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Forget your wallet; it’s all about virtual cash

Mobile banking is no longer about the banks - it’s about the payments market. As a result, it’s set to be the sector’s new consumer battleground.


The traditional bank-client relationship is set to be subverted  for good by mobile technology that delivers a service direct to smart phones and tablets,  as the payments’ markets steals a march with a surge in critical innovation in this area. Everyone from Google, PayPal, Square, Isis, Apple and even the likes of Starbucks are at it.


Those who channel virtual cash are in a strong position. The everyday business of having a current account, savings or loan could get reinvented as users are bombarded on a near-daily basis with ever more options for their digital wallets that will eventually replace everything from credit, debit and loyalty cards to vouchers, coupons, tickets and cinema and airline boarding passes.


One size is expected to fit all. The more engaging and convenient digital wallets get, the more likely they are to win more business and be able to directly leverage more from existing banking payment infrastructures - or simply replace the bank as the customer's favoured financial partner.


As consumers, we're also an intolerant lot, getting more impatient all the time and failure to provide a seemingly seamless service costs. Research from Experian shows that nearly half of all UK adults have abandoned an online transaction after getting frustrated at the length and complexity of the validation and security checks. For instance, online consumers are most tolerant with mortgage or insurance providers, but even they will get no more than 10 minutes to complete a transaction. Any longer and the opportunity is often lost and the customer simply goes to a competitor. Only around one in six will bother to try again at a later date.


Despite the commercial risks of banks being eclipsed by well-known high street brands, there is a middle way, which could see institutions become white label, back-office providers for more trusted names.


Naysayers and tech-deniers will happily hide behind customer research suggesting there’s still a reluctance to switch to digital wallets. But the challenge must be taken seriously by banks because the cost of late or non-adoption will be significant.


As mentioned in my last blog, BBA figures show that we’ve now downloaded more than 12.4 million banking apps, while the number of transactions made using them has nearly doubled in a year, hitting 18.6 million per week by the end of 2013. There are also now 28.4 million debit and credit cards with tap and pay contactless technology in use, and the number of payments made from these cards is expected to triple in the next year.


Success from here hinges on three factors: adoption of new technology, seamless and accurate levels of security which don’t interfere with consumers’ front-end experience, and a straightforward channel that allows customers to bring together all their credit and debit cards onto one simple to use platform.




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