The emergence of mobile payments may seem like a slow crawl now, but as younger consumers mature, they are going to demand more mobile services and banks need to have services geared to that faster pace.
"The young consumers of today will be the omni-consumers of the future, expecting mobile services across numerous channels to operate seamlessly," says Dean Seifert, senior vice president of product strategy for payment processor Vantiv Inc.
During a Sept. 18 Vantiv Insights webinar, Seifert and Ken Paterson, head of research operations for Mercator Advisory Group, presented results of recent research regarding consumers' awareness of mobile payments and their use of the various technologies in mobile commerce. The organizations surveyed more than 1,200 U.S. consumers in January, and 25 merchants and 15 financial institutions in July to compile the data.
Young consumers have high hopes for the development of mobile payments, and they expect significant strides in less than two years, Seifert says.
"Financial institutions and retailers need to leverage the customer data to provide services that these omni-consumers are wanting and expecting," Seifert says.
Most consumers say they will still carry plastic cards as a backup, even if they are using a mobile wallet. Currently only two out of 10 consumers would rather use a mobile wallet than plastic, but more than a third of those surveyed predict e-wallets will be more convenient than plastic cards in the future.
"They will be looking for mobile to provide financial tools, coupons and other services across all channels," Seifert says.
Younger consumers are interested in mobile services that help manage finances, make person-to-person payments and handle transactions frequently visited venues such as restaurants, he adds.
Rather than wait for the mobile payments world to shake itself out, merchants and banks can pursue tests and limited implementations of mobile commerce with a focus on tools that young consumers need, Seifert says.
"It lets the customer see that you are working on services that they want," he says.
Over the next five years, mobile payments are likely to become more commonplace, Paterson says. Of the consumers surveyed, 68% said mobile would be their preferred payment method in the next five years.
Various factors signal the potential for mobile commerce, not the least of which is the fact that 56% of consumers overall now own a smartphone, and 78% of those in the Gen Y age bracket of 18 to 35 own a mobile device, the study says. In addition, young consumers already average 15 minutes on their phone when shopping to compare prices or make online purchases. Nine out of of 10 young consumers said they made an online purchase in the last six months, the study says.
Banks and retailers have to think of all mobile channels working together, Seifert says.
"The companies enabling smooth experiences over all channels will deliver what these consumers are expecting," he adds.
The Gen Y consumers aren't laser-focused on mobile. These consumers also have the highest percentage of ATM, branch office and call-center visits, Paterson says. "They are multi-use intensive already," he says.
Of those consumers in Generation X and Baby Boomer categories, ages 35 to 64, banks and retailers should focus on luring the mobile transactions exists of the more affluent segment, Paterson says. Of that segment, 74% of those earning $100,000 or more own a mobile device, and 16% have used a mobile device for in-store price comparisons.
"It's far less than the younger consumers, but it's a sizable percentage of older consumers," Paterson says. "Younger consumers are more experienced with mobile technology, but older consumers are coming up the experience curve as well."
The data illustrates that "pockets of omni-consumers" exist outside of the younger consumer age brackets, Paterson adds.
Gen Y and younger consumers generally collaborate with friends or family prior to making a purchase and they are impatient when all of their mobile channels online, person-to-person, mobile apps, mobile card readers, etc. are not working seamlessly, Seifert says.
In addition, four out of 10 Gen Y consumers say they would switch providers to get better rewards programs or discounts. However, they are less concerned than other age groups when it comes to guarding their purchase history and data.
"But they expect something in return for that data in the form of targeted offers," Seifert says.