Both large companies and new startups are reimagining the way we handle our finances. Fintech companies are seeing large increases in fundraising, and the reasons are obvious. Today, it’s all about a seamless banking experience that delivers convenience and security to consumers, in the platforms — and devices — that they use.
Capital One commissioned a study that finds nearly one-quarter (24 percent) of Americans are using mobile wallet apps in some capacity, while 16 percent are using their mobile wallet to make purchases. Since Black Friday, more Americans have shopped online compared to last year, and internet outlets that work with mobile payment apps are poised to benefit from higher traffic and conversions.
For both consumers and retailers, mobile wallet is an important trend. The time between Thanksgiving and New Year’s Day is when stores make the bulk of their annual sales. Of the 24 percent of respondents now using mobile wallet technology, more than 63 percent say they have only been using a mobile wallet for less than a year, according to the Virginia-based bank’s survey. It demonstrates the rapid acceptance and use of the technology and its potential to be a game-changer in payment methods.
Stakes are high this shopping season, and observers expect that American consumers will make more purchases via mobile wallet than ever before. And the math is clearly in mobile’s favor. More people are relying on their smartphones to buy items on their wish list. And for years, the payment industry has been adapting to this new digital reality. Similarly, consumers are leveraging technologies such as mobile wallet to make life simpler and easier in a period when innovation can often make things more complex.
Millennials are driving change
The rise of payment technologies is also shaped by a change in demographics.
Millennials, who now outnumber Baby Boomers, are reshaping entire industries. And banking is at the highest risk of disruption of any sector. When it comes to digital, shoppers want convenience and security, and this places pressure on payment companies, including banks, to cater to a growing audience of tech-savvy users. The young crowd know “what’s out there” and they’re willing to switch to better solutions.
That’s where mobile wallet comes in. Customers are able to swipe their phones at the checkout counter and digitize their buying experience. For example, with Capital One’s mobile app Wallet, cardholders can get instant purchase notification on their mobile device the moment their credit card is use. Moreover, users can lock their card if misplaced or lost, snap photos of their receipts as well as digitize up to 25 gift cards at one time. All from a smartphone.
These features provide the advantage of speed, security and a seamless buying experience. Mobile payment also reflects the digitization of money. Of the trillions of dollars that move around the world each day, it’s estimated that less than 4 percent involve physical cash.
“As wallet technology simplifies the shopping experience and becomes more readily available at retailers, the adoption and usage rates will continue to increase,” said Paul Moreton, Capital One Vice President of Digital Product Management, in an interview with The Huffington Post.
There are other exciting innovations when it comes to online banking. Fintech firms, such as TypingDNA, are working to improve security by using a shopper’s typing patterns as part of the authentication process. Biometrics and behavioral patterns are seen as key components in the fight against fraud, and they’ll likely improve the advantages of mobile payment tech.
Perhaps the financial industry continues to face a compelling reason to change given the fluid dynamics of the marketplace. Today’s consumers are impatient and savvy — and because many are well-informed, thanks to Google, they can move in droves.
So what will banking and payments look like in the future? According to this previous post on TheNextWeb, the cost of banking will decline as fintech solutions and early disruptors alter how money is transferred and stored. Companies and retailers that don’t move quickly enough face the risk of their customers move elsewhere with a herd mentality.
This post is part of our contributor series. It is written and published independently of TNW.
This post is part of our contributor series. The views expressed are the author's own and not necessarily shared by TNW.
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