Mobile payments have already changed customer interactions, and for the most part this can be seen as positive for user convenience. In a recent Forbes article, the Forbes Finance Council outlines 10 ways mobile payments can change customer interactions. The article highlights such things as new monetization opportunities, customized targeting versus mass marketing, improved customer service, and increased customer loyalty. These four all hinge on one crucial and sensitive subject, data–not just any data, but users’ personal data.
As we have seen in recent articles, people are becoming cautious about the applications that they use that revolve around payments. For instance, Venmo recently had a problem when it was discovered that Venmo purchases and other private data of users was public. Granted, users have the ability to turn off this feature; however, it is turned on by default. And for a similar reason we recently saw the abandonment of Snapchat’s P2P payment platform. In addition, a recent survey by Fiserv found that 53% of respondents say they strongly distrust internet security.
This is a tightrope that financial institutions are going to need to learn to walk. On the one hand there is the benefit of being able to provide better customer service, and on the other there is the risk of overexposing personal data and losing the trust of your consumers. This balancing act is going to become even more difficult as fintechs continue to market themselves and show consumers the opportunities that they present but only if the consumers’ financial institution allows them to. From a technical standpoint thanks to APIs this process of sharing information will be easier. However, as pointed out, financial institutions will need to make sure to do their due diligence to ensure that their reputation of security and trust will not be tarnished by a fintech partner.
Overview by Ryan McEndarfer, Editor-in-chief at PaymentsJournal.com