Mobile wallets have been talked about for years, I've lost count at the number of reports I've read citing that mobile wallets will dominate the world and that your traditional wallet will be replaced by an app on your smartphone.

The UK and Europe

My first foray into the mobile wallet world was way back in 2012, working for the European based Telefonica and its commercial UK arm - O2. There were many solutions in the market long before we at Telefonica developed ours. The obvious one which springs to mind is PayPal that we've all come to know and love. It's probably fair to say that they never really took off in the UK or Europe for that matter. Most of the telcos have tried and failed to capitalise on the hype. Barclays are probably the only major bank in the UK to have stood the test of time with their Pingit solution but that's really about it.

Singapore & APAC

Roll on a few years and I am now based in Singapore, a vibrant, well developed financial hub and I am fully entrenched into the FinTech world in this region. Singapore, as it is widely documented, has a great combination of infrastructure, high smartphone penetration and a consumer base driven by technology. It is you would say, the perfect place for mobile wallets to thrive and be successful, however, the truth is that it's not really the case. There are local providers of mobile wallets in Singapore, coupled with offerings from the telcos and the major banks but yet adoption and usage remains modest at best.

The advent of Apple Pay, Samsung Pay and Android Pay may help change that shift and influence the awareness of digital wallets and more importantly, one of the key drivers that underpins it - mobile payments. 

If I look at the other regions in APAC, the landscape is very different to Singapore which remains in its own little bubble. The neighbouring regions are aspiring to grow from being purely cash-driven societies and develop much like Singapore has, and whilst that will take time I feel strongly that this is where mobile wallets can flourish as a enabler.

Mobile Wallet Users

There are essentially two camps to which you could classify a mobile wallet user:

• Banked
• Unbanked 

Most of the developed payments markets tend to focus on pushing mobile wallets to banked consumers and are easy to on-board. The best placed providers here are the banks themselves as they already have a large consumer base they can tap into and leverage, whilst offering additional services to drive adoption and usage. For telcos and third-party providers, this will probably be a hard sell. There are the odd exceptions of course, namely Paytm in India which is currently riding the crest of a wave following the demonitization exercise in India in November 2016.

The unbanked are slightly trickier to deal with as there are more obstacles to overcome, esp. for consumers with no formal bank accounts or credit history. On boarding and KYC are far more important and relevant and the digital wallet offering will more than likely be some form of SVA or Stored Value Account. This would allow the consumer to top up their digital wallet and would provide them with a formal account and full money management capabilities.

Major Concerns

A major headache from a consumer perspective is the apparent lack of interoperability amongst wallet users. If you side with digital wallet provider A and your family member or friend sides with provider B then it becomes more a challenge due to the siloed nature of how mobile wallets are built. Additionally, as a consumer I am now beset with so many mobile wallets these days, if I were a layman, I know I'd be terribly confused as to whom to side with. Don't get me wrong, choice as a consumer is a good thing but too much choice across different verticals is not good and this is where fragmentation is inevitable.

Summary & My Final Thoughts 

Amidst of all this, I still remain hopeful that mobile wallets will continue to grow but there are some considerations that the providers must be aware of but the battle of who will come out on top remains intriguing. As a fan of mobile wallets, I shall be keeping a close eye on developments as they happen globally.