EVOLUTION OF BANKING

NON BANKS:
DIGITAL WALLET
Core Elements
Digital wallet takes over money transmission…?
The money transmission or current account has been the core product at the
heart of the customer relationship for decades, with customers expecting
an account which receives income, pays standing orders and direct debits,
alongside providing a debit card all for free. The next few years will see a
rapid adoption of mobile wallet services which, over time, could replace the
traditional money transmission account. The more engaging and convenient
experiences of digital wallet propositions will likely win, whilst leveraging
existing banking payment infrastructure, and have the potential to replace the
bank as the core relationship owner with customers. Banks could become a
back-end service provider, still providing some non adopters with cards and
cash – the question being where does the income get generated from?
However, it’s not the first time that new technology has been positioned to be
the end of traditional banking or of cash. Customer research often suggests
a reluctance to switch to digital wallet, but research 10 years ago would have
suggested MP3 players were just a fad. This challenge must be taken seriously
by banks as the benefit of success is significant. The new entrants have no
intention of becoming a physical bank and taking on the regulation and capital
requirements this involves, but they are very much interested in taking a
dominant share of the payments industry income. Success here will require
merchant adoption of technology, new levels of security which don’t diminish
the customer experience (biometrics?) and a simple service which allows users
to bring together all their credit and debit cards.
Phone replaces plastic cards
Payments made via NFC
Wallet consolidates all brands
Provider levies fee on merchant
Security and lost phone?
26 | The Evolution of Banking and Financial Services