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Payment options and payment trends are critical topics and threats for many financial institutions’ revenue streams today. As technology continues to provide consumers with more payment options, financial institutions need to reconsider their offerings and drive engagement with current customers. Mobile wallets are getting a lot of media attention and are just one of the many payment trends that consumers now have as an option. As payment trends are consistently changing and growing, it is arguable that consumer demands are also on the increase, with a desire for greater convenience, speed and security.
Here are four payment trends and how financial institution marketers should address these changes.
1. Mobile payments are projected to surpass $214 billion by 2015.1
According to the “Global Retail Digital Marketing Report” by the European Financial Marketing Association (EFMA) and Wipro, 91% of financial institutions forecast online/mobile will be the primary vehicle for transactions within 5 years. The online and mobile user experience must be top-notch, and financial institutions should do everything in their power to ensure adoption.
Financial institutions need to target users to ensure ease of adoption of online and mobile bill pay. Double-digit growth in online and mobile bill pay transactions can be generated through targeting customers based on their payment behavior. This behavioral marketing effort spans all aspects of the customer lifecycle, from initial sign up of mobile and online bill pay to migrating users to super users. The keys to success lie in growing usage and adoption in an effort to ensure online and mobile payments become second nature for the customer to conduct through their financial institution versus the multitude of other payment options.
Additionally, the Credit Union National Association’s 2013-2014 environmental scan indicates that mobile payments are projected to surpass $214 billion by 2015. But don’t expect users to intuitively move from online payments to mobile payments without some coaching. Banks that support strong adoption programs are more likely to take advantage of these payment trends and not end up losing share to the many payment options customers are likely to have going forward.
2. 20% of mobile phones worldwide will have mobile wallet functionality by 2018.2
It is estimated that 20% of mobile phones worldwide will have mobile wallet functionality by 2018, which is a significant increase from 10% in 2013.2 Payment trends indicate that mobile wallets are advancing to enable smartphones to interact with POS devices, a capability that has become a focus for retailers and financial issuers. Apple, Amazon, Visa and MasterCard are becoming major players to counteract the pace of Google and PayPal. While more people are turning to mobile wallets to do business, financial institutions must focus on developing and generating adoption for their mobile payment options. At the risk of sounding like a broken record, your financial institution must work on mobile adoption and make your FI the default mobile payment option in the consumer’s mind.
3. Debit and prepaid cards are becoming a key payment trend as the economy rebounds, with a 14% increase over 2009.
Debit and prepaid cards are gaining more momentum as viable payment options. I wouldn’t go as far as arguing that plastic will replace cash and checks, but it is a growing payments trend and needs to be considered as a threat to traditional online and mobile payments. This threat translates to another reason to ensure growing adoption and usage of core bank payment options. Increase user engagement, work to maintain market share within the core bank’s offerings and look to promote your banks’ own payment offerings, such as person-to-person, online bill pay, and electronic transfers.
4. Omnicommerce has a high impact, as 66% of consumers today have a tablet or smartphone.3
Eight out of 10 banks offer online access, and merchants must cater to the omnichannel shopper who desires to utilize multiple channels for enhanced shopping experiences. Senior bank marketers must develop strategic campaigns to address these payment trends, but realize that your marketing communications tactics should mirror the consumer’s preference for multichannel marketing. Don’t be reliant on any one channel. Use a multichannel approach and ensure message consistency.
Topics: Financial Services