Mobey Forum: Most FIs Likely to Go It Alone on Digital Wallets (May 30, 2013)
May 30, 2013
Banks and other financial institutions looking to enter into the mobile wallet arena are likely to find a market rife with competition, mostly in the form of own-branded products that deliver proprietary services only. That was among the findings in a new white paper by Mobey Forum’s Business Workgroup, the fourth in a series conducted by the group on mobile wallets. The paper outlines several structures for mobile wallet development and outlines some key considerations FIs must weigh when choosing the best approach.
Most wallets coming to market in the near-term, the paper predicts, will be the result of FIs going it largely alone, developing their own proprietary wallets independent of a partner. Only when a secure element is required or when needed functionalities become too difficult to provide in-house are most FIs likely to seek outside partners. The paper cites Barclays’ Pingit as an example of a “vertical” wallet, in which the FI designs, controls and manages all services available on that wallet. “Horizontal” wallets, such as Google Wallet, aim to aggregate services and drive mass market adoption, require more cooperation among stakeholders, but offer a wider range of functionality.
The Mobey group projects that the number and range of different wallet types coming to market will lead to a near-future in which multiple mobile wallets co-exist, with consumers using multiple wallet products on one mobile device. “The number, breadth and variation of mobile wallet solutions set to come to market is going to make getting to grips with the technology a challenge for the end-user,” said Jordi Guaus, chair of the Business Workgroup, Mobey Forum. “This means that banks and financial institutions should think very carefully about their chosen structure and approach to market. Decisions taken now will have a significant bearing on the value they are able to deliver to customers and, in a crowded market, value will be the key to earning the loyalty of end-users.”