Article

Getting customers to love your bank — and its mobile wallet

The mobile wallet is shaping up to be a powerful customer interface. Value-added services are a golden opportunity for an FI to show that it's truly on the side of the customers.

August 30, 2016

by Sirpa Nordlund, Executive Director, Mobey Forum

Even though studies are showing that an increasing number of users are giving the mobile wallet technology a try, only a few are reported to be using it on a continuous basis.

Consumers say their top two reasons for not using their mobile wallet regularly are that they forget to do so (the question of value) and that they are uncertain as to which merchants will accept the payment.

Value added services have been widely held as the enabling force that will drive mass market adoption of mobile payments and mobile wallets. It isn't hard to see why. After all, who doesn't like bagging a bargain?

As far back as 2010, Mobey Forum has been theorizing about value-added services. What services would be the most attractive? What form would they take? How would they be integrated with the mobile wallet?

And, crucially, what role could they play in helping banks and other mobile payment service providers establish a point of difference in a contested and fragmented market?

Fast-forward to 2016 and mobile wallets and their services are developing largely as anticipated: The user accumulates value, generated over time through repeat payments, which can be redeemed in a related form, usually at a time of the user's choosing. 

Nagging questions  

As the years go by and NFC-enabled devices filter through to the mass market, the mobile payments user demographic is diversifying.

What began with a select few affluent, financially astute and mobile tech-savvy early adopters now encompasses those challenged by their finances. This includes individuals who struggle with credit-related problems, often due to rising living costs, unemployment or, notably, poor financial management.  And then, of course, there is everyone in between.

First of all, the words "value added services": Whose perspective do they reflect? Do they really mean what they should? To whom are they adding value? Whom are they designed to serve? What should they achieve?

For those providing the payment service, the answers are fairly clear. The objectives are more customers and more customer data; increasingly targeted marketing and product development; more purchases; increased revenue.

What's in it for the customer? The opportunity to obtain a discount, of course.

But perhaps we should be talking in terms of incentives, instead. What are the various types of incentives being deployed to encourage regular use of mobile wallets?

Firstly, there are financial incentives, which provide users with a cash-back deal when they use their mobile wallet for payment, instead of a plastic card or cash.

Secondly, there are product or service incentives: Android Pay has introduced the Tap10 promotion, for example, which offers consumers a free song for every tap-and-pay transaction performed. Chase offers consumers a free album download to users who enroll their cards with Apple Pay.

But, since many banks already have reputational issues relating to trust, is it wise to issue value-added services that solely encourage customers to spend? It doesn't feel like the most effective way to win them over.

For me, there's a far more thrilling incentive a bank could offer — one that represents a completely different perspective from that of retailers.

Instead of encouraging consumers to spend, spend, spend, an FI could encourage customers to save, save, save. After all, the freedom generated by increasing one's savings is arguably a far bigger incentive than a "free lunch" triggered by the purchase of goods or services. 

One could foresee a situation in which banks give their mobile wallet customers a savings incentive to help them fulfill their true dreams (and not those of retailers).

Feeling the love

Several fintechs already offer money management services to consumers. Mobile wallet use and value-added services could similarly be used to promote sound financial management, potentially to a wider audience.

At the same time, the bank would position itself as being on the side of customers, protecting them from frittering away their hard-earned money, and instead, encouraging savings and investments via regular use of their banking app.  

I'd like to see value-added services providers follow this lead. Executed sensitively, I believe customers would respond favorably to such a program.

Perhaps value-added services could be designed to reward savings deposits instead ("interest" for the mobile age). Maybe mobile money management services could be 'unlocked' within the wallet, just like in-app purchases, to reward daily balance checks or the regular viewing of transaction histories. Perhaps loyalty points could be gifted to those that successfully clear their credit card each month.

The mobile wallet is shaping up to be a hugely powerful customer interface. For banks with the creative vision to think a little differently, value-added services could be a golden opportunity to demonstrate that they really are on the side of their customers.

photo istock