Mobile wallet adoption is finally gaining momentum with nearly one-third of Apple Pay customers now using it at least weekly. With Apple, Android and Samsung getting the jump on mobile wallets, financial institutions must act now to capitalize on the growing demand from consumers.
And the task is tough. According to the First Annapolis Consulting report, Study of Mobile Banking & Payments, most consumers (65 percent) want one payment app on their phone, and most would prefer their bank to be the app provider.
In order to stay relevant and engaged with their customers, FIs need to offer a mobile wallet that fits the unique needs of their customers.
In addition to providing basic card and payment functions, they can surpass the offerings from nonbank providers by building trust with advanced security offerings, which is currently one of the biggest roadblocks for mobile wallet adoption.
FIs are already embracing this mobile first strategy by offering mobile banking and mobile-PFM applications like Bank of America's Erica chatbot. However, in order to capture the full customer journey, particularly at the point of payment transaction, FI's need a mobile wallet strategy.
Financial providers that are able to give customers more control of their cards and transactions within a mobile app are more likely to capture market share from consumers making the jump to mobile.
FIs need to think about the massive shift to online commerce and related mobile payments while being backward-compatible with physical payments. According to the website Statista, mobile payment projection is $780 billion, out of which $49.29 billion is proximity mobile payment.
By 2019, Statista forecasts that mobile will reach a trillion, while mobile proximity will rise to $189 billion. FIs have an opportunity to offer solutions that are focused on in-app payments.
To maximize use of any card within the mobile wallet, consumers must have the trust in their provider that not only is the account secure, but that the card will work as promised when it is needed.
Mobile wallet providers and FIs have tried many tactics to prevent fraud, including the current trend towards behavior-based risk modeling, which uses analytics to determine the likelihood of fraud to approve or deny a transaction.
However, risk modeling can result in a high rate of false negative denials, which, according to the Javelin study Future-Proofing Card Authorization, causes nearly 40 percent of declined cardholders to abandon that card.
From transaction notifications to receiving digital receipts, consumers like the feeling on being able to actively manage their financial interactions from the palm of their hand. Consumers also like to see that their spending is indeed from them, which makes instant transaction confirmation a popular tool that allows them to easily complete an authentic and secure transaction from their smartphone.
Incorporating biometrics through fingerprint authentication increases the level of security in a user-friendly way and is faster than using physical cards at the point-of-sale system.
After triggering a payment through the mobile wallet, banking customers can then seamlessly and safely authorize the transaction, which offers an extra layer to secure the transaction through their financial institution without asking them to jump through frustrating hoops.
The other side of card control that can give FIs an advantage in the mobile wallet arena is the ability to customize their transaction environment. Starbucks has proven that ease of use is winning over their customers with 16 percent of all transactions running through their mobile app.
Card on-off switches, spending controls, location controls and real-time transaction alerts via push notification tie the purchase with the information on the customer's phone. In addition, the customer has the ability to annotate and tag transactions and even add digital images of receipts. Together, these tools can change user behavior.
FIs need to offer these additional controls and visibility to build consumer trust in both the institution and in their mobile payments application. Through mobile-based card controls, users are given the power to interact with their cards, giving them essentially a "remote control" for their debit or credit cards.
By integrating the card control app into the mobile wallet or mobile banking app, card issuers can provide the highest available level of customer self-service and become the card of choice in any mobile wallet.
Customers using this type of mobile wallet will not only interact more with their financial institution but also will take a customized approach to their banking.
Protected with an additional level of access, management, card controls and transaction alerts, consumers will form a strong association between their smartphone and the payment card that gives them the assurance that their money is secure and their FI has them covered.