BOSTON—What’s going on with digital wallets?
That’s a question not easily answered, experts have stated, as new wallets routinely appear across the globe with features, functionality and offers that can vary a great deal from market to market, making it difficult for CU decision-makers to map a path forward.
The good news is Aite Group has launched a global Digital Wallet Database to help financial institutions understand what’s in the market and to learn what could meet their customers’ and members’ needs as digital wallets take greater hold in the U.S.
The bad, or at least challenging news for most credit unions: the database may be limited to those CUs that have pretty big wallets of their own.
“The database was created to be the definitive source of information on digital wallets around the globe, providing subscribers with detailed information on individual wallets in every region,” said Thad Peterson, Aite senior analyst. “It will help people understand the state of the art in digital wallets around the globe and will help them identify features and functionality that will be useful for their own digital initiatives.”
Assistance to Marketers
Peterson said in addition to the database keeping FIs informed over the changing digital wallet landscape, it will also help marketers determine the shape of their mobile wallet portfolio.
“Sure, most financial institutions have enrolled in Apple Pay, Samsung Pay and Google Pay, and some don’t need more than that,” Peterson said. “But if I were a credit union marketing person and I was seriously interested in looking into the wallet space for my members, I would say, ‘Okay I've got members in the big three wallets, but is there anything out there that might be a better fit for some—better features and functionalities? Is there any way we need to adapt or differentiate our offerings?’”
Growing Acceptance
While digital wallets have struggled to take hold in the U.S. compared to other countries, globally their acceptance continues to climb. The number of people across the globe using digital wallets will increase to nearly four billion, or roughly half of the world’s population, by 2024, Peterson said, citing Aite data.
He added that total digital wallet transactions could reach $9 trillion a year by then.
Peterson further noted more than 350 wallets are currently in the database, and that more are being added as new ones are introduced.
“When you go to the tool you will see the wallets are broken down by region of the world, by wallet type and we have as much data on each of the wallets as we can gather,” explained Peterson. “In addition to the features and functionality of each, you will see the parent company, the type of wallet, the region covered, the number of wallets outstanding, how transactions are being handled, the number of customers…You can filter the data, compare it, and run reports. We will soon be contacting the providers to add additional information that will make the database even more robust.”
Multitude of Players
Peterson thinks the number of digital wallets in the world will never grow much beyond 500. And, the fact there are more than 300 today is in sharp contrast to analysts’ predictions when mobile wallets first emerged that digital wallet consolidation would eventually occur and each country would have only a few large players.
Peterson said he is unsure, if, or when the numbers will decline.
“I think it depends on the circumstance,” he said. “In Africa, you're correct; there's only one or two digital wallets in every market in Africa. In China it’s WeChat Pay and Ali Pay. But when you look at Europe, and North America, I don’t think we’ll ever see that type of consolidation. We're always going to have a lot of different players doing a lot of different things. And I think that’s because there's different use cases for different types of digital wallets.”
Insight Lacking
Peterson said he believes the vast majority of bank and credit union staff don't know what's “all out there, because there's really never been a way to find out,” he said. “Digital wallets are the current and future engines of commerce. Up to now, there has been no definitive source of information about all the digital wallets in the world. Our goal is to provide the payments ecosystem with an iterative tool to better understand and evaluate different digital wallets in the market today.”
The database is available to subscribed users through a secured web-based login. Subscriptions are available on a yearly basis starting at $7,000 per user, Aite said. To access the database, go to https://aitegroup.com/aite-group-digital-wallet-database