Increased competition from banks in mobile wallet segment to drive innovation and growth globally

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Banks across the globe have only recently evolved to the shifting customer preferences to mobile and digital banking services. According to PayNXT360, 34% of consumers in the US and 42% consumers in Europe are already using mobile wallets such as PayPal, Android Pay, Masterpass, and Apple Pay.

Technology firms such as PayPal and Apple Pay in the US; Ant Financial Services and Alipay in China; Paytm and MobiKwik in India are disrupting payments industry and already have registered significant user base. As a result of this, banks are running into risk of losing customers to third party platforms. Instead of competing, banks and financial institutions are collaborating with fintech firms to provide efficient and cost effective services to customers.

Below is the list of recent developments where leading banks that have launched their own mobile wallets or offered support to other mobile payment service providers in order to offer digital banking services to their customers.

January 2017

France – BNP Paribas has selected Mobile Protector technology of Gemalto to secure its multi-brand omni channel mobile wallet Wa!.

UK – Fifth Third Bank supports Android Pay and Microsoft Wallet, enabling customers to add their debit and credit cards to Android Pay to make contactless payments with their mobile devices.

India – SBI has partnered with government-owned telecom service provider BSNL to launch digital wallet MobiCash. The wallet runs on Android and iOS smartphones with GPRS facility, as well as on basic mobile phones without internet connection via SMS or unstructured supplementary service data. The app will enable users to transfer funds to other wallets and accounts.

December 2016

Malaysia – CIMB has launched its mobile wallet CIMB Pay for Mastercard and Visa card holders. Apart from making contactless payments at over 1,800 NFC enabled terminals across Malaysia, customers can also receive alerts on nearby flash deals and offers in real-time via the app’s in built notification system.

November 2016

US – Chase Pay, the mobile wallet service from JP Morgan Chase has been launched in November 2016. Chase Pay has partnered with merchants across different sectors such as retail, food & beverage, and travel in order to add more customers.

Australia, Mexico, and Singapore – Citigroup has launched its own mobile wallet called Citi Pay to allow its customers to make mobile payments for online, in-app, and in-store transactions. Citi Pay customers can benefit from reward points and loyalty options. Citi Pay is integrating with Masterpass to support payments for Mastercard consumers.

Starting 2016, leading banks including BNP Paribas, JP Morgan Chase, ANZ, Wells Fargo, Axis Bank, and Credit Suisse have begun testing blockchain technology to execute cross-border payments, trade finance documents, and KYC registration. This is expected to significantly reduce the time taken for manually processing transactions, in addition to securing error-free operations.

At a fintech forum in Japan in February 2017, Bank of Japan’s executive director Shigehiro Kuwabara advised that financial institutions should avoid depending on technology firms for distributed ledger technology. Kuwabara cautioned that though the distributed ledger technology has great potential, but it however cannot completely reinstate the current banking systems. Kuwabara noted that banks need to understand about the technology so as to offer enhanced banking experience to customers. Bank of Japan is collaborating with the European Central Bank to explore opportunities using the distributed ledger technology.

However, there is a different view point in India where the Indian central bank Reserve Bank of India’s deputy governor suggests banks to extend cooperation with fintech firms in the areas of peer-to-peer lending.

To know more about how these developments are likely to impact mobile payment growth, click here.