Do Your Members Actually Want a Wallet?
It’s easy to concede that no one really has all the answers when it comes to mobile wallets. Will merchants begin rolling out mobile commerce in appreciable numbers? Will Apple include NFC on the iPhone 6? Will a dominant wallet product emerge at last?
With even experts uncertain, maybe it’s time to consider whether these questions are relevant in the first place. Instead, perhaps credit unions should be asking different questions:
- What can we do today to participate in mobile payments?
- Which of today’s players will be relevant to our credit union’s success, specifically?
- What mobile payments features would our members like and use now?
- How do we incent our members to include us in their mobile payment journey?
- Can we use mobile to build loyalty?
- How can we create systems that will evolve with this rapidly changing space?
Mobile payments are certainly the future of payments. But wholesale change in the payments space never happens overnight. Consider this from Javelin Strategy & Research:
“With an annual U.S. retail POS market of almost $4 trillion up for grabs, the stakes are extremely high. But slow adoption, lack of merchant enthusiasm, fragmented offerings and blocking by competitors has resulted in stalled growth for mobile wallets.”
Is there any way consumers wouldn’t be confused, given the environment?
There are plenty of options for credit unions within the mobile payments space, but diving headlong into the wallet wars doesn’t seem like a good one – at least for now.
Go Where You Can. Where should credit unions focus their energy? The simplest starting point: Get your cards into everyone’s wallets, some leading options of which were highlighted by Ryan Zilker in a July 16 opinion piece in CU Times.
Incentivizing mobile wallet transactions is a no-fuss way to integrate your cards into a variety of existing mobile wallet products–and to help your members associate your credit union with mobile payments. Make sure your card programs are competitive. Do you offer the best rewards? The most attractive rates and fees? The best way to move your card to the top of the wallet–any wallet–is to make it the most attractive one there.
At the same time, think about the development of new payment alternatives as a mobile engagement challenge. Instead of focusing on issues beyond your immediate control like merchant adoption, you can turn your attention to issues you can address, such as mobile payments. As an added bonus, shoring up your mobile offerings can help you build loyalty.
Credit unions can provide members with the mobile access they want and need: mobile banking, account transfers, alerts, real-time P2P payments and mobile check deposits.
New technology will provide even greater utility. For example, CO-OP will soon offer users control of their payment cards via their mobile devices, enabling them to set usage limits and receive security alerts, making their accounts more interactive and useful.
Put Time on Your Side. Credit unions also need to consider real-time payments. Faster payments may be the most intuitive selling point there is. Who doesn’t want to be paid faster? A survey conducted by the Fed earlier this year found 69% of consumers and 75% of businesses want real-time or within-the-hour payments.
In addition, FIS found that 55% of consumers want real-time payments from their primary financial institutions – and not card or alternative providers. Offering your members faster payments not only capitalizes on their trust, but also enhances it through a greater user experience.
In fact, the Fed is currently working on a faster payments initiative. The goal is to create a real-time payments network within the next 10 years. But, who wants to wait 10 years?
Where technology is marketable and available now, put time on your side. While you can’t offer your members a universally-accepted wallet product now, you can move toward real-time payments – in the real, foreseeable future. That’s not only a benefit, but also a differentiator.
Again, credit unions are not in the driver’s seat on many wallet-critical issues. But on key features and capabilities, you can actually lead the pack. Doing so is a little like building a wallet from the inside out. Win the day on mobile payments, card controls, mobile usage and loyalty, and card programs, and you’ll be sure to be in the mix when member mobile wallet adoption follows.
What seems most likely is that the mobile wallet and payments space will continue to be in flux – most likely for a long time. For credit unions, the smartest strategy may well be one that includes – but doesn’t revolve around – wallets themselves. Rather, gearing up for speed, innovation and change is the best place to put your money.