The rise of smartphones has fundamentally changed the way consumers and businesses interact, and the banking industry is no exception. In a few short years, we've witnessed the rise of mobile banking apps. And if recent years are any indication, mobile's prevalence will only continue to grow.

The rise is justified: mobile is the key to reaching, engaging and maintaining the coveted Millennial market. America's biggest generation – approximately 68 million people ages 18 to 34 – has also proven to be one of the most difficult to reach. Millennials tend to be skeptical of big business. They expect companies to engage in a dialogue. They consume information via digital channels. And they sleep with their mobile devices next to their beds.

However, a recent survey conducted by the FINRA Financial Investor Education Foundation found that more than half of Millennials believe little to nothing sets their bank apart. While these numbers may scare some credit unions, others will see this as an opportunity.

So how do credit unions seize the opportunity? How do you differentiate yourself from other credit unions? In short, by offering new tools and services that speak to Millennials. Already, an overwhelming number of Millennials believe mobile wallets will replace the way they access money and pay for things in the very near future.

For the first time ever, financial services companies face competition from tech companies vying to provide banking solutions. In fact, three-quarters of Millennials surveyed by the FINRA Financial Investor Education Foundation said they would be more excited to use financial services provided by the likes of Google, Amazon or Apple – instead of their own banks.

Appealing to the next-generation consumer requires credit unions to reach and engage them on mobile devices. Company-specific apps are the default choice for many credit unions today. However, these apps often fail to see the big picture and engage consumers in a meaningful right way.

Consider the number of apps on your own smartphone. According to recent calculations, the average ranges from 68 apps on Android devices to 88 on iPhones. Now consider how much time you spend using each one of those apps. The odds aren't good – no matter how beautiful or user friendly the app is.

A multi-tenant mobile wallet essentially streamlines multiple apps into a single place, delivering consumers a simple and easy-to-use experience. It offers virtual versions of my credit cards, as well as special offers to various merchants. It's easy, and it's safer than a traditional wallet. It reflects my multi-faceted and digital life.

Credit unions stand to benefit from mobile wallets in several ways. Not only can these help credit unions distinguish themselves and attract new users, but mobile wallets also make it easy to extend marketing campaigns, advertise and engage users on the one device that's always with them.

Some credit unions and banks are even exploring more technical integrations within mobile wallets that allow users to access account information.

However, mobilizing banking and payments should never come at the expense of security. The current payments ecosystem and infrastructure works, and there's no reason for a third party to intercept your customer relationships or data. What can improve is security at the point-of-sale, as evidenced by the recent high profile data breaches. Your mobile wallet strategy should account for the EMVCo mandate that's quickly approaching in 2015. NFC-based wallets are capable of supporting contactless EMV, a forward-looking solution.

Although mobile wallets represent a relatively small percentage of users today, growth is poised to surge – especially with Millennials at the helm. In fact, Juniper Research predicts the number of contactless transactions made with mobile wallets will reach 9.9 billion in 2018, up significantly from the 3 billion estimated this year. Mobile wallets are no longer a matter of if but a matter of when.

Chirag Patel is general manager of issuer relationship management with Isis. He can be reached at chirag.patel@paywithisis.com or (646) 710-4038.

Instant Insights /

Millennials and the Mobile Wallet

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