Amazingly, 72% of mobile wallet users now say they’re comfortable enough in the digital universe to leave their wallets at home and rely on their phones to make payments.
Americans have long had a love-hate relationship with digital wallets and banking. They love the convenience but hate the technical issues and the idea of identity theft via hacking. That’s changing, though, according to a recent survey by Marqeta, a card-issuing platform.
A Digital World
With so many online-only merchants popping up in recent years, digital payments are commonplace. Virtual banking is everywhere, too. A consumer might not speak to someone to pay for a big-ticket item like a car. They will arrange the financing online and give the vendor a check for the amount. Then they’ll pay the bank directly.
Marqeta’s survey of 4,000 consumers worldwide included 2,000 U.S. residents. It found customers are using multiple financial services by many providers instead of sticking to the traditional local brick-and-mortar bank or lender. In fact, 42% of the respondents say they use both traditional and digital banking services.
The latest trend in digital money is embedded finance. Simply put, that means payments, loan transactions, etc., don’t go through a traditional bank first. With embedded finance, businesses can accept and process payments more quickly, translating into faster delivery to customers, whether they’re buying a car or a hamburger ordered through a mobile app.
Embedded finance is big business for companies that use it. It’s benefited from the Covid-19 pandemic, with users looking for more unified payment processes, and McKinsey.com estimates it will be worth $40 billion by 2028, or even sooner.
What About Traditional Banks?
While online banking has spiked in popularity, customers still like their brick-and-mortar institutions. About 77% of U.S. respondents still use traditional banks as their primary institution, with 60% keeping most of their money in their primary accounts. But even these consumers generally prefer digital platforms for most transactions, where they can use a computer, tablet, or smartphone. Clearly, customer service is king with these consumers since they can use a bank’s website or app to transact business anytime and have a smooth experience.
Traditional banks should continue to refine their customer experiences, though, since 56% of respondents said they’d consider getting financial services from providers like large tech companies, retailers, or social media platforms. That’s a 10% increase since 2022.
Keep The Tech Updated
Although U.S. consumers use digital platforms more often, they’ll go elsewhere if there are any hiccups in the process. The Marqeta study showed 43% of those surveyed canceled purchases if they had to download a new app or payment method to complete the transaction. So it behooves any company using digital finance to keep the tech in good shape, including ensuring it’s compatible with iOS and Android platforms.
Since mobile wallets can also hold other important cards, like insurance or identification, many users are turning to them for easy access and are adding debit or credit cards, too. Financial providers have worked for better user experiences for their digital customers, and the customers have responded enthusiastically. About 90% of mobile wallet users said adding their credit or debit card to their mobile wallets was much easier than expected.
Looking Ahead
Considering all the above stats whirling around, there’s no doubt digital banking and mobile wallets are here, with more innovations on the way. With 67% of U.S. consumers saying they’ve used mobile wallets in the past year, financial institutions are well-advised to keep expanding their horizons with more digital offerings that improve customer experiences and frictionless payment methods. Rachel Huber, Marqeta’s Market Intelligence Lead, said, “Long-term consumer loyalty will depend on who can provide the most exceptional end-to-end user experiences.” It doesn’t get much more cut and dried than that.
This article was produced and syndicated by Wealth of Geeks.
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