Banks may believe they can provide the best mobile wallet experience — but most have done very little to create their own product.

"Banks in the U.S. think they should be the center of the universe for all financial services," says Arkady Fridman, a senior analyst at the Aite Group.  But the "watching and waiting" approach might be detrimental to banks.

"At least in the U.S. [banks] need to make sure that they do not miss capitalization opportunities from owning the funding instrument," he says.

In the next six to 12 months, just 43% of bankers surveyed for Finextra's Monetizing Payments whitepaper said they would deploy a mobile wallet. Yet, 60% said traditional financial institutions are the natural home for a mobile wallet. The survey was conducted with 183 bankers worldwide.

While small and medium-sized financial institutions might want to tread carefully, the big banks should experiment, Fridman says.

And many big players are doing just that.

Wells Fargo is working on a variety of mobile payment projects, says Mike Kennedy, executive vice president of innovation and payments strategy at Wells Fargo.

"Customers are increasingly interested in mobile wallets," Kennedy says.

The bank is looking at different technologies that perform wallet functions, not solely focusing on storing card credentials in the mobile device, which comes with security trade-offs, he says.

"We want to help [customers] improve their commerce experience," Kennedy says. Mobile wallets "are not just about the payments…but really have to solve for the commerce experience."

Bank of America, which has a large experimental lab, has done several mobile wallet pilots. "We continue to look for new ways to help our customers utilize their mobile device" for financial services, says Tara Burke, a spokeswoman for B of A.

Bank of America has used QR codes for payment at the point of sale and at teller lines (Burke would not provide an update on this product). The company also offers its own mobile card reader, called Mobile Pay on Demand, through its Bank of America Merchant Services joint venture with First Data.

Citigroup has taken several stabs at person-to-person payments. In 2010 the bank killed off a trial of Obopay's person-to-person technology, saying "the market just isn't ready for it yet." Citi currently offers Popmoney, a person-to-person payment offering from Fiserv.

JPMorgan Chase is also "committed to making mobile commerce a reality," says Rob Tacey, a spokesman for Chase.

"We were one of the first issuers to participate with the Isis Mobile Wallet pilot, and we continue to look at other mobile wallet opportunities that would provide cardholders with a secure option for easier and faster payments on the go," says Tacey.

Chase Mobile Banking provides customers with Chase QuickDeposit, a mobile deposit capture feature; Chase QuickPay, a person-to-person payment system; and Chase Instant Action which alerts users when their balance is low and allows them to transfer money by replying to the text message alert.

In 2011, Chase began offering a mobile app, Jot, for small businesses to track, categorize and organize expenses. The bank recently added a receipt capture capability.

The card networks are also pushing their own digital wallets. American Express has Serve, MasterCard has MasterPass and Discover is key to the expansion of PayPal's point of sale project. Visa and Visa Europe heavily promoted mobile payments during last year's Olympics.

Though the biggest financial companies are active, the U.S. hasn't seen much innovation from the banks in terms of mobile wallets, Fridman says.

"With respect to banks and wallets, the U.S. is very, very far behind," he says. "Once you go outside the U.S. borders, the banks have been much more aggressive in thinking about the wallet and figuring out how to enable their wallet … to transition into a commerce opportunity."

Within the U.S., big technology companies and mobile phone carriers are moving faster. Google Wallet and Isis support Near Field Communication (NFC) chips for contactless payment, and although the technology has seen slow adoption, these companies still have a head start over banks.

Other wallets, such as LevelUp and the mobile Starbucks Card, took advantage of QR codes, which work with nearly any smartphone.

SCVNGR's LevelUp is already on its next phase, delivering new QR code readers to its merchants to replace older smartphone-based systems. Starbucks boasts that 4.5 million payments a week, or 10% of its U.S. sales, are mobile payments.

A handful of smaller players could take market share from banks, including FreedomPay's Vibe mobile wallet in St. Louis, Mo. The Vibe wallet, which focuses on offers, rewards and loyalty, is part of the FreedomPay Commerce Platform, which Taco John's began using this month.

"Banks are having increasing trouble being a jack of all trades," says Fridman.

Bank operations are very siloed, making them inefficient in a lot of back office operations, he says. Plus the U.S. financial services industry is plagued with regulatory concerns, he adds.

Big data has exploded recently and many mobile wallet initiatives are looking for ways to glean more information from the consumer's transactions, searches and social media posts. With this data, companies can tailor offers and incentives to specific customers more apt to use it.

By offering not only money handling services, but also coupons and air miles, 67% of banks want to be the custodian of all customer value, according to the Finextra study. Personalized product offers and one-to-one targeting will be an important business driver for big data initiatives in more than 69% of banks.

And about 81% of banks say mobile wallets can add value at the point of sale by sending targeted offers, according to the survey.

Banks are in a good position to take advantage of merchant-funded rewards, says Fridman.

"Banks have consumer mindshare of digital channels," he says. "It's a touchy subject, but the reality is if you take a look at the time consumers spend online … banks are right behind social media; consumers interact with banking applications very frequently." 

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