Analysts positive on CBA’s bold hardware play


Commonwealth Bank of Australia’s (CBA) bold venture into the technology vendor market, revealed this week with the announcement of its own Point-of-Sale (POS) tablet and iPhone attachment, is being viewed as a bold and potentially lucrative move by industry experts.

Denise Montgomery, Research Director of Financial Services Technology at Ovum, says CBA’s strategy implicitly acknowledges the disruption facing traditional players in the payments market. “CBA has decided to go on the front foot. It is better positioned than the other majors, who are all still facing significant core banking challenges, in order to pursue the development and launch of innovative products and services,” she says.

In what has been described as an Australian-first, CBA will provide a POS hardware solution directly to retailers in a bid to bypass rival third party devices.

The hardware consists of an Android 4.0-based tablet, called Albert, and an iPhone attachment called Leo. Both can accept credit card and Near Field Communications (NFC) payments and are fully mobile with 3G and WiFi technology built in as standard. The bank has also developed an application ecosystem called Pi, in collaboration with IDEO, which is open to third party developers.

If CBA’s offerings gain traction, the benefits will be significant. The bank will earn additional fees or commission income. It will also gain access to a wealth of customer data. “Consider the data and process advantages. These devices mean that the bank can now access customer and transaction data that traditionally was captured by the retailer or merchant,” says Montgomery. “How CBA takes these data opportunities forward will be of interest.”

A key challenge facing CBA is its late entry into the hardware vertical. “Albert might be a first amongst the banks, but it’s not a first in terms of tablet hardware,” says Michael Araneta, IDC Financial Insights Associate Director of Consulting and Research. “There are marketing challenges there – CBA will need to work hard at customer education, and will need to closely consider merchant fees to generate interest.”

Montgomery says an additional challenge will be in convincing application developers to utilise the platform, over current third party offerings and the highly anticipated Apple iOS solution due for release later this year.
“It’s safe to say that CBA is far enough ahead in terms of technology that it can afford to take a few risks,” says Montgomery.

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