New stats indicate that millennials will drive the future of the mobile wallet. They are the up and coming group considered "mobile disruptors" that are reshaping the thought process of the payments industry. As wearables and mobile wallets pick up momentum with the younger audience, it's important for credit unions to understand behavioral trends not only for payments, but also for money transfers within mobile banking.
A 2015 Mitek and Zogby Analytics poll, “Millennials the Next Mobile Disruptors” revealed that 86% of millennials made purchases or conducted transactions from their smartphones. Three in five millennials already feel comfortable using mobile devices for exchanging money, both sending (61%) and receiving (63%), according to the poll.
When asked what they’d like to do in the future, 19% said pass funds among friends by taking pictures of their debit cards, and 21% said they’d like to establish a budget by taking pictures of their paychecks, bills and bank statements.
For example, the PayPal-owned Venmo offers a P2P payment service that allows users to transfer money to one another through a mobile device app or web interface. In just five years, Venmo’s idea grew into a business that is expected to process about $4 billion in transactions this year. Venmo and comparable services trend high among millennials as popular ways to skirt ATMs or split a restaurant bill.
Other emerging payment vehicles include mobile wallets such as Apple Pay, Android Pay, Samsung Pay and the soon-to-come LG Pay.
Apple Pay has found itself well established among many credit unions after just over a year in the marketplace. PSCU also just announced two of its credit union partners, the $5.2 billion, Peoria, Ill.-based CEFCU and the $2.8 billion, Richmond, Va.-based Virginia Credit Union, launched Samsung Pay.
But mobile wallets still raise concerns, one being top-of-wallet positioning, as credit unions want their cards established as the default card within wallet programs.
“It is critical to highlight the value of payment methods utilized on a regular basis,” McGinness maintained. “Promote the convenience of mobile payments, for example, to help ensure your card is top of wallet for your members.”
Another issue is consumers are not yet buying the wallet concept. A mobile wallets survey by the Phoenix-based consulting firm CCG Catalyst found 51% of consumers prefer their own financial institution’s payment wallet versus a third party’s payment wallet, the latter of which requires financial institutions to serve as a funding source.
With 2015 winding down, think back a year ago. Sure, technology has made huge leaps in a year; that seems par for the course regardless of the industry. But look at user behaviors, especially the millenials. They are demanding services beyond the basics of internet banking. Is your credit union core technology ready for the next generation in mobile payments and mobile wallets?