More big banks are committing to their digital wallet strategies, creating the opportunity to extend their brands into new realms as payments and shopping go mobile under their own brands—but there are some notable holdouts.

Capital One, Wells Fargo & Co. and RBC have all gone live with branded, proprietary wallets, and other large banks are expected to follow soon.

But one giant—Bank of America—is charting a different course. The nation’s largest debit card issuer said it won't develop its own wallet, and for the present will rely only on third-party wallets (including the freshly rebooted Masterpass), which is stirring debate among some observers.

“Customers are becoming inundated with wallet options and there is a tremendous amount of noise and confusion in the marketplace,” Bank of America said in a written statement provided by a spokeswoman. “We believe there is a lot [yet] to play out here, and that the majority of platforms have yet to create a meaningful value proposition for consumers beyond simply digitizing their cards.”

B of A itself has done plenty to inundate consumers with mobile wallet options. The Charlotte, N.C.-based bank was one of the very first to support Apple Pay when it launched 22 months ago. B of A was also quick to embrace Android Pay and Samsung Pay when they became available several months later.

“We have a truly open wallet strategy that provides first and foremost for customer choice…our strategy is to partner with the major platforms we see consumers adopting and ensure they can leverage their credit or debit card as they like,” B of A said.

Analysts say B of A’s strategy highlights the question of what exactly banks risk by not fully controlling the customer's digital wallet experience.

One theory is that so far there's little really at stake.

“Many issuers have held off on developing a branded mobile wallet because they don’t think the market conditions are ready,” said Jordan McKee, a senior analyst with 451 Research.

Data indicates consumers still aren’t engaging much with third-party mobile wallets. Of these, Apple Pay has the highest awareness among consumers, but only a small fraction of all transactions are conducted via Apple Pay, nearly two years after the wallet’s launch.

To be fair, Bank of America had its brand dragged through the mud at Apple Pay's launch, after some customers found the mobile wallet was double-charging their B of A debit and credit cards. This incident may have served as a cautionary tale that few other banks experienced.

And some research suggests banks’ own digital wallets may get even less traction than third-party wallets at this point.

451 Research conducted a survey among Capital One cardholders during the first quarter of this year, and among the cardholders who said they were most likley to use a mobile pay app within the next 90 days, Capital One Wallet ranked well below other, broad wallets. 

More than half, or 61%, of consumers in the survey said they planned to use PayPal to make a mobile payment, followed by 30% who planned to use Apple Pay, 23% who planned to use Android Pay and only 18% who planned to use Capital One Wallet.

“My hunch is that while there may be a subset of the population interested in using their card issuer’s mobile wallet, third-party wallets will be the dominant payment vehicles [in the near future] due to their level of integration with the overall device experience,” McKee said.

Confusion about which wallets support which cards also could come into play for some bank customers, observers noted.

Through Host Card Emulation (HCE), banks can support tokenized contactless mobile payments via NFC-enabled Android devices. But because Apple Inc. hasn’t opened access to the NFC chip on its own devices, banks can’t provide the same experience on iPhones and iPads.

The lack of universal access for all types of cards and handsets in a proprietary mobile wallet could weaken the return on investment for banks, some say.

“Launching a payment wallet that’s more than just a digitized card is a significant investment for a bank in terms of people, dollars and strategic focus,” said Michael Moeser, director of payments at Javelin Strategy & Research, noting that building a proprietary digital wallet in most cases calls for long-term commitment.

It will likely take years for banks to fully develop their mobile wallet strategies, analysts agree.

Banks lacking their own mobile wallet probably won’t lose customers immediately because of it, said Lee Manfred, a partner with First Annapolis who oversees payments strategy and innovation.

But it could happen eventually.

“The risk for a bank that doesn’t build their own wallet is waiting for customers to leave before responding to the digital wallet trend, and then it will be too late,” Manfred said.

By standing on the sidelines, B of A also is missing out on the opportunity to build its reputation as a mobile payments technology leader and to gather "invaluable" information about customer behavior and preferences with its own wallet, Manfred added.

“In the near term, B of A’s stance on digital wallets may have little effect on its trajectory, but over the long term, mobile and digital payments will fundamentally change how banks and retailers do business,” he said.

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