Gavin Carpenter can remember the trigger that set Phonovation, the company he leads as chief executive, on a path towards growth through innovation.
In 2015, after reviewing its operations, a business adviser told him about the concept of lean management principles. This moment sparked a focus on continuous improvement in how the business operates – and getting external validation for that work through accreditations and certifications. It also paved the way for fostering an innovation culture throughout the business.
Since then, Phonovation has become certified to independent industry standards such as ISO 27001 for security and the PCI-DSS standard for the payment card industry. The latest milestone came in June, when it was named overall winner of the Deloitte Financial Services Innovation Awards, as well as coming out on top in the Most Disruptive Fintech category.
Awards and accreditations are demonstrable proof of Phonovation’s progress and help to enhance its status, Carpenter says.
“When we go to meet a company or a customer, reputation is very important, so if it can precede us in any way, that adds a huge element. When we introduce ourselves, the first page on our slide deck is badges of the standards we have achieved. ‘Deloitte Financial Services Innovation Awards winner’ will become a new crest on that deck. These things add weight; it sets a tone for the meeting,” he says.
Phonovation won the Financial Services Innovation Awards for its Mobile ID service, which allows banks to authenticate their customers securely through their mobile phone’s unique identifier. This patented technology also prevents customer accounts from being taken over by fraudsters. Mobile ID now protects 98 per cent of banking customers in Ireland.
In the process, the technology has allowed banks to make cost savings by removing the need to support card readers to help customers log in to their online banks. It also helps banks to comply with the PSD2 regulation and enhance the security of payments while reducing fraud. And the technology also makes it easier for banks to bring new customers onto their services and to self-serve tasks like resetting their passwords easily. Phonovation estimates that it has reduced calls to one bank’s customer care centre by 25,000 calls every month.
And Carpenter says the technology can be used beyond just the banking industry – it could also be used as a secure identifier for government services, or in the insurance sector.
It also gets around the thorny issue that mobile phones weren’t inherently intended to be secure devices. “Mobiles weren’t originally designed to be used for banking,” he says. “They’re designed to be convenient, and their developers didn’t think security-first. These technologies we’ve brought in have been a retrospective correction to allow banks to transact with their customers.”
Mobile ID is one of several business communications tools that Phonovation provides. It sends 280 million text messages a year on behalf of Irish companies to consumers. It also handled the text alert service notifying the public about their Covid-19 vaccine appointments. It originally built this messaging platform in 2010, and one of the company’s earliest successes with it was when waste management companies adopted it for sending reminders to customers to leave their bins out for collection.
Phonovation is a high-performing team of 34 people based at its office in Dún Laoghaire. Carpenter proactively looks to understand each individual’s skillsets and ensure they’re best positioned for growth within their team. The company’s flat organisational structure allows everyone across all departments to contribute ideas to improve all areas of the business in a process-driven way. In 2018 alone, as part of its ongoing lean management journey, Phonovation made more than 2,000 improvements in the way it goes about its daily work.
Applying lean principles in a service organisation has attracted attention further afield; a Japanese college recently seconded an innovation expert in artificial intelligence to the company. Phonovation has also taken part in Enterprise Ireland’s Innovation 4 Growth programme, delivered together with the Irish Management Institute and MIT, which aims to help businesses embed an innovation culture in their business. Carpenter says the company is open to working with external advisers, and skilled experts from across the world, to contribute ideas to the company’s products and its way of working.
As a sign of this approach, later this year Phonovation will launch technology to tackle smishing, a type of scam involving text messages that direct people to malicious links or attachments that could steal their banking logins or personal information. Earlier this year, An Garda Síochána warned the public that smishing in Ireland had grown by 61 per cent.
Carpenter says the technology has already sparked interest from a bank to carry out a proof of concept. “When we’re innovating, we validate that it’s not just an idea that we think is clever – because that’s a big problem with innovation: you create a solution and then go looking for a problem,” he says.
The anti-smishing system is a product of Phonovation’s innovation engineering group, which gathers all company staff across finance, customer care, sales and technology to brainstorm ideas in a workshop setting. The innovation engineering concept was developed at MIT, and Phonovation has used this approach for the past six months. One facilitated session led to 104 ideas, which the team then voted on to create a shortlist to take forward.
“We have two years’ worth of innovation and concepts in front of us, and we’ve already worked on seven projects. We’re going ahead with three of them, we’ve benched two and we’re evaluating another two,” says Carpenter.
With a healthy pipeline of ideas, it’s a safe bet this won’t be the last we see of Phonovation at future Financial Services Innovation Awards.