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article imageBanks 'two APIs away' from losing customers to mobile apps

By James Walker     Oct 19, 2017 in Technology
Consumers are increasingly interested in mobile payments technology and are attracted to the idea of a centralised digital wallet. A new study by Accenture found smartphone users are "desperate" for a modern approach to banking that works around them.
After a slow start, there's growing evidence that mobile payments are beginning to take off. A recent survey found smartphone apps are now more popular than cash as consumers look for more convenient and accessible ways to pay.
Accenture's Future of Payments report looked at views from 1,500 consumers in the United States and Canada. 64 percent of respondents said they intend to use a mobile wallet by 2020, up from only 46 percent today. The next few years will be important to payment providers as demand grows.
Technology companies and fintech firms still stand to benefit the most. Mobile wallet apps issued by traditional banks are languishing behind services like Apple Pay, Android Pay and Samsung Pay. These have penetrated 49 percent of consumers, compared with just 28 percent for apps provided by banks.
Rise of the aggregators
23 percent of consumers said they'd be prepared to switch from their mobile banking app to a digital wallet. The promise of increased convenience and a centralised view into personal finances is making modern apps preferable to older services. This will be alarming to banks which are already having to overhaul their business strategies in response to the fintech trend.
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Accenture said banks face a real risk of being displaced by "aggregator" mobile apps. These can consolidate information about several different accounts into a single service. This gives you a unified view of your finances, letting you feel in control. Customers are already demanding this kind of value-added functionality and banks are coming under pressure to deliver their own implementations.
"Consumers are desperate for a different breed of mobile payments options," Accenture said. "The risk here for banks, considering the rote functionality of their mobile payments apps, is that aggregators will start to disintermediate banks in mobile payments by providing this increasingly sought after unified view of consumers' finances. Banks are essentially two APIs away from losing a big chunk of their mobile app traffic."
Adaptable experiences
The study shows that mobile payments are now a significant threat to traditional banking processes. With consumers increasingly accepting of services like Apple Pay and Android Pay, they're more likely to pay with their phone more frequently and for larger purchases. Over time, the banks will be cut out of the payments ecosystem as customers choose tech platforms to manage their finances.
There are still opportunities for banks to respond to the trend and launch their own services though. Accenture said the "right vision" could let banks, card providers and tech firms coexist in the future of payments. The winners will proactively explore new technologies and listen to their customers, offering improved experiences that can adapt to individual user needs.
More about mobile payments, fintech, Banking, Mobile apps, Payments
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