Emergence of mobile wallets is expected to pose a threat to the
revenues of banks and financial institutions. This has been
concluded by the latest survey conducted by a financial consulting
firm, Carlisle & Gallagher Consulting Group. As per the
findings, because of these mobile wallets, banks and financial
institutions are expected to face increased payments related
competition from non-financial companies in the near future.
The survey was conducted in April and about 605 consumers
participated in the survey. The findings were quite astonishing as
nearly 48% of the respondents stated that they would prefer making
payments for goods through mobile wallets, if given a choice. The
survey also confirmed that the consumers are not interested in
payment options provided by their respective primary banks.
Further, these consumers showed interest on other services - search
& shop, loyalty programs and real-time incentives - offered in
Additionally, among those who are interested in using mobile
wallets, 80% affirmed that they would consider making payments
through PayPal Inc., owned by
). Further, 60% of those interested in mobile payments avowed that
they would like to use
) services and the same percentage voted for
), though currently it does not offer this facility.
Meeting the Increasing Demand
Banks and financial institutions get significant amount of
revenue for transferring money from the purchaser to the seller
through debit and credit cards. If the non-financial companies also
start providing similar services, the revenue and market share of
banks would definitely get hurt.
Many non-financial companies have already started providing
mobile wallet facilities in an effort to tap the growing demand.
Google has joined hands with
Sprint Nextel Corp.
) to offer its mobile service facility − Google Wallet. Likewise, a
joint venture between Verizon Wireless, subsidiary of
Verizon Communications Inc.
), AT&T Mobility LLC, a unit of
) and T-Mobile USA, the U.S. wireless unit of
Deutsche Telekom AG
) − known as Isis, has tie-ups with nearly all major credit card
providers to offer mobile wallet services.
The banks are now waking up to the changing needs of their
customers and have started offering mobile wallet facilities to the
customers on their own.
Bank of America Corporation
) has successfully tested the technology related to mobile wallets
in selected markets and plans to offer the same in the near future.
JPMorgan Chase & Co.
Wells Fargo & Company
) are also trying hard to meet the growing demand for mobile
wallets and improve their market share through it.
How Real is the Threat?
Though conducted on a smaller scale, the survey is expected to
have greater and more negative implications on the revenues of the
banks. Over the next few years, most of the customers would be
using mobile wallets to make payments. For customers, it is a
service that enables them to keep track of coupons, loyalty
programs and other incentives in a hassle-free way.
For banks, which are facing various regulations related to
revenue generation, mobile wallets present an opportunity to recoup
some revenue. If the banks don't take immediate actions, other
non-financial companies would garner a major market share, leading
to revenue losses.
So, it's high time for banks to take steps and develop their own
mobile wallet facilities. This would enable them to augment revenue
over the longer term.
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