Customers are feeding money into Starbucks mobile applications to speed up checkout and drive-through transactions to the tune of $1 billion in the first quarter.
And that is $1 billion of consumer money uncontrolled by banks, which are used to controlling the payment system. Deposits, payments, credit card transactions all flowed through banks in one form or another. Every time a debit or credit card is processed – even gift cards – banks get a percentage of the transaction.
With the emerging digital wallet and other mobile money options, that’s not the case anymore.
“Banks have to compete with major retailers and mobile payment solutions,” said Al Dominick, president of Bank Director, an information resource for senior executives and directors of financial institutions. “New technologies mean new competitors banks never considered on the playing field.”
Paul Hickman, president and CEO of the Arizona Bankers Association, said that the digital wallets are the next evolution of payment systems.
Financial institutions are competing with a large number of non-traditional organizations and technologies, including technology firms and payment providers. These newer market entrants have the potential to displace banks and credit unions with newer and perhaps more noteworthy products and services, making it critical that FIs assess the technology and solutions preferences of their customers and members to maintain – or gain – their loyalty.
Overview by Ed O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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