By : Robert Johnston
March 19, 2015 08:30 AM
Would you choose a bank instead of Apple to deliver financial services? It seems facile to ask, but given all the attention around Apple Pay and the swathe of alternative providers in recent years, there is a risk for banks that they will lose their footing at the heart of the payments sector.
If people can rely on Apple to deliver the apps they need to make payments, will they still bother with a bank?
The pressure to innovate was highlighted in the World Payments Report 2014, which showed how alternative providers are increasingly entering the banking space.
Co-produced by Capgemini and Royal Bank of Scotland, the authors noted that the penetration of the payments market by non-bank payment service providers has been “one of the biggest drivers of change.” It is clear that in many cases, “non-banks have been more successful than banks in developing front-end, value added payments innovation.” In other words, when it comes to services like apps and mobile wallets, banks need to ensure they don’t get left behind.
Yet, banks still have an important edge, and it comes from a perhaps unlikely source: trust. Customers have grown up with their banks, they know the name and can easily head into a branch to speak to a human being.
Banks are the most trusted provider of mobile wallets, ahead of PayPal and Apple Pay, according to figures compiled by Phoenix Marketing International. In fact, while just one in three of the 4,200 adults polled would take up Apple Pay, two-thirds would use a mobile wallet app offered by their bank.
The report showed 65 percent of consumers are worried about hackers compromising their personal details. Again, this is where banks can leverage their status and experience to gain the trust of consumers. Customers need to know they can rely on their mobile wallet provider to protect their data. To support this, a 2013 survey from PwC showed 50 per cent of people said they trusted their financial institutions to manage their mobile wallet the most, versus just three per cent for mobile operators like Apple or other carriers.
But trust can be won and lost easily, particularly in new spaces like mobile wallets. Security is the biggest worry and a potential banana skin as failure to tackle fraud is a leading cause of customers leaving their bank.
NCR offers both bank and retail solutions. Click here to see some of NCR's retail mobile payment solutions.