The wallet goes digital
As smartphones take an ever-more prominent role in our daily lives, there’s one emerging trend that financial institutions should pay particular attention to. The concept behind the “mobile wallet” is, on its simplest level, the idea of storing digital versions of credit and debit cards on a smartphone instead of carrying hard copies in a bulky, physical wallet. If a consumer wants to purchase something using their Google Wallet app, they simply tap the back of their phone on an NFC terminal (basically a scanner) at the point-of-purchase and the transaction is complete.
While the real upside of mobile wallets is yet to be truly realized (like automatically selecting the card with rewards points you didn’t even know were available for purchasing a particular item), the technology is far enough along that key players in the tech industry are moving in on what should intuitively be financial and banking market share. According to a study by Carlisle & Gallagher Consulting Group, Level-Up, Square, PayPal, Google and Apple are the tech giants best-poised to beat major banks and credit card companies to the proverbial profitable punch.
What’s really at stake?
Revenue, of course! As Carlisle & Gallagher discuss in their white paper on the above-mentioned study, simply doing nothing allows third parties to undermine a bank’s status with their client. It’s simply one less service you’re providing them, which is particularly unacceptable when you consider how much of a natural extension mobile wallets are from online and/or mobile banking. It’s bad for the brand, and what’s bad for the brand eventually is bad for the bottom line.
Hand-in-hand with market share, institutions that have a stake in this technology really should feel a strong sense of urgency in responding to demand. The same CGCG study points out that 48% of respondents would be interested in a mobile wallet. The problem is a lot of people don’t know it’s available to them in a functional manner. But technology is pervasive, and public ignorance is not expected to last long. As Phillip Ryan of Bank Innovation points out, “Forrester Research puts mobile proximity payments at 4% of the mobile payments market, but expects that number to reach 45% by 2017.”
What’s a marketer to do?
There are really two issues at hand here for marketers: What to do if your business does not offer a mobile wallet app and how to get ahead of the market if/when your business builds a mobile wallet app.
If your business does not offer a mobile wallet app yet, you can still be proactive in your marketing approach. Promote what mobile services you do offer. If you can get people comfortable using your services in a mobile format, you’ve already reduced some of the pushback you’ll get when you expand the functionality.
If your business has a mobile wallet app available or one is in the works, the solution is pretty simple: Spread the word. According to CGCG, 48% of people are already interested so just let them know it’s now conveniently available through you. The mobile banking service Mobiliti found that adoption rates sky-rocketed from 10% to, in some cases, over 30% when financial institutions marketed their solution.
The key to a successful campaign, according to CGCG, will be to tailor your message to three demographics:
- Payment optimizers
- Techno shoppers
Each group will require messaging targeted to their specific objections. For example, 52% of the traditionalists cited security concerns as a primary reason for their lack of interest. This is an opportunity to play to one of your strengths: People have a certain kind of trust with established financial institutions regarding security that they may not have with a new tech company.
The issue in debate isn’t if mobile wallets take off; it’s when. Financial marketers need to get ahead of the mobile wallet boom before tech giants devour the market share. The key is brand awareness in the mobile banking space. Many people don’t know mobile wallets are even a thing and their concerns are similar to those voiced when online shopping came into existence. But like financialbrand.com points out, “[Consumers] went from ‘I’ll never buy anything online’ to ‘I prefer shopping at Amazon’ in less than 10 years.”