Okay, I want some algorithmic solution to a problem, a credit scoring problem", or something like that. "Let me google that, and search or it. Oh, okay. There's a dev portal, and okay, they use this kind of scoring mechanism, or these metrics", or whatever it is. Reasonably easy for people to search and find, but what about our services? Our services are actually... We're like a last mile provider, so we need to make things better for the organizations we sell to. We need to improve their capabilities. So really the question is how do we let them discover what... Sometimes they're not even thinking about what the question is to ask. So this is where I'm really keen to take this dev portal idea which is a tradition way that people can discover, and find out about API's, and actually take it further through the community manager concept where we actually create that one to one single view of the customer, and give them a portal that's a single view of their ecosystem.

                                                                                And they can see, "Okay, I have these services, and these platforms that I've procured from DN. What are the capabilities of these platforms?" So I almost want to be able to give them a window into all the capabilities of our services, and allow them to say "Okay, I've already got these. I see I could actually use that capability to connect into my earpiece system." Whether it's "I can improve my asset management, or track pin pads that are regulatory compliance things, or I can do audits on my regulatory compliance, or..." all of those types of things which are heavily consuming of their time, and impacting their efficiency. What I need to do is give them a window into those services.

                                                                                It's not something that someone's going to google for. I need to create that view of my services to my customer, and that's where things like this community manager which goes beyond the portal idea... It actually creates a discussion environment, or a two way interactive environment where I think a portal is more of a broadcast mechanism, and come and have a look whereas in the community situation we now can get into the two way conversation, and say "Oh, what is the problem you're trying to solve? Okay well this API capability would help you with that." That to me, that is going to be the way I want to bring my API's and my capabilities to my customers. Create that view.

Matt McLarty:                   21:14                     I think that's... I've always looked at that community manager idea from the provider standpoint where customer relationship management... When your developers are customers, it's kind of like CRM for developers, or... Can't really say DRM because that's taken, but developer relationship management. But I think it's interesting to look at it from the customer's perspective of... And this is something, I think... Last season we had Steven Fishman on talking about customer journeys when the developer is the customer. It sounds how you're looking at it which is "We understand all these different customer journeys we have. We want to introduce into those customer journeys the opportunity to use the API's as products where appropriate, and have them naturally, and organically discovered through that process as apposed to just blasting it out hoping people find it."

                                                                                So that's interesting. And you kind of... My next question you've kind of answered part of it, so I'm going to rephrase it a bit because I was going to probe on this idea of fintech. So it's my fault, I keep saying, calling DN a fintech. When I do that, I must admit, I'm taking a little cheek with the fintech providers who act like it's a brand new idea that technology would be useful in a financial services context. On that front, I think part of my opening as well is talking about disruption. There's no doubt that there're all sorts of vectors of disruption happening in financial services. And even following along from the previous question in the discussion there, I think that we've seen these not only fintech's, but digital disruptors in general have a tendency to start by owning the customer experience. So they deliberately intervene, and own the direct consumer relationship as a way of building up their customer base, and network effect, and all that.

                                                                                So I think it's really interesting that you looked at it from the angle of "We're really good at serving these B to B customers, and empathizing with their consumers needs, and providing solutions in that context" which I think is quite a good, and unique way of looking at it. But just in general, what is it... How do you see disruption in the market place? I think certainly historically DN has had a hardware presence, but probably increasingly it's software presence. How are you dealing with this whole digital disruption threat?

Bruce Diesel:                      24:06                     What's really interesting is what I referred to earlier as saying, "Okay well, we're a last mile provider", and what you just described is somebody has taken that last mile, and wedged themselves in there. They've become that last mile. So for us, yeah, that I absolutely a disruption because our traditional customers are being disrupted, and essentially that means we're being disrupted. We now need to look at this and say... We got to look at our customers, and say "What do we do in our portfolio, in our services, to help them deal with this disruption?" And the way that the consumer engagement, the actual consumer touch point is being taken away, and owned by somebody else. And this is... As you say, it's a real, real threat to them, and we have a lot of information around how the younger generation just sees no differentiation between traditional banks. They see no differentiation there whatsoever.

                                                                                So what do the traditional banks do when they look at that market segment that is only growing, and its becoming more and more of the segment that they need to deal with? We need to position our products to support those customers, and one of the biggest challenges they have is that these new disruptors, they come from such a low cost place. They really... Because they've taken that last mile... And it's no longer a physical last mile. It's through mobile devices, it's... They operate off a much lower cost base, and that really is where the disruption hits our traditional customers. They have these infrastructures, they have these branch networks, they have these ATM networks. They're out there, they have these big data centers. They can't wish them away. So part of it is they have to obviously play to their strengths, and they need to use the advantage of having some of that physical infrastructure because the one thing that the digital infrastructure can't do is deal with cash, and that is what we do.

                                                                                I often tell the story about my son who sold his motorcycle, and would only accept cash because when it got down to the real... He wanted those notes in his hands before someone was going to ride away on his motorcycle. And then he has a problem because he came back in after selling the motorcycle, and he said to me "Well, now what do I do? Dad, can I deposit this into your account, and then you transfer the money back to me?" So cash is there, and what we've got to do is we've got to really optimize that infrastructure, and allow that infrastructure to be a lot more cost effective, but still enable those bricks and mortar organizations to have that infrastructure, and those physical touch points.

                                                                                I don't think that humans will go away completely from this physical engagements. The last year notwithstanding. We still crave human interaction sometimes, and I had a good chuckle at my wife today also trying to deal with a specific problem that she had. She was trying to deal with a bot to solve a possible fraud on her card, and she was pulling her hair out. She just wanted to talk to a human. So there's that disruption, but I don't think it will swing completely the other way. And so what we've got to do is we've got to provide solutions and capabilities that reduce the friction, and the cost of those services. We've got to really allow our customers to be far more cost affective in delivering that last mile. That's where I believe, for me, the API play really does start to enable them to become a lot more interconnected at a lower friction, and a lower effort, and reduce that overall threat of disruption that they are facing.

Mike Amundsen:             28:41                     Yeah. We've danced around this a couple of times. DN's been around a long time. We didn't talk about this in the beginning, but I live in the northern Kentucky area which is the Cincinnati market. And the history of Diebold safes and bolts were actually created in Cincinnati in the 1850s, or 60's, or something. It has a long, long history of always being... I think they built the world's largest sage in San Francisco in the 1880s, or something.

Bruce Diesel:                      29:15                     That's right. Wasn't it at the bottom of the Sear's building, or something?

Mike Amundsen:             29:19                     Yeah, I think something like that. They had the thing where... The Chicago fire, I think, was one of their claims to fame. The stuff that was in the Diebold safe didn't get damaged by the fire. So you've been dealing with notes, and papers, and all these things all this time. Disruption is disruption, but one of the things... And you talk about the challenges of these more nimble, or late comers to the market, they don't have the same investments in brick and mortar, and all these other things. One of the things Diebold is good at that mature players aren't good at, have dealt with a long time is that dreaded word regulation. You know how the system works. You're invested. You have all this intellectual property that means you can navigate that space.

                                                                                Also the opposite story which is that regulation stifles innovation, that regulation slows you down, that these nimble players are actually beating you to the customer because they're not paying attention to the regulation. Is that really true? How are regulations now? Things like PSD2, and open banking, how are they playing in this space that you're in now? Where does regulation fit in all of this?

Bruce Diesel:                      30:38                     Regulation has been part and parcel of banking from the beginning. Essentially that's what created the trust, and banking is about trust. Bottom line. Any bank, their biggest brand asset is the trust element, and that's what they focus on. Without trust, banking, or traditional banking just does not happen. So they do have that trust. They do have that position, and that physical trust position that they can leverage. And you see their physical branches. You're kind of "Okay, well. I'm giving you my money, you've got these branches, and everything. You're not going to disappear overnight."

                                                                                But we see the introduction of these regulations, and what is really interesting is that very often... Or the PSD2, you mentioned, PSD2, and that was actually introduced to break up some of these monopolies that the European Union were... After the 2008 financial shenanigans that went on the European Union were saying "We want to create a more level playing field, we want more innovation, we want to open this up a bit, and not be dominated by some of this monopoly players." Ironically, most often these types of compliance... And they're saying "Okay, you must become compliant with PSD2, and strong consumer authentication, and GDPR", and all of these things.

                                                                                The unintended consequence in this situation is that it actually makes it harder for startup environments to get in there. It raises the bar, and very often regulatory compliance has been used as a raising of the barrier of entry. And I think you're seeing that even in the PSD2 world where there are some of these young, or startup digital disruptor banks. But you're seeing that the big banks, they'll take on those regulations, and they'll actually use them to their advantage, and they will create a regulatory framework that really is an expensive obstacle to overcome to be a player on that playing field. And essentially while yes, it creates openness, it also has the impact of really creating a difficult environment for startups, or non complaint players to come and play in. And again, banks will leverage their trust, and they will fall back on "Who do you trust having your monthly paycheck being deposited into?" So I think that these regulations are...

                                                                                And I often compare them to the format wars. You always had... But very often the format wars get won by the big players. It does benefit the consumer though, so I think open banking is going to benefit the consumer. It does provide for more access to that data that was an asset inside the bank, and leveraged by those banks. That consumer data is being opened up, and being made available. But I don't see regulations as being something that is going to enable the young, nimble players to impact the big players too much.

Matt McLarty:                   34:29                     I think that's... I think, Mike, you opened that question well because I think it's evident... A company that can pivot from bank volts to electronic solutions already to software based solutions... I think, Bruce, what you're really reflecting is the ecosystem thinking that's so important in a digital economy. You're already thinking beyond the immediate interface, thinking about what you can intuit around your customers customers, and so on. And I think that's a really interesting point too. The regulations in this case, on the surface looking like it's really planning to opening things up for these third party players, or third party providers. I forget what exactly the [crosstalk 00:35:20]

Bruce Diesel:                      35:19                     It is TPP. Third party providers.

Matt McLarty:                   35:24                     Yeah, third party providers.

Bruce Diesel:                      35:24                     [inaudible 00:35:24], all of that.

Matt McLarty:                   35:26                     But the important thing is that the consumer benefits. I got to do this because I didn't mention this yet, but my background... I cut my teeth in the ATM and point of sale space as a young techy. Even before that my dad worked for software companies catering to that. I had binders of payment software I'd bring to school. Anyway. But early in my career... I think ATM's are such an interesting... If we want to talk disruption, ATM's have been this long-running, very much needed device in our lives that is there to dispense cash.

                                                                                But as a customer channel... I worked closely early in my career at a bank where we had a very ambitious business group who wanted to... Their scope was the ATM's, so that was the one card they had to play, and so they were always looking for new opportunities, new things to build. We actually prototyped a solution around 1998.... It wasn't with DN so it's not going to get DN in trouble. They're another provider... To actually sell movie tickets at an ATM. That was one of a number of functions, but needless to say it was pretty groundbreaking to have the ability to provide an ecosystem solution selling movie tickets from an ATM in 1998.

                                                                                Now behind the scenes what was happening is we were basically printing a message on a terminal that would be read by an operator in an operation center who would phone the movie phone line, literally phone then, and order the tickets. I don't think we ever ran into the situation where they phoned and it was sold out, but needless to say that whole solution never got passed the prototype phase. But I think one of the things it brought up for me was this whole debate around... Was that an appropriate use for the ATM channel? What more can you do at that channel because I'm telling you, if I need 60 bucks to go and buy something, and I'm standing behind someone who's browsing Facebook on the internet, I'm going to be upset.

                                                                                But I think it's interesting that... You alluded to the role of cash, and I think in some ways it's the long tail. We see all these cases of "Well, we're going to go cashless", but there's still this need for cash. So from the ATM perspective, are there new and innovative solutions that match with the need for cash in the digital economy?

Bruce Diesel:                      38:09                     That's a funny question because like you say, there's always been this vague desire that the ATM could be more than it is. It can do so much more, and those things have never really happened. What we were doing in the 80s and 90s with ATM's you're kind of still doing today. Not a hell of a lot happened there, but as we go forward now we'll see that, as you say, this long tail of cash. Cash is declining so the cost of cash by volume increases. You've got less volume so the cost per unit actually increases to actually facilitate the movement of cash, and the management of cash. But what I think will start to happen is that the ATM will become infrastructure like roads, and utilities, and all of those types of things. To me, I think we'll see that the infrastructure will be an environment that banks can utilize and share, and sit on top of.

                                                                                And what we see with banks is that they have two approaches to this cash cost. One is that they say... Okay, a full function very expensive ATM needs a certain amount of volume to become viable, so as the volume decreases we start to see ATM's no longer being viable. So they have two strategies to that. One is that they either reduce... They go with a lower cost ATM, just a cash dispenser. Just really simplify it down completely, and just provide that utility function. The other strategy is... Okay, they're reducing their branches as well, and they need a point of presence. So they need other services on those ATM's as well so some banks will go to... "Okay. I want this to become actually a point of presence." The other was "I just want to cash and dash." So essentially if these ATM's become infrastructure, we as the infrastructure provider, that last mile provider, need to actually cope with almost diametrically apposed requirements.

Matt McLarty:                   40:32                     Interesting.

Bruce Diesel:                      40:35                     One organization is saying "I want this thing to replace my branch, and do all the functionality of a branch", and the other one is saying "I just want cash and dash, and make this thing cost as little as possible." So this is really... And to drag us back into the API play, is where if we have this infrastructure, my view is that what will happen is that our shared infrastructure, the utilization of that infrastructure will create... Each bank will put their own persona, and compose their own solution on that infrastructure. And they will say "Okay. Well I just want a cash and dash so when one of my card holders enters into that infrastructure, or inserts a card in that ATM, they'll just see the simple function, and they'll just do the cash withdrawal because all my other services are digital, and all of that."

                                                                                Another bank might say "Okay. I want to use that infrastructure, but my customer base is still a customer base that wants more physical interaction, more capability. So we have these interactive video tele-solutions where we actually literally have a tele talking to you through the ATM environment. And it becomes a much richer engagement." We've got to cope with both, and that's where I see API's really creating this ability to... I'm sure at some point it will be dynamically composed on a one to one customer basis, but for now certainly a customer group, or a bank group would have an experience composed using API's that fit with their need depending on what that institution is. So really that's where I see things moving towards, but totally new services on an ATM, no. I think it's still going to be... The single bottom line is that it is a secure way to dispense, or receive physical tokens like cash. And that is it's one area that it can't be replaced on, and I think that's the corner stone of what it'll be.

Matt McLarty:                   42:41                     All right. Well I guess I'll just have to get my movie tickets online then.

Mike Amundsen:             42:44                     I was going to say, I think I can still buy stamps on my ATM, if I go to my branch's ATM's. They're at least trying to sell stamps. I don't think I've ever done that, but they still do that. I want to touch on two things, really, because the first thing you talked about is that infrastructure. ATM's sort of represent infrastructure. One of the things I love about the ATM network is that you can essentially just plot a cash box down, plug it into the network. You can put it anywhere without asking for permissions from the rest of the network as long as you've got the licensing and agreements, and everything in the technology works. This is the way I think the promise of API is. I should be able to plop my service into the value chain.

                                                                                I already have agreements, and we already have all of the exchange messages, and details. And I got my 1.5 percent, or my half percent, or tenth a percent, or whatever. I think that's one of the things that fascinates me about this space, where the ATM's represent a half a century of "We can do this. We can actually move money. We can move credit back and forth." Now that takes me to the next thing which you said which really piques my interest, and that is ATM's are still going to be that... Getting you physical tokens, physical money, physical cash. So that leads me right to the other hot topic in this space besides the buzz word Fintech, and that's crypto currency.

                                                                                So that's a whole other disruption vector, and I've even seen photos... Never physically actually seen... Photos of an ATM, of a Bitcoin, or coin based ATM. So where do you see that going? You're close to it than most of us. What's really going on there? Is that going to be a think? Is this going to be a novelty? Where does this all fit in? Where does crypto currency start to have another disruption vector for you?

Bruce Diesel:                      44:52                     We wonder if and when crypto currencies will come about, and I think all of us know that they will. That crypto currencies will become the method for moving value around networks. No doubt about it. It's a good solution, there's no question about it. There's still some problems with the solution. I think we'll see them formalizing, and I think if you're paying attention to the press you'll be seeing a lot of banks are really making noises around adopting crypto currency. I saw a really interesting article about Amazon adopting an internal crypto currency which I believe makes a lot of sense. It's a way that they can almost... It's a common pattern where you have this intermediate form of value that you can translate to all other forms.

Mike Amundsen:             45:54                     Abstract value, yeah.

Bruce Diesel:                      45:55                     Yeah, yeah. Absolutely. Canonical value as such. And I think Amazon are going into that. They're operating in multiple countries, multiple currencies, all that kind of thing. So they're saying "Okay. Why don't we just create a canonical internal value system, then we trade into the different end-point values?" The HubSpoke model. All of those patterns, they're all there. So absolutely, I think that crypto will come there. But will they replace cash? No. I don't believe initially. What I think they'll do is they'll push cash further out into the edge, and if we look at what cash... If we just boil it down, and look at the fundamentals of cash there are a couple of attributes that cash has that crypto doesn't have, or no other electronic instrument does have. And that is it is zero cost of transacting between peer to peer. If I have 10 dollars in my pocket, and I owe somebody 10 dollars, I take that 10 dollars out and I give that to that person. There's zero cost of transaction.

Matt McLarty:                   47:07                     They get zero carbon footprint too.

Bruce Diesel:                      47:10                     Well, that's always... In creating the cash in the first place was there... We can go drill down into that rabbit hole. But ultimately I had a 10 dollar value, I gave you that piece of paper, you had 10 dollars. Nobody skimmed a couple of percent there, nobody took a couple of percent. It didn't cost me anything to give it to you, and you didn't pay anything to receive it, and it's anonymous. Also totally, totally anonymous. If I've given somebody that 10 dollars, there's no record of that, and there's still a need for humans to... There's a strong desire to keep that privacy to themselves, and those interactions are private to those humans. There's a strong social element to that. You can't take that away very easily.

                                                                                So what will happen... The problem of cash is that... And I call it transmisability. It is not transmissible. I can give it to you in a peer to peer, or a micro kind of environment. But for me to move it across the country, or to somewhere else physically, that is where cash costs a lot. It's very expensive to move around, and manage, and secure, and put in volts, and count, and do all of these functions. You have all of this infrastructure to do all of those movement tracking, tracing. All of this stuff. That really is where cash becomes expensive. So what you're seeing is it's being pushed further, and further out into the edge where it circulates in small pockets where it's geographically very small locations, and the cash can circulate. So you're seeing even... Even DN. We're creating cash recyclers.

Mike Amundsen:             49:09                     Really?

Bruce Diesel:                      49:10                     Yeah, absolutely. All of our new... Our entire new hardware portfolio are cash recycling portfolio. So I deposit some cash in there, and what you see is... It's a really fascinating situation because the most inbound cash... Typically, branches are the inbound cash flow, and that typically comes from small to medium enterprises, or vendors. Retailers, and those businesses who accumulate the cash, aggregate the cash, then take it to the branch. The old model was they take it to the branch, the branch would package it up to send it to a central bank, count it and everything, and then disperse it again through the ATM networks. So that whole process, very expensive.

                                                                                So what will happen is moving value around over long distances... Crypto, and those kinds of things I think are still very... They will dominate that space, and we'll push the stuff down into the edge, and those businesses, shop owners, whatever it is, they'll go deposit funds into a recycling device, and then that device will present that cash back to consumers who need the cash. So essentially, I think that it's symbiotic. I don't think that one is a replacement of the other. They have different attributes, and they have different applications. And that's what we'll see. We'll see people anonymously transacting... Because the cost of that transacting is zero, I can give you five cents. It scales down to the smallest, smallest financial transaction.

                                                                                And the ironic thing is... And again, this is the unintended consequence. We talked PSD2, and it's going to open up everything. The unintended consequence of bitcoin is the carbon footprint is started to generate. That it's actually becoming a really expensive form of value movement, and those aren't the idea when they originally get created. Everybody thought crypto currency... I can pay you with a token, and the entire network will update itself, and I don't have this one single, massive data center that costs a lot. All I've done is I've pushed the cost out on a much broader scale. It gets down, and this is where I'm always very thankful for my education from an engineering perspective, is you get taught some of these basic principles like conservation of energy. You just can't violate these natural principles. You think you can, but they always come back.

Matt McLarty:                   52:00                     That's such an industry problem of missing total categories of cost. That's the myth of infinite growth. And you want the cost to scale in concert with the environmental cost. You want the financial cost to... But unfortunately I think they may be out of wack in the crypto space, but more of the... Now Mike and I always talk about how we might think we understand industry ecosystems on the surface, but I just love diving deep, and then finding out about things like cash recycling, and other deep ecosystem value opportunities that are out there.

Bruce Diesel:                      52:43                     Yeah. It the tip of the iceberg that I think we see in other industries as a casual observer, and it's until you scratch below the surface that you realize what it's all about. I agree with you, it's absolutely fascinating.

Matt McLarty:                   52:58                     Yeah, definitely.

Mike Amundsen:             52:59                     Yep, yep. So this has been awesome, Bruce. I'm sure we could keep going, but I think we covered some pretty good ground there. The entire financial services space, we went 20th century, we went 19th century. I think it's been... I've learned, and I think our listeners would have a lot to learn as well. So big thanks for joining us today.

Bruce Diesel:                      53:28                     Well, thank you. Thank you for having me on.

Matt McLarty:                   53:28                     It was fantastic, thank you Bruce.

Bruce Diesel:                      53:29                     Thanks Mike. Thank you Matt.

Matt McLarty:                   53:32                     All right. And thanks to our listeners for staying with us on this episode. We look forward to bringing you the next episode of API's Unplugged. Thanks.

Speaker 1:                           53:47                     Thank you for tuning in for this special episode of COMMERCE NOW. For more information, log onto Dieboldnixdorf.com, or go under the insight section to learn more about our Mind Share series. Until next time, keep checking back for new topics on COMMERCE NOW.

Summary:
In this episode of COMMERCE NOW we discuss fuel and convenience and how things have changed and continue to change and what fuel and convenience retailers need to do to keep up with these changes.

Related Content: 

What are your Shopper's Thinking?

Nielsen Survey: Retail Personas

Related Links:

LinkedIn Profiles -
Jerry Langfitt
Reint Jan Holterman

DieboldNixdorf.com

Transcription:

Jerry Langfitt:                     00:14                     Well, everyone. Thank you for joining us today. I would like to welcome today's guest RJ Holterman. Who works with a fuel and convenience group at Diebold Nixdorf. Welcome RJ, thanks for joining me today.

RJ Holterman:                    00:24                     Thank you, Jerry. Thanks for having me today, I'm looking forward to this conversation

Jerry Langfitt:                     00:29                     Today, we're going to talk about fuel and convenience and how everything has changed and how everything is still changing. And what fuel and convenience retailers need to do. RJ, what do you see happening in the fuel and convenience market today?

RJ Holterman:                    00:43                     Well, I think like in other segments of retail, we see a huge transition going on. And with saying that, I think in the end convenience stores are unique, but no longer really separate or set apart from the other types of stores. And especially I think in today's challenging economic environment, you'll see that fuel and convenience retailers are facing a critical inflection point. If you just look at, for instance, the number of people driving less in the US, one reason study found that more than 60 million Americans had stopped commuting. And that the numbers of people getting gas once a week had fallen by almost a third compared to the pre pandemic months of January and February, one year ago. So at the same time, an increase in the oil supply has triggered a significant drop in oil prices. And as demand for fuel remains low, fuel and convenience store retailers must adapt in order to survive.

Jerry Langfitt:                     01:37                     So with convenience sales that I've read are up. Most of them have grown, most of the store count might've stayed either the same or just slightly off compared to fashion retailers. What's going on and how is COVID 19 affecting how people are reacting to the benefits of a convenience store?

RJ Holterman:                    01:58                     Yeah, I think especially now with this whole pandemic, people who do leave the house or even are allowed to leave the house in some countries. Typically prefer to keep the distance from other customers and store staff. So that will lead them from, let's say the very crowded and big grocery stores and supermarkets and they rather would visit a smaller stores with less people in it. So they have less chance or lower chance to contract COVID. So you see that people will visit convenience stores more rather than the big supermarkets.

Jerry Langfitt:                     02:32                     Well, with the fuel industry in transition and rapidly needing to do more than just fuel. How do they need to really look at this and change their operating model or what their goals are?

RJ Holterman:                    02:44                     Like you'll see is that, the fuel industry is rapidly moving beyond the traditional forecourt interactions. And retailers seek to offer additional services, expanded services in order to achieve a one-stop shopping experience. While adapting, their business model from fuel plus to plus fuel. At the same time, consumers expect a seamless shopping experience that can start at home or on the go or wherever they are and then continue at the petrol station. So it's not just they visit the store, but typically journeys have started hours, minutes, days before they entered the petrol station. And this also requires retailers to be able to combine lets say, the offline with online journeys.

Jerry Langfitt:                     03:28                     So there's a lot of changing consumer behavior, as we've already talked about with COVID. But there's also just, people are seeing the need for convenience even more now. How can we react or what are we seeing with that changes in the consumer behavior?

RJ Holterman:                    03:42                     What we are seeing indeed is increased demand for new ways to shop. So that's online to offline. But also think about people who order products, but want to pick them up at a convenient location. So curbside pickups and desire for low touch interactions with staff or with other customers even. So that also leads to new ways how people want to go in about store. So with higher needs for self service, with new digital ways to pay, in the end people want to have more control over their own shopping journeys. And that's also very relevant, I think for C stores.

Jerry Langfitt:                     04:23                     That's really interesting. Because when you say relevant for C-stores not that they've kept themselves apart, but they're a separate industry. But the greater retail industry still affects them from grocery stores, to big box. And C stores need to look at how to gain those new understandings with the consumer. So that's really interesting to hear.

RJ Holterman:                    04:44                     Yeah, I think so too. Last year, at Diebold Nixdorf, we work together with Nielsen to do a survey with over 15,000 consumers in 15 countries. To find out different shopping patterns and also the impact of technology on that. And in the end, how can retailers help these customers or these shoppers to improve their overall shopping experience. And it's a long study. You can download it on a Diebold Nixdorf website if you want to. But what I would like to highlight there is, that we in the end found that there're six different personas or types of consumers across the board. And one of these personas that we eventually called aspirational tech fans. We found those are typically the young urban people sociable. Always chasing for the latest trends and continues to looking for new experiences that they can share them through the favorite social channels.

                                                                                And at the other end of this spectrum, you will find what we call the well-balanced traditionalist. These people tend to be very content with the current approach to shopping and have no desire to engage more frequently with technology. Interestingly enough, both aspirational tech fans and the hesitant potentials show the largest preference for C stores for doing the shopping trips. For instance, these aspirational tech fans hate waiting in line. And being in a constant hurry with a fast and furious lifestyle. The busy jobs and hobbies and friends, well life in general, you can say. And based on the 15,000 consumers we surveyed, we noticed that about two third, 62% of this group, visit a store just for immediate consumption.

                                                                                That can be a coffee or fresh juice or a snack or a fast food meal. And they typically consume it in a quick serve restaurant. And about the same amount, 58% also do top-up shopping several times a week. And they are most likely to do it in a C store nearby because that's more convenient for them saves time and well in the end, they have smaller baskets shopping trips, but they do it several times a week.

                                                                                The same you will see also with the hesitant potentials group. These are typically people in their mid thirties, still working hard to build the careers, very much focused on the professional goals. And also spending a lot of time on the jobs. They want to cut back some time on let's say the shopping activities, et cetera. So also these people are frequent C store visitors and doing a lot of top-up shopping as well, around 60% as well.

Jerry Langfitt:                     07:24                     What's interesting I find is and I was recently looking at the same study, but admittedly I'm pushing 50. And I forget that millennials, while we talked about them for a long time are 25 to 40 years old. And a lot of retailers always, I don't want to say dismiss them, but we still treat them with, I think the wrong viewpoint. They've been waiting for them to become the biggest spender. And I think that's already here. So while retailers and C-store operators can continue taking care of the older generation, who's used to everything exactly how it is. I think it's becoming more critical for them to really pay attention to where everyone is going. And it's not when millennials become the largest spenders that's already here. And with our kinds of implementations, you need to meet them before they're ready for it.

                                                                                So I think It puts retailers on notice that they really should look at this because this is not merely a growing population, but it's already here today. In the US we see the role of convenience stores growing in popularity as well. Just convenience in all of these groups becomes more critical. I just don't want to spend time or get friction. I just need to get in and get out the best experience as possible

RJ Holterman:                    08:37                     For sure, that's completely right. I think a resent study carried out by NACS, underpins this attitude or this behavior as well. According to a survey of US convenience store owners, the sales of convenience items have remained strong during the first three quarters of last year. While fuel is still catching up for the reasons we discussed earlier. So in fact, more than half of the respondents said that in-store sales through the first nine months of 2020, were higher than the same period, the year before. And even still, almost two thirds or 64% said that in-store sales were up in September compared with last year. So you see a strong need and actually a growing demand for C stores, convenience stores across the globe, but particularly also in the US.

Jerry Langfitt:                     09:27                     Well, when it gets right down to it, how is fuel itself changing? And changing how C stores need to look at their environment and what they provide?

RJ Holterman:                    09:36                     That's the interesting question, Jerry. I know we've all been talking about fuel plus to plus fuel and it's something out there in the market. But maybe I can make also a few comments on the fuel itself. One important driver, I think that's changing the mobility market, is also the ecological sustainability. So the fuel market, but also the car manufacturers are currently investing in this, to make the transition from traditional fuels to electric charging and more recently also to e-fuels. So the focus is on reducing the environmental impact of cars and trucks. And while electric charging is more environmentally friendly than traditional oil based fuels, it will not be the long-term answer to ecological sustainability. Electrification certainly will be part of the solution. Especially if the electricity is coming from renewable sources, such as wind and solar plants. But there are also limits to electrification.

                                                                                The pace of electrical vehicle adoption depends not just on the consumers and commercial transportation companies buying these vehicles. But also the availability of materials like batteries and other components is a factor of influence. And research shows that even in the best case scenarios, only half of the car sold by 2030, so let's say in the next 10 years, would be fully electric. The bottom line then is also that by 2050 even, almost 50% of passenger cars and 70% of heavy duty trucks. Still will be partially powered by combustion engine. And the rate of replacements by electric vehicles simply isn't fast enough. And now what's very interesting to see, is that a number of car manufacturers and fuel companies realize this and they are now betting on the e-fuels. Which is a different type of fueling, it's based on organic matters. That's towards deep in the earth. And it's a carbon neutral alternative that's becoming available at a more rapid pace where at least that's what we expect.

                                                                                And in the end, if e-fuels will reduce carbon dioxides to footprint CO2. Footprint of existing cars and they will replace petrol and diesel without modification. And also very important, fuel stations or fuel retailers can use the same infrastructure they have today. One company that's for instance, is very active in this space, is Porsche. Interesting to see that they are betting on the e-fuels. And there's only one issue right now with e-fuels, that's the price per gallon is about 15 times higher than traditional gasoline. So it will take some time before it becomes, let's say economically viable. But as with most other things, that's just a matter of research and development, as well as scaling up to production to get higher efficiency levels. So all in all, it's promising technology

Jerry Langfitt:                     12:33                     That is really interesting and I'm excited to see electric cars take over in America, as well. As what they're trying to do in Norway. But for now coming back to the fuel plus to plus fuel transition and having to deal with the fuel pumps as they are. How do you see the development of the role of the store at the pump and how much people can do at the forecourt?

RJ Holterman:                    12:57                     Yeah, I think eventually we'll see that the service stations will develop into becoming sort of a community hub. So it's a place not just to fuel up or recharge your car, but also place to work. Maybe we have wifi access and smart consoles where you can sit down, bring your own laptop and smart devices with you. And while enjoying a cup of coffee and a sandwich, do your work. Also, it will become a store with pickup points for goods ordered online, maybe even while you're on the go or waiting for the traffic lights or the product and then pick it up one hour later, when you are in the store. These will not just be the traditional click and collect e-commerce goods and online or the groceries and et cetera. But think also about pharmaceuticals products on prescription, maybe delivered via drone or by a courier to the safe located inside the C store. Which you then can pick up afterwards.

                                                                                Or cafes food facilities, a choice of meals for your lunch or dinner, as well as food to go. If you prefer cook at home yourself. And even in the longer term, you can think of these type of stores because you will spend much more time there. It's not just in and out, but you'll spend part of your day there. That these will have maybe indoor outdoor playgrounds for kids and have a place to unwind for the grownups. And think about rooftop gardens, whatever, where you can sit, meet other people, read the newspaper or simply drink a coffee. Those are the things that eventually service stations will turn into a community hub where you do much more than just fuel up your car or get your car washed. It's become part of daily life I would say.

Jerry Langfitt:                     14:39                     I agree. I mean, it ends up being that hub, it's convenient, it's near everybody. There's lots of them out there. Way more C stores than there are big box or grocery stores, just for the nature of what C-stores always meant. You talked a little bit in the beginning about adaption. Is that because consumers are also changing?

RJ Holterman:                    14:59                     Yes indeed, consumer's needs and preferences, I would say ever-changing. And as a result, fuel and convenience retailers also need to become agile or need to adopt agile strategies that deliver more than they do now, to services to keep that consumers engaged?

Jerry Langfitt:                     15:17                     So what do we recommend you should look at?

RJ Holterman:                    15:20                     I think there are several ways for fuel and convenience retailers to drive a more successful customer engagement strategy, if you will. I think first of all, maybe shift the focus to services beyond fuel. So the fuel plus to plus fuel change. So some fuel retailers are already expanding the offerings in new ways. Such as introducing recharging hubs and on the go food services and adopting a plus fuel business model. Requires a flexible approach that can be modified and scaled to meet consumers future needs. Another area where or to focus on, is to create a seamless shopping experience. In the end, I think a new era for retail is dawning and the role of physical stores is changing as consumer preferences also are shifting increasingly towards digital shopping journeys.

                                                                                And today's consumers simply expect a seamless shopping experience that can start basically anywhere at home, on the go, somewhere online. And then continue at the fuel station. And in order to deliver these type of experiences, retailers must have the capability to integrate the online and offline consumer journeys. And retailers should focus also on an increased demand for essential items. Connecting with consumers to drive a personalized experience and embrace the shift towards online shopping.

Jerry Langfitt:                     16:49                     What can we do to simplify consumer journeys? Usually it's by removing more friction, that's one place you tend to start. What is something that a retailer could maybe strategically focus on?

RJ Holterman:                    17:01                     I think in the end, visiting a convenience store can be so much more than just a pit stop. Especially also now during this pandemic that's going on. Now more than ever, consumers are looking for a quick and safe shopping options. And like I said, at the beginning, C stores are often less crowded than other retail environments. And they are designed to help customers get in and out quickly. To capitalize on these built in advantages, retailers could or maybe should consider investing in advanced flexible technology that allows them also to further simplify the journeys and remove friction. For instance, by introducing self-service checkout, by offering loyalty programs that increase personalized engagements. By offering cashier less stores and even consider home deliveries and those types of activities. So remove the friction by simplifying customer journeys.

Jerry Langfitt:                     17:55                     When it comes to a retailer's IT infrastructure. They really have to look at it from a different perspective. Because a lot of their old technology might be inflexible. And they need to kind of take a new paradigm and say, "okay, I need to create agility. I need to create the ability to be more nimble." That seems like what they need to do. Isn't it?

RJ Holterman:                    18:17                     Yeah, I fully agree. I think the key to successful in the modern retail area is all around flexibility and adaptability. So flexibility in inventories, flexibility in store location and layouts, flexibility in opening hours. And also the level of self-service available to a variety of consumer to accommodate these differences in consumer demands and preferences. And IT infrastructure is a key enabler for that. So fuel retailers for whom agility and flexibility are important, could look at the following criteria to when evaluating IT solutions. So for instance, the level of flexibility and adaptability, the capability to integrate with existing IT solutions already deployed. How easily they can scale up and scale down if needed. And of course also the cost efficiency.

Jerry Langfitt:                     19:14                     Okay, so what can a retailer do today? What steps will take them to this? What we feel is this C store renaissance, where people are starting to realize the value of C stores being more plentiful and located near them and quicker access.

RJ Holterman:                    19:33                     I mean also without making too big an investment. The first and probably also most easy and logical step for many fuel and convenience retailers would be to remodel their current stores. And maybe a few ideas to help you get into the C-store renascence renaissance. First of all, you can streamline your convenience stores layout. Think about that longer browsing times can mean more purchases per customer. So what traditional C-store designs often discourage browsing as they are very tightly packed, tight aisles, crowded checkout areas and shelving the blocks, sidelines. So improvements that maybe are easier to complete are wider aisles, so customers don't feel crowded and don't feel rushed.

                                                                                And have multiple checkout areas throughout the store, including also maybe some self checkout registers. Well these avoid long lines that may otherwise negatively affect traffic close inside the store. Maybe also very simple and down to earth, keep trash out of sites and make sure that your bathrooms are clean and cleaned frequently. Because that's one of the things people may sometimes forget. But that's also a key driver for people to stop by at the C-store official along the highway, they need to go to the bathroom.

Jerry Langfitt:                     20:55                     I do know... Not to interrupt you, but in America, someone did put an app together. And you can actually be on the road and look for bathroom ratings at convenience stores. So you can find the cleanest one, the nicest one, the most outfitted one and see how close you are to it. It was something that happened a couple of years back once the iPhone and the mobile apps started to be so popular. I can find any information I need based on my own preference. So you're absolutely right, that those are incredibly important.

RJ Holterman:                    21:25                     Bathrooms are important driver in customer loyalty because people love to come back to a clean place. And I can imagine this app is really helping them and fostering this loyalty also in an easier way. Another way is also where do you put popular items in your store? If you put them in the back, they have to go along the way through the store. And also maybe more likely to pick some other items that they see on the shelves. And by eventually spend more in your store.

Jerry Langfitt:                     21:55                     When it comes to hot food and beverage stations. I mean, how can someone differentiate their store? I mean, food is without a doubt, one of the largest growing section or features a C store can offer. It's just exploding with what you can now get in a C store. That's a great experience. I know my son loves eating at the C-stores that's around our house. I mean, that's his regular place. What more can a C store operator do?

RJ Holterman:                    22:21                     Well, you can imagine if you only offer, let's say the basic like chips, candy bars and soda, then your customers will have little reason to consistently return to your store. Right? They can go to any other store as well to get that. But if you can use your C-store remodel, so to say, to add more something, the other guys don't offer. Think about fixing bars to let consumers customize their food of choice. Whether you sell nachos or fries or hotdogs. The ability to customize one of these classics with a range of fixings is one of the best ways to get people excited about your store. And adding fixings is also simple way to increase the sales while offering them at a higher price. Another thing is how to... Coffee is a very important driver.

                                                                                So revamping your coffee station and offering different types of brew, as well as options like cappuccino and tea, that also will help you step up and increase your sales. And the last thing you could also think about is maybe it's also partner with the food chain. So we'll see now that many national change are eager to team up with convenience stores. Offering customers, the favorite food, in addition to the other staples they need. And this could give you a big leg up over your competition.

Jerry Langfitt:                     23:42                     Well and then finally, when you have to look at their registers area and the point of sale. Is really where it's at, when it comes to plus fuel versus fuel plus, what can I do with that area? Kind of towards the end of the journey.

RJ Holterman:                    23:56                     Now, one thing that's, I think fairly easy to achieve. And then also with low cost is installed lighted signs above the checkout area to promote a selection. So not too many, but just a small selection of high margin items so that people will see it when they are at the register. Also think of adding small display cases to the register area, to make some sale items more eye-catching. This can also include display cases at self out registers if you have them. Or maybe even more so, at self out registers. Because people then tend to feel they have more time to make the selection. They don't feel rushed because they have a line of people waiting already behind them. So they can pick their choice and in the end spend more per visit.

Jerry Langfitt:                     24:42                     Well, that's definitely what every retailer truly needs. I need more visits from the same people and I need larger basket sizes. And the kind of look at that consumer over the life of the relationship that I have with them. Okay, so what can a retailer in the fuel and convenience industry do today to become more fit and flexible and more agile in their environment?

RJ Holterman:                    25:05                     Yeah, I think that the single most important differentiator in fuel and convenience retail and maybe it goes for the entire retail segment as well, will be adaptability. So the retailer that is most adaptable, most adaptable to change will most likely also increase market share and grow the business the fastest and the best. And the extent to which a retailer is able to continuously adapt to new innovations and to changing consumer demands, ultimately also decides who stays in business and who will fade away. This is also and it's not just something that I say. Also, if you go to Forrester research, for instance, they also stress this particular part of adaptability in a recent report that they published.

                                                                                And they say adaptability, which is the ability to understand and anticipate market dynamics and exploit opportunities big and small, as soon as they arise. Maybe then logically, the next question becomes, "well, how do I do this? How do I become more adaptable?" And well, I can say there's no silver bullet that magically turns a traditional retail organization to a highly adaptive one. But there may be a couple of things to consider as a retailer that are critical to long-term business success.

Jerry Langfitt:                     26:24                     It sounds like referring back to our Nielsen study, there's a need to take care of the techno-savvy the people that want new journeys. How is that going to... I mean, one would think that we would have to have some kind of, I need to digitize the store more.

RJ Holterman:                    26:39                     Yes, I think so, too. And well, what we see is that retailers are continuously adapting their checkout mix, if you will. So the checkout infrastructure to better serve a consumer base, that's more familiar with various checkout options. And that this can range from self service and assisted service also to mobile scan and pay for example. Click and collect curbside pickups and even consider, even though it may sound very futuristic, it's already happening in some places, drone based home deliveries. So in the end, I think it's important also for retailers to embrace a modular approach that includes the complete ecosystem of hardware, software and related services. And that gives them a choice to implement what fits best with their specific customer base to reduce friction in consumer and staff journeys. And at the same time, also of course, very important, lower the total cost of ownership for these type of solutions and for the stores.

Jerry Langfitt:                     27:40                     So typical IT infrastructures and I'm going probably back a few years, dating myself. You would implement something, you would have a pretty rigid infrastructure and that would prevent you from... Or maybe not prevent you, but just make it really challenging to add new features, functions, new journeys. How does a retailer need to foster a bit more openness when it comes to their retail IT infrastructure?

RJ Holterman:                    28:02                     In the end, openness is very important because as a retailer, you want to offer consumers the end to end connected shopping experience that they expect. What your consumers expect. Regardless of whether the journey started at home, on the go or in the store. And an open technology platform with a set of standardized APIs for faster and easier integration, will allow you to adapt to upcoming technological innovations more easily by employing an collaborative multi-vendor strategy. So you don't want to put all your eggs in one basket with one vendor, but rather see best of breed solution in a collaborative fashion using standardized and open APIs for that.

Jerry Langfitt:                     28:46                     Interesting, I definitely feel that the APIs and a lot of what retailers are using from an integration standpoint makes things maybe not easy but easier. And it's definitely how they can be more adaptable moving into the future. Interestingly enough, as you put new journeys on the need for everything to really work and always be on and available to consumers becomes critical. You'll never get a second chance or a third chance to prove to someone that a new journey is really going to be more convenient for them. It seems like they really have to, after implementation, you've got to make sure that going for adoption, you really support that new journey and that new technology.

RJ Holterman:                    29:26                     That's completely right. It's very important that consumer and staff journeys are always up and running. And of course that they are secure. So this requires a combination of remote and proactive service model. So think about proper system monitoring, extensive data sharing on system availability and making intelligence correlations. So using a correlation engine to connect the dots and facilitate also root cause analysis in case something does go wrong. Combined with remote support services, this will maximize your gains and ensure that you can guarantee a very high availability of your online and offline customer interaction points.

Jerry Langfitt:                     30:06                     Thanks, RJ. I think that's a good place to close. Really appreciate you sharing your thoughts and how fuel and convenience retail is evolving. And thank you to our listeners for tuning in to this episode of COMMERCE NOW. To learn more on our FCX offering, please visit, dieboldnixdorf.com/fcx.

Summary:
In this special episode, COMMERCE NOW teams up with Kiosk Marketplace to discuss Self-Service Kiosks and how they are quickly becoming ubiquitous with museums and airports using them for years and McDonald’s successful push in the QSRs industry. Now add the convergence of consumer preference for self-service, COVID related avoidance of human to human interaction and retailers automating tasks to free staff for more involved duties and you have self-service kiosks truly hitting its stride. 

Related Content: 

Video: QSR drives Seamless Checkout 
QSR Infographic
K-TWO Kiosk: Offer Customers a Transformed In-Store Experience

Related Links:

LinkedIn Profiles-
Carl Von Sydow
Elliot Maras 

DieboldNixdorf.com
KioskMarketplace.com

Transcription:

Elliot Maras:                       00:16                     Welcome to Kiosks and the Self-Service Consumer Journey. I'm Elliot Maras, the editor of Kiosk Marketplace. Joining me today is Carl von Sydow, director of Self-Service for the Americas at Diebold Nixdorf. Self-Service Kiosks are quickly becoming ubiquitous while museums and airports have been using them for several years. In the last two years, McDonald's has made a big splash with kiosks in the QSR industry. Many other restaurants and retailers have since come on board. When you add the convergence of consumer preference for self-service, COVID related avoidance of human to human interaction and retailers automating tasks to free staff for more involved duties, self-service kiosks are truly hitting their stride. Retailers from a wide variety of industries are looking harder at self-service. Dave & Buster's for example, is using kiosks to power up playing cards and food ordering. IKEA uses kiosks in their bistros for food ordering and grocery retailers.

                                                                                The always open proverbial essential retailers are expanding food courts and leveraging kiosks in their food journeys. 2020 was a challenging year for everyone, but the kiosks have played a big role in meeting the need for safety. COVID-19 has heightened demand for self-service as a way to improve customer safety. While much of the technology that went into action had already been developed prior to COVID-19, the technology found new use as customers scrambled to improve their safety. The pace of kiosk introductions has never been faster than it is today, with no end in sight. All indications point to self-service kiosks playing a bigger role than ever going forward. Carl, why did we see an increase in kiosk journeys over the past year?

Carl von Sydow:                02:08                     Hi, Elliot. Nice to meet you and a very good introduction to the topic. You covered a lot of good areas there. And some of them you mentioned already is the answer to that question. We have had kiosks all over the place for quite a lot of years in airports and museums as we said, but what I feel right now is that the concept of a kiosk is merging with the traditional self-checkout solution that we have seen primarily within grocery retailers. But these two are now merging together, offering new, much more exciting combinations and form factors et cetera for self service. And then we have the drivers, like you mentioned, we have experienced the last 14 months with COVID, which has really pushed self-service to the front of a lot of retailers mind.

Elliot Maras:                       03:11                     Tell me why are new retailers in different industries looking more closely at self-service kiosks?

Carl von Sydow:                03:18                     Yeah. We have several examples, you mentioned two of them, Dave & Buster's, IKEA, we have several different grocery customers as well. The business model is not only self-checkouts anymore for traditional grocery retailer. They want to add more different customer journeys. It's all about addressing different customer journeys. We use that word quite often in our daily work. Nowadays, it starts with the customer journey and within a customer demography for a typical story, you can have several different subgroups and you need to identify what different subgroups do you have perhaps in your business and try to find the best customer journeys for that little subgroup to make them come to your store or restaurant or whatever it is more often than elsewhere.

                                                                                And the mix between kiosks and self-service and form factors offer this opportunity now in a completely different way than before. You mentioned IKEA. IKEA is adding so many different customer journeys now for self-service with kiosks, not only in the bistro, but elsewhere, there are a lot of exciting projects going on there. Just identify groups of customers and that customer journey and then find the right solution for them and then implement it. So it's somehow... It is driven by customer journey expectations, customer expect higher variety of customer journeys when they go to the store, but also by technology. We have the technology now to offer different customer journeys and form factors. So it's a combination I would say that drives a lot of retailers into this area now.

Elliot Maras:                       05:16                     Well, speaking of technology Carl, what new innovations do you see enhancing kiosks?

Carl von Sydow:                05:24                     Yeah. That's also very interesting question. A lot of... Since we start with the fact that we are sort of merging kiosks to tradition kiosks with some kind of self-service, self-checkout with perhaps payment, identifying products or ordering products on the screen, we are adding technologies like RFID for fashion retailers or reading different barcode types in a different way than before. Identifying the customer traditionally is done with loyalty cards or programs like that. But now we can also add, with the help of our mobile companies that has pushed face recognition into every man's telephone right now, mobile phones. So adding face recognition as a tool for verifying age, for age restricted item, that is a great enhancing of the kiosk/self-service solution because otherwise, age verification drives staff intervention and take... Increase the time of your customer journey. You want to eliminate all these pain points and if you can find technology that makes that customer journey easier and faster for the customer, it's also a great thing.

                                                                                Another area is for QSR ordering. Imagine that you are a mother and you have three kids and you go to your local or your preferred QSR restaurant. Instead of ordering the same and go through the whole order every time, with the different meals for the kids and all that, with face recognition connected to a loyalty program where we have approved that you can do this, you can have the kiosk identifying you as a customer, "Welcome back. Do you want to use the same order as you did last time?" And then we have the whole order for the family already there and you just press OK. A lot of these things is to make the customer journey faster. A lot of these things are coming strongly now.

Elliot Maras:                       07:39                     That's a lot of different technologies, that you're up to speed on. But tell me, what self-service innovations has your company introduced in the last year?

Carl von Sydow:                07:51                     Yeah, the pace of development for self-service have raised. I would say the last few years, but even more so the last 24 months, as I said, we have seen this merger between the traditional kiosk to self-service. And just recently, a few weeks ago, we launched our new completely new portfolio of self-service. Which range now from the traditional baskets to bag with grocery self-checkout, with everything that goes with it to a 32-inch kiosk-like-self-service station that you can dress exactly as you want. It could be a self checkout in a grocery store, food ordering kiosk, or you have all these different form factors in the same portfolio, same software platform, everything is run by the same technology. And we are also adding, apart from that modularity and flexibility, we have taken a step away. Traditionally kiosk and in moreso self-checkout have been pretty locked in when it comes to software and solution. You have to buy our software, if you buy our hardware, we have taken a step away from that. So we have a much more open approach now to our customers.

                                                                                We have different software strategies. You can go full on with all our software package or suites, you can go hardware only and you can also go the middle way, where we will offer some of these traditional functions as modules with APIs. So the customer can decide whatever form then they want to use themselves, and then we can help them. They don't need to develop all these self-service specific modules like produce recognition, age verification, security scales, cash management, all these are separate modules that we can offer our customers as a separate software module with APIs. So, that's a big shift from only a few years ago.

                                                                                We are selling self-checkouts in high numbers. We also know about frictionless shopping. Of course, that is a very interesting area. We are monitoring it. We are looking into it, but we don't have anything really in the pipeline right now because it's a little bit too early. As we see it, retailers are asking for a solution that works today... I mean technology is quite expensive to do with frictionless self-service. So just in short, those are some of the innovations that we have just recently launched. And we'll continue to launch new innovations this year.

Elliot Maras:                       10:49                     From a short-term perspective what customer verticals do you see expanding the most in self-serving?

Carl von Sydow:                10:58                     Our experience over the last six, 12 months, especially here in the U.S., there have been a little bit ahead of us in Europe, but right now we get a lot of interests from fashion retailers that is definitely growing and also convenience stores, C-stores. Again, coming back to the possibility with a little bit different form factors of self-checkouts or cell service stations than before, a traditional basket bags self-checkout doesn't fit in a small C-store environment. But now with kiosks/self-checkout in one, C-stores all of a sudden see this as a great opportunity for them. So we have a lot of C-stores customers looking for self-service in their small stores right now. So that's two very easy identifiable verticals that are looking at self-service much more than only two years ago.

Elliot Maras:                       12:04                     Well, tell me, Carl, what are your final thoughts today on the kiosk market?

Carl von Sydow:                12:10                     Again, I'm coming back to the customer journey. We try not to just sell technology or to show the customers, "Here, we have the products, which one do you want?" We try to go a little bit deeper and understanding what the customer need. Why do you need? Why do you see this need? What do you want to offer your customers? What customer journeys do you have? And we call all that store advisory service. So we go in and try to help the customer identify exactly what they need, the mix of self-service solutions that would fit their needs the best. And then come to the point here, you have different technology solutions that would fit your customer journey. So by identifying and working with the journeys, you will have a much better implementation of your solutions. And that will grow more and more. It's all about customer journey.

                                                                                It's not so much technology, first it's customer journeys. That is one big thing. And what I also expect to see on the kiosk market is even more alternatives of form factors of kiosks, outdoor kiosks, indoor kiosks and other features that we can add. The alternatives and options are limitless. More or less, the technology goes so fast, but yeah, those are a few things that I would expect to see on the kiosk market the next two years, perhaps?

Elliot Maras:                       13:47                     Carl, thank you. Thank you so much for your input. Clearly, this is an exciting time in the kiosk industry. This has been Kiosks and The Self-Service Consumer Journey. Thank you all for joining us.