March 13, 2007

Venyon & NFC -- Cool, but is it Viable?

Recently I attended a breakfast in San Francisco given by Venyon, a joint venture of Nokia and Gieseck & Devrient, focused on the topic of Near Field Communication (NFC). NFC is a short-range wireless connectivity technology that has recognition by the International Organization for Standardization/International Electrotechnical Commission (ISO/IEC), European Telecommunications Standards Institute (ETSI), and ECMA, a European association for standardizing information and communications systems. NFC is optimized for proximity transactions, operates globally in the 13.56 MHz range, and offers data exchange rates from 106-424 kbps. It is also purported to be compatible with the existing and future contact-free payment and ticketing card infrastructures based on ISO 14443 standards.

Venyon envisions a future whereby mobile phone manufacturers will integrate its secured chip and management platform into handsets thus allowing users to use their phone as a secure bank vault by which to commence instantaneous consumer gratification. One comparison given was the use of the mobile phone much like the Oyster cards of London Transport, or equivalent tracking/payments systems in use in various metro transport systems. In addition, Venyon also foresees the embedded technology as a part of multi factor authentication solutions based upon its secure chip, the mobile phone SIM, and your knowledge of secrets. One such scenario might be gaining access to a secured door by touching the contact pad with the phone (as opposed to a card key), which triggers a phone call to the registered number for the mobile phone, whose conversation could be viewed by remote security camera whereby the parties then exchange secrets or pass codes, and the door then is unlocked remotely.

OK, this technology is the stuff that futurists love. It integrates, shares electrons, proffers a future of great enablement, professes a revenue stream for service providers, includes a piggy bank, and has a zillion possibilities for savvy business folk to attempt to have the piggy bank sent their way. I can hear the ads now, “With Cingular and Nokia you can download the latest MP3s, cool ring tones, your bank deposits, and your latest hot club listings, all into one totally cool device that will reduce your carbon footprint while we bill you automatically from your personal cash vault located inside the phone.” Argh!!

To be fair, I am no longer a twenty-something, I am two twenty-somethings. Cool is not as hot as it once was, and I am not no longer easily captivated by gizmos. While I believe there is a market populated by younger people who judge social status by the latest device or wireless functionality, looking beyond this crowd, just how useful could Venyon's use of NFC be for a payment and authentication solution? Technically, it would probably work, but could most people be convinced to change their behavior to where the phone became the next credit or debit card? Would a unified card key system be swapped out in favor of a collection mobile phones from various and sundry service providers? Would light weight modern phones survive the impact and abuse they would receive if they started being slapped against payment and access pads multiple times per day? But most importantly, will banks, payment providers, retailers, and all the other requisite parts of a successful ecosystem sign up and play?

In the realm of IT, one axiom remains constant. It is much easier to swap out technology than to change human behavior. In order to effect behavior change, the new way of doing things must provide benefits not available through the old way and offer a high enough economic imperative to bribe the user into desiring the change. At present, it is hard to see where the economic imperative would be high enough to cause substantial change in the general public.

However, by seeking the tweens and twenty-somethings, which have disposal income and time, Venyon and its NFC cohorts could plant behavioral seeds that would transcend into working adulthood. This could groom a future where such solutions would be as expected as listening to music on a mobile phone is in this demographic today. So, the challenge will be to find deep enough pockets to drive the development of an NFC ecosystem and place the technology into enough early adopters and hopefully watch their NFC behaviors grow. This would take a lot of patience, but it is not impossible. Just ask anyone 10 years ago if they would listen to music on their cell phone (analog, heavy, and expensive) and they would laugh you out the door. Yet to the major mobile providers today, it is no laughing matter.

Although I think Venyon’s vision will not be an overnight success, when technology offers new ways to help separate people from their money, there are always folks interested in taking up the challenge. Time will tell if Venyon’s solution ultimately addresses a need in the marketplace, or if it will join the long list of technologies that were seeking a problem to solve, but did not find one in time before their own problem of financial viability become insurmountable.

1 comment:

fb4 said...

I think you missed the point of a smart chip within the phone. The only reason you have multiple cards is to display branding, a smart chip can contain multiple applications (cards) and the branding can be displayed on screen so you would only ever need one mobile phone.

Also most of the trials that have happened over the years have been partly funded by the banks and payment providers so they are already onboard; the retailers already have the systems in place, for example in the Uk the chip and pin hardware used in most shops has a place to mount the contactless reader, they just get a new piece of hardware, nothing else to change.