FOUR ESSENTIALS TO WIN WALLET WAR

Over next few years, mobile operators, retailers, financial institutions and start ups will compete to grab a piece of pie in mobile wallet market.  While there are many players in mobile wallet space, the wallet with more partnerships and with more engaging experiences may become de facto wallet. Here are our four essentials to win the wallet war.

1) Understand the scope of your wallet

  

According to U.S dept of Labor, the average household income in 2009 was approximately $63,091. The annual expenditures were estimated to be $49,638. Mobile wallet today covers categories of consumer spending including Food, Restaurants, Apparels, and Services, Gasoline purchases that account approximately 30% of total consumer spending only. 

(Source: financemymoney.com)

It is evident that the wallet is replacing the plastic market; hence, one can argue that the scope is limited to the scope of cards. Interestingly, the presence of wallet inside a phone makes great differentiators to expand the scope beyond what is covered by the plastic.

By synthesizing the average consumer spending data, the following observations can be made:

a)   The housing and transportation (except gasoline) expenditure, which accounts for whopping 50% of consumer spending. The wallet does not cover these categories.

b)   Health care, Insurance and pensions represents approximately 12.4% of consumer spending.is not covered by the wallet. Today, the wallet may not cover these categories.

c)    The cash purchases and e-commerce or online transactions are further shrinking the wallet share. Overall, only 30% of the consumer spending can fall into mobile wallet scope today.

Finding opportunities starting with segments like Insurance, Health care and pensions segments and then moving on to recurring payments like mortgage, car payments etc can increase the scope of wallet.

To proliferate the adoption of a wallet, the provider needs to partner with many players in each category and offer differentiated and engaging experiences to the end user. 

2) Focus on vertical markets:

Today, the wallet providers focus on building horizontal commerce services like Transaction, Loyalty and deals etc. While it serves as great starting point, it is challenging to win in crowded market. Today, customers expect personalized experiences than a cookie cutter approach.

 

To proliferate the wallet adoption, the wallet provider needs to focus on vertical segments. By partnering with branded players in each vertical, the wallet provider can create unique experiences for the target audience.  To give an example, rather than simply allowing customer to pay with mobile phone at McDonalds, if wallet let the user to browse menu, recommend food and order food and pay for the food may create a better experience for the user.

3) Monetizing the context:

There are approximately 4000 applications in Apple’s app store under finance category for iPhone. Some of these apps can be improved with the contextual information provided by the wallet. The context can include location, date, time, merchandize information, price etc. The context can be further enriched by past purchase data, intentions expressed through social networks etc.  The 3^rd party developer may greatly appreciate the aggregated context to create best possible experience for the end user.

Wallet as service discovery point:  The transaction data can be used to find apps and services relevant to the context. For example, the newly launched train schedules app can be presented upon user purchasing the ticket. The wallet provider can create a framework where third party services can register to be presented to the user upon specific transaction data. In some cases, apart from presenting the required data can be sent to the app to tailor the app experience suitable to the context. The wallet provider should exercise caution when presenting 3rd party services, as they may be intrusive for the end user.

Contextual Invocation:  The third party apps can run in the background, but user need invoke them explicitly to interact. The context of transaction can bring the auto invocation aspect through wallet. For example, the expense management app can automatically track purchases based on the calendar data of a business user and prompt user to add a business expense upon transaction.

Unlike many 3^rd party services, Mobile wallet provider should establish greater trust with customer when dealing with financial information. User should be given full control with opt-out approach to their data. User needs to understand the data they are willing share with private parties and authorize the wallet provider. It’s the responsibility of a wallet provider to simplify these options and present them intuitively so that customers can make informed decisions.

Today, the wallet is built to cover the transactional aspects. The wallet adoption can be improved by bundling the essential services like loyalty, deals, coupons and digital receipts etc. Creating a fluid and engaging experiences among these services play great role in wallet uptake.

4) Beyond Transaction:

In mobile commerce, the transaction part is the only dominant business today. According to Gartner, worldwide mobile payments are estimated around $172 billion. This includes mobile payments, P2P, carrier billing, online/offline purchases. By 2016, mobile payments expected to reach $600 billion worldwide.

There is huge momentum in mobile commerce space today. The SoLoMo(social-local-Mobile) phenomenon brought new ways discover the products and services and resulted in a deal economy. The traditional loyalty programs evolved to created deeper engagement between product and customer. New apps emerged to compare prices in real time. All these development elevated mobile commerce to whole new level.

There are 3 phases to any commerce opportunity

1)   Pre-Transaction (Discovery and Evaluation)

2)   During Transaction (Financial- loans /lines of credit)

3)   Post-Transaction (Organize, protect, engage and loyal)

It is essential to understand the customers commerce journey to identify the opportunities,, partner with players and offer fluid experiences.

Love to hear your thoughts on winning the wallet war.