Consumers who are interested in mobile wallets would consider using nontraditional financial institutions in place of their primary bank for that service, and for banking in general, according to a new report from management and tech consulting firm Carlisle & Gallagher.
The Charlotte, N.C.-based firm surveyed 605 U.S. consumers in April, and 46 percent responded that they would be interested in using mobile wallet services. Seventy-six percent of these consumers are currently using or intend to use mobile banking today, according to the report.
Eight in ten consumers interested in mobile wallets said that they would use PayPal as their mobile wallet provider. Six in ten said they would use Google and six in ten also said they would be interested in a mobile wallet offering from Apple.
Even more alarmingly for banks, consumers surveyed who are interested in mobile wallets would consider alternative players for banking services. Eight in ten would consider using PayPal if it offered banking, while six in ten said they would consider using Google or Apple.
"The competitive threat from new entrants is real," said Peter Olynick, Carlisle & Gallagher's Card & Payments Practice leader. "People have already slowed their use of cash and checks in favor of credit and debit cards. Within five years, half of today’s smart phone users will be using their phones and mobile wallets as their preferred method for payments. These customers will be using better tools to help them optimize transaction choices. Banks need to proactively consider how their products will stay ‘top of wallet’ in the new mobile wallet world."
According to the study, consumers place significant value on the benefits of various offers and incentives, from lower interest rates and cash back rewards to discounts and sales coordinated with loyalty programs. However, they are frustrated with the number of offers they receive and with their ability to track the terms and conditions for each of their cards, which could lead to a bigger interest in mobile wallets.
"Banks need to ease the pain points with their mobile wallet features to retain customers," said Olynick. "We advise banks to update their core transaction processing capabilities today so they will be ready to provide improved transaction and shopping experiences in their mobile wallets tomorrow."