Cutting Through the Hype: The Truth about BLE Beacons

ibeacon2The industry is abuzz at present with many people talking about the endless opportunities and possibilities around BLE Beacons, and amidst all the discussion remains a large amount of confusion around different beacon technologies be they iBeacon, PayPal Beacon or one of the many other types of beacon.

Several heated exchanges continue, especially with many observers questioning the future of NFC in light of the much-anticipated upcoming adoption of BLE Beacons.

To fully understand the pros and cons of BLE Beacons, it’s first necessary to take a step back and consider the original aims of location-based services (LBS) and the notion of ‘right-time’ marketing that is so often discussed.

Location-based services (LBS) are nothing new. Ever since the mass adoption of smartphones several years ago there has been an endless stream of LBS solution vendors vying to dominate the market. The likes of Foursquare, TagTile, Shopkick as well as numerous others have in the past demonstrated novel and innovative ways of detecting or recognising when a consumer was at a given location, but one thing persisted across all of these solutions, a high level of friction, that deterred all but the most motived and proactive consumers from actively participating. The underlying pain of removing the phone from one’s pocket, unlocking the device, locating the necessary app and then waiting for it to open was simply too great to ever achieve mass consumer adoption. It’s simply a question of convenience, or in this case, the lack of.

To understand why BLE Beacons are a game changer, we first need to look beyond the beacon related technology and understand why beacons are able to eliminate the traditional friction that has plagued LBS solutions. The root cause of this friction lies with the Apple iPhone and the restrictions that have been imposed on developers in the name of protecting the consumer. Don’t get me wrong, the iPhone provides many valuable safeguards for the consumer, but it is these safeguards that have traditionally acted as effective roadblocks for LBS solution providers.

Apple’s recent decision to provide native support for BLE Beacons, albeit their proprietary iBeacon signature, has created the first true opportunity for frictionless LBS solutions running on iPhone devices. Once the consumer has installed the app on their phone and granted the required permissions there is no need for them to keep manually opening the app at each location, instead the location is automatically detected from a nearby BLE Beacon and conveyed to the app without the phone ever leaving its owners pocket.

It is the ‘frictionless’ nature of iBeacon that has changed the game for LBS, rather than the underlying technology that surrounds BLE Beacons. The ability to communicate with a passive consumer is essential for the long-term success of any LBS solution. And for those consumers who do not like the idea of being tracked, they can avoid such schemes, it’s simply a matter of choice on the part of each consumer.

Getting a consumer to install an app on their phone is a relatively trivial task, but getting them to proactively open the app on a regular basis is an entirely different challenge and one that is doomed to failure in the long term, especially once the initial novelty value has worn off.

The second benefit with iBeacon is that it’s not constrained to iPhone devices. iBeacon is nothing more than the format of the data that is sent from a standard BLE Beacon to the smartphone and whilst the iPhone provides native support for iBeacon there is nothing stopping an Android app from detecting an iBeacon, albeit slightly more effort on the part of the developer and a somewhat increased level of battery usage.

In short, the game-changing aspect of BLE Beacons lies in the fact that they are supported by the majority of recent smartphone devices, which is not the case for alternative technologies and more importantly, that the consumer experience is frictionless, in that they didn’t even need to remove the device from their pocket.

But the real future of LBS and ‘right-time’ marketing does not lie solely with BLE Beacons, as any truly effective LBS solution needs to take into account the Omni connected nature of the world in which we live in. To truly succeed, LBS solutions must fully embrace, harness and leverage on a diverse range of ‘location feeds’, be they BLE Beacons, GPS from Smartphone Apps, Social Media Check-Ins or even the often overlooked ‘grey-data’ that already exists within the payments ecosystem in the form of payment-card and ATM transactions.

Incumbent players within the payments ecosystem, most particularly acquirers and issuers, are in a unique position to jumpstart their activities by leveraging on existing ‘grey-data’ whilst at the same time embracing other types of ‘location feeds’ to deliver value-added-services to merchants and consumers alike, that not only have the potential to re-invent the traditional brick-and-mortar retail experience but can also create new and highly profitable data-driven revenue streams, thus mitigating against the threat posed by the continued pressure against traditional transaction-fee based revenue models.

One thing is for sure. BLE Beacons are here to stay and will have a positive impact within the brick-and-mortar retail environment. The question that remains is whether the incumbent players will be able to leverage on their existing ‘grey data’ before new entrants corner the market.

Learn more about what’s next in banking at Bank Innovation 2014 on March 3-4 in Seattle. Request an invitation here.

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