By Swamini Kulkarni
In today’s fast-paced live smartphones applications are the holy grail. From monitoring the stock market to learning how to play guitar, there are mobile applications made for every need. The financial sector is no exception. Within a few years, mobile wallets have become a must-have and are no longer an optional offering.
The demand of tech-savvy people and the desire of financial institutes to build a relationship with customers created a perfect storm and mobile wallets secured a sweet spot in people’s smartphones. According to a report published by Allied Market Research, the global mobile wallet market is expected to reach $7,580.1 billion by 2027, growing at a CAGR of 28.2% from 2020 to 2027. The most popular technology companies are already leading the mobile wallet market with their solutions such as Google Pay, Samsung Pay, and Apple Pay. However, there are many other companies that have launched mobile wallet applications for smartphone-toting customers and their businesses are better for it.
Recently, Independent Bank, a Michigan-based bank launched an Online and Mobile Banking platform, ONE Wallet. The bank offered two separate platforms for business customers and commercial customers names ONE Wallet Business and TreasuryONE respectively. The mobile wallet includes bill pay services with faster payment and offers customers the capability to reset passwords quickly and the chance to open new accounts or apply for loans with a few clicks. With the use of ONE Wallet, customers can transfer funds to Independent Bank customers as well as other financial institutions customers.
Similarly, several technology companies and financial institutions introduced their dedicated mobile wallet technology. What’s more, the virtual currency and gaming industry has entered the market too. Recently, BlackHat Project announced to launch its mobile wallet, Cell Pockets. Everi Holdings Inc., a leading provider of digital casino gaming products and content and financial technology company launched JACK Mobile Wallet to allow customers a choice of having a cashless mobile experience and introduce a customer-centric feature to customers.
The lure to use digital wallets is only going to increase in the future. Apart from fund transfers, mobile wallets support lightweight content such as loyalty rewards, coupons, and gift cards coupled with member cards and IDs. These perks establish a direct engagement with customers like never before. Moreover, it offers new brands a chance to communicate with a larger consumer base and inform them about their services and products.
PayPal might be the most popular digital payment platform since its association with eBay. However, the advent of Google Pay and Apple Pay brought tough competition in the digital payment market, and quickly these technologies secured a huge customer base. There are multiple reasons why Google Pay and Apple Pay gained such popularity. Fund transfers with a mere click along with customer’s confidence in Apple that it will guarantee customer privacy, security, speed, and anonymity. Not all mobile wallets offered such benefits that customers were searching for.
Future trends in mobile wallets to look forward to –
In the future, customers will value security and privacy more than anything as they are more aware of what personal information is being shared with mobile wallet platforms and other companies that have tie-ups with the parent company. Strong user authentication will be a major trend in the mobile wallet industry. There are a colossal number of mobile wallets to choose from and choosing the right one can be overwhelming. Thus, both companies and customers need to understand the importance of data security and privacy. Moreover, the companies that offer self-custody mobile wallets and complete control of the data to customers would stay ahead of the curve.
Loyalty programs have been tried and tested by many companies in the industry and will continue to lure customers in the future. People love discounts and cashback and that’s why loyalty programs are all about. This customer retention strategy works wonders for enticing new customers and builds a relationship with them. Already a majority of retailers across the globe have adopted this strategy by offering in-store mobile payment options. This way customers earn points every time they make purchases using mobile wallets. In the future, more and more retailers, especially those who just started their business will follow this strategy.
The Covid-19 pandemic destroyed several small and big businesses. However, it supplemented the growth of the mobile wallet market. Near Field Communication (NFC), one of the major drivers of the rapid adoption of mobile wallets received new appreciation during the pandemic. The contactless payments gained utmost importance since the outbreak, as customers no longer need to physically interact with a retailer every time they shop. The simplicity of NFC would continue to benefit the mobile wallet industry.
Having said that, biometric technology could be the next big thing in the market. Although it has been around for longer than a decade and the majority of smartphones offer fingerprint authentication, its integration in mobile wallets would add an extra layer of security to customers. It enables customers to access their accounts with the retina or fingerprint scan and eliminates the need to remember long, complex passwords. The biometric technology in mobile wallets will make digital payments faster and extremely convenient.
Last but not least futuristic trend in the mobile wallet industry is artificial intelligence (AI). Over the last few years, AI has transformed the way businesses are run. AI has proved how it can manage routine customer interactions and AI-driven chatbots are the most common examples. However, the integration of AI can help financial institutes to understand customer problems and offer a choice of automating basic transactions with customer’s approval. AI is capable of doing routine and reparative tasks and it can certainly handle voice instructions, which can help in processing ACH payments without speaking to an agent.
Such trends are about to hit the mobile wallets industry; some of them have already proved their importance in digital payments. Customers are now tech-savvy, more concerned about their online privacy and the safety of their personal data. Thus, companies must offer their undivided attention to the security of data and develop trust with their customers. As cryptocurrency is gaining importance, several companies would launch mobile wallets specifically designed for handling virtual currency transactions. This would need an extensive amount of investment in cybersecurity and financial institutes are bound to offer such facilities to stay in the game.
About the Author
Swamini Kulkarni holds a bachelor’s degree in Instrumentation and control engineering from Pune University and works as a content writer at Allied Market Research. She is deeply fascinated by the impact of technology on human life and loves to talk about science and mythology. When she is not glued to the computer, she loves to read, travel and daydream about her areas of interest.