For months upon years, we’ve heard and seen a lot about the concept of a mobile wallet and the many benefits and conveniences it offers consumers. We’ve covered the core concept of the mobile wallet in this blog and have shared advice with banks on how important it is to their long term viability. There have been a number of third party players (Google, PayPal) in the market finding nominal success with their mobile wallet applications, to date. But, like anything else, when consumer adoption hits the tipping point, it will be important to offer a more valuable wallet with more functionality, more personalization and more integration – without compromising security. As only a bank is positioned to do.
So, we’ve put together some thoughts on what banks must do to really own the mobile wallet and how they hold the advantage when it comes to being able to offer the most complete solution. Banks understand consumers, their spending habits, their preferences and their budgets perhaps more than anyone else. They have the insight to understand when a person is likely to go out to eat, or shop at the mall or make a big purchase. So, why are they a behind the curve?
First, they haven’t made mobile wallet apps interesting enough to use. Up until now, a lot of banks have provided the same vanilla online functionality in their “mobile app” – simply allowing consumers to check their balance, make a transfer and pay a bill electronically. While this has been convenient, it’s not enough. They must evolve the mobile app, or wallet, to include personalized and handy tools that synch with the consumers’ preferences and habits. For instance, making suggestions on nearby restaurants and offers – based on the type of food and atmosphere they believe the consumer likes. Or, integrating all of the consumers’ travel miles and rewards into a single interface and providing insights and recommendations on when and where they can best redeem those miles by looking at optimal booking times or budgets. The mobile wallet will eventually be smart enough to tell YOU when you can redeem and use points – rather than forcing you to do hours of research to see if your airline rewards will synch with your hotel or rental car points. It will be intuitive, easy to use and act as the central repository for all of the financial and personalized information you currently carry in your physical wallet.
The winning mobile wallet will eventually replace credit cards. No longer will you have to walk into Nordstrom’s and/or Target and rifle through your wallet to find your rewards or store credit card. Instead, your mobile application will let you know exactly how many points you have, what your existing balance is and the items on sale that apply directly to your interests and preferences. It may even create a custom offer for you to buy the boots you have been eyeing – by sending an instant coupon your way when you are strolling through the Nordstrom’s shoe department.
Banks are the only entity that can do this as intuitively as I have demonstrated above and as securely as possible. Their legacy of protecting important customer information will play a major role in how the mobile wallet market shakes out in terms of what is important to consumers. So, why do banks have the ability to provide more personalized and intuitive recommendations? They can rely on the most accurate first degree data – vs. the less accurate and insightful third degree data.
What this means is rather than just make assumptions that Joe Smith likes football because he is 40 years old, lives in Green Bay and has a subscription to ESPN Magazine (all third party data). Instead, they know that Joe Smith has been to Lambeau Field several times in the past year, has purchased an Aaron Rodgers jersey from an online store and has posted a number of articles on Twitter about this year’s Packers team. The first hand or “first party” data that banks have own (in addition to third party data) enables them to provide much more specific recommendations and offers to Joe Smith based on what they already know – not what they assume based on his demographic. Consumer adoption of the mobile wallet will be driven by this accurate and insightful knowledge because the offers presented are more intuitive and actionable.
Third party data can only make recommendations based on what you have redeemed in the past and what they “think” you may like based on the bucket they’ve put you in. While many have done this somewhat successfully, banks have the knowledge and the power to increase redemption and interaction rates by 50 fold if done correctly. This is because they actually understand their customers, their purchase habits, their budgets, etc. Those that can combine “first party” data with third party data create the most compelling case for understanding a customer as they can then apply the generalized information with first hand personal preferences. The companies that do this will likely be the most successful in creating higher redemption rates on personalized offers and coupons.
So banks, it is time to own the mobile wallet. There are a number of technology solutions (like our Lily solution) out there that can help you interact with your customers by enabling you to get a better understanding of who your customers are and what they want by mining through all detailed data. Not only will this help you to improve the accuracy of targeting, but it will enable you to offer a service far superior to PayPal or Google. The true mobile wallet is the destiny of the banks, but there is no time to waste.
