Twenty-one percent of consumers in the US and 17% of consumers in Europe would be interested in, or already use, digital wallets. Three wallets — PayPal, WeChat, and Alipay — already have dozens of millions of users. Should banks be worried? Yes, very, according Forrester’s latest research on the state of digital wallets.
Delivering contextually relevant services to customers’ fingertips, digital wallets will change how customers shop. However, digital wallets are, first and foremost, engagement platforms, relegating payments in the value chain. Banks run the risk of disintermediation and should not simply cede the customer relationship to mobile wallet providers.
“Banks are already losing insight into their customers as spending migrates to platforms like Amazon, eBay, and iTunes,” Forrester Senior Analyst Jacob Morgan writes. “If customers adopt digital wallets offered by a third party, banks, credit-card issuers, and other payment firms risk becoming less relevant to their customers and losing their existing insight into and influence over customers’ spending decisions.”
How quickly today’s digital wallets become a serious threat and which wallets are most successful depends on how established firms respond and how well each digital wallet operator tackles the various challenges outlined in the report and related to simplicity, ability to address unmet needs, new value creation, business model, and survivability.