Consumers want their bank to provide them their first mobile wallet because of their trust in the institution. But, at least in the UK, no wallet provider has thus far addressed all of consumers' concerns with mobile payments, new research shows.
To appeal to consumers, mobile-wallet providers must ensure security and guarantee protection in case the phone is lost or stolen, supply a tangible benefit to encourage use and provide broad education, Mark Jackson, director of Auriemma Consulting Group in the UK, said in an interview.
Convincing consumers that lost mobile wallets don't also mean lost cash, as is the case with a leather wallet, would be a good start, he says.
"Consumers don't understand that," Jackson says. "Educating consumers about that would go along way to addressing that challenge."
Barclays is perhaps closest to meeting consumers' demands with its Pingit person-to-person funds-transfer service, though he says Pingit presents issues for first-time users.
"The challenge is, what if [the recipient] isn't already registered" for Pingit, Jackson says. Instead of sending them funds, "You're just sending them a headache," he says.
To receive funds, both users must register and have completed an earlier person-to-person transaction online, he says.
Despite these obstacles, consumers remain interested in using mobile wallets, with some 48% of 1,000 UK consumers surveyed online in June expressing a desire to obtain one, according to Auriemma's Mobile Payments Report.
Moreover, 18.4% said they would use a mobile wallet if their bank offered it, compared with 11.6% who said they would if PayPal or some other digital/mobile provider offered one.
Only 9.5% said they would use a wallet offered by a mobile provider such as O2 or Vodafone, and just 5.1% said they would if an external provider such as Google, Apple or Facebook provided it.
But the window for banks to take advantage of their favorability could close quickly, Jackson says. Other providers need to build creditability, which banks already have, he says.
"Once a consumer has a mobile wallet and understands it, it will be easier for new entrants to enter the space," Jackson says. "And when that happens, it will be very quickly."
Jackson declined to estimate when that window for banks' best opportunity might close.
Prospective wallet users tend to be the low-risk/high-income consumers financial institutions already target, so making their participation within the mobile-wallet space is "key to both engaging these consumers and maintaining market share," the report notes.
Among the chief mobile-wallet features and benefits respondents cited were the ability to review account information for cards stored, cited by 65.8% of respondents; ability to store card information to fund future purchases, 65.6%; ability to put funds into and take out of the wallet easily, 61.4%; and ability to access and use loyalty programs, 60.6%.
Auriemma's research isn't the first to suggest banks jump in quickly to the mobile-wallet market. AlixPartners LLP, a Southfield, Mich.-based global business advisory firm, made a similar recommendation in March.
But such suggestions haven't stopped some big banks from letting mobile carriers control their wallets.