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Mobile Wallets: What's The Value Proposition?

A Snarketing post by Ron Shevlin, Director of Research at Cornerstone Advisors

Mobile Payments Today reported on a Finextra study of banks’ mobile wallet plans. Regarding mobile payments, the study found that:

“81% of banks are looking to add value beyond the transaction, including providing relevant offers to consumers at the point of sale.”

My take: Add value to whom?

To consumers? Really? You’ve got research that shows consumers want more offers thrown at them?

Does your research also show that consumers want to walk down a busy city street and have offers popping up on their mobile devices as they approach every friggin’ store on the block?

Oh, I see…your research shows that consumers want “more relevant” offers.

Good luck with that. Relevance is a slippery notion. Many marketers suffer from delusions of relevance. Relevance can’t be quantified or measured, it’s highly subjective, and worse, it’s a transient condition.

If the marketers who sell a particular product can’t figure out what’s relevant to a particular consumer, how is a banker supposed to figure it out?

Oh, I see…you say it’s about providing relevant offers at the point of sale?

So when I’m at the register at Starbucks paying for my Venti Skinny Half-Caf Ristretto Macchiato-style Americano, you’re going to hit me with an offer for a large coffee at Dunkin’ Donuts? Or did you mean that you’ll offer me a nickel off a muffin (right after the barista, who knows me cuz’ I’m there 10 times a week, offers me the muffin he knows I always get)?


If you thought that the financial crisis brought bankers to their senses, you were wrong. Turns out that many are still living in la-la-land.

If they think that consumers will adopt their mobile wallets, and make mobile payments with them, because of the “value added” of receiving offers, I have ocean-front property in Kansas to sell them.

The “value” in providing offers through mobile wallets (and at the point of sale during a mobile payment) is to the merchant, not the consumer.

It’s the promise of helping merchants and retailers reach prospects (or even customers) in a more efficient and effective manner than they can today.


The dilemma for banks (and credit unions) is that the “value” to consumers regarding offers is in having the FI (through a mechanism like a mobile wallet) limit, or filter, the number of offers the consumer receives.

That’s what consumers really want. Not more, but less offers. Somebody to intercept the offer and say “oh no, not another offer from a nail salon — the last thing Ron needs!”

But who’s going to pay for that?

Consumers aren’t going to pay banks to get fewer, albeit more relevant, offers.

It’s not clear that consumers really want to pay banks for anything (and if banks do charge for something, you can be sure ol’ Dick Durbin will come running in screaming for regulatory action).


The value proposition of the traditional checking account was “a safe and convenient place to park your money until you needed it.”  The rise of the debit card was fueled by a value proposition that promised “a more convenient way to make a payment.”

The value proposition of the so-called mobile wallet — whatever that means, considering there’s no consensus on its definition — isn’t clear just yet. I wouldn’t bet my money on it being “an even more convenient way to make a payment.” And I sure as hell wouldn’t bet on it being “a way to get more relevant offers.” 

No, my money is on “helping consumers make smarter decisions about their finances and spending.” (This is why the new basis of competition is performance).

The question that bankers should be addressing is “how do we help our customers make better decisions?” and not “what should we put in our mobile wallet if we build one?”

Ron ShevlinRon Shevlin is Director of Research at Cornerstone Advisors. Get a copy of his best-selling book, Smarter Bank: Why Money Management is More Important Than Money Movement. And don't forget to follow him on Twitter at @rshevlin.

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

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  1. Completely agree with this. And would also cut & paste “bankers” with “telcos”, which are even less relevant to the consumer purchasing decision and process.

    I’m increasingly of the opinion that as technology (particularly phones & apps) becomes more capable of doing anything, the value lies not in helping *what* you’re doing, but *why* you’re doing it. I haven’t yet come across anyone who seems to understand the user’s intent & purpose for buying things with a phone.

    Dean Bubley

  2. Unlike you (and your Kansas ocean front property), I do believe consumers could value offers through a mobile device, but agree with you that the primary benefit consumers will be drawn to via mobile will be immediate forward-facing tools that will help them manage their finances easily (performance).

    I don’t think the mass market wants a ton of charts and graphs, but instead, immediate insight as you make the purchase the way Moven and even GoBank have proposed. If I insert my upcoming deposits and bills into my online banking calendar, it is of great value to know if the next purchase I make might cause me concern a few days down the road.

    Unfortunately, any success of a mobile wallet concept to the masses will require a lot more assurance to the consumer that their bank account won’t be hacked via their phone. Without the type of education and guarantees/assurances the credit card industry provides a purchaser using plastic, the phone won’t ever get significant traction.

  3. Russell West says:

    It seems to me, an ‘always opt-in’ solution to value-addition is a reasonable approach. After all, (and I agree with the author), relevancy really is transient and different for all of us (no matter how accurate the marketeers analytics supposedly are).

    Proximity marketing (QR and NFC), can – and should – do this: You see something you like, you tap your NFC phone or scan it and off you go.

    This addresses the ‘how do bankers or MNO’s help customers make better decisions?’ question by offering a great vehicle for customers to do it themselves. Their partners provide the offers and customers decide if they wish to take part… No SPAM, no hassle.

    Russell West

  4. Ron, as always, I see you like to stir up the pot a bit. I think much of what you raise maybe relevant to the US market especially the over 30 crowd but the next generations will most likely want the convenience that mobile payments offer. In terms of getting offers, I agree most people don’t want more offers but less and more relevant offers. I already see the value proposition for a lot of women and some men that I know who are still running around with discount coupons. Wouldn’t it be much easier to get the ones you needed or wanted when you are in the store shopping to see if there is a coupon off for batteries or laundry detergent? Anyway, much of what you mentioned talked about mobile marketing and coupons. When it comes to the convenience of making mobile payments or carrying a mobile wallet, I am already seeing this first hand in emerging markets that don’t have sufficient ATMs or POS machines. In these markets, a mobile wallet can be a game-changer when it comes to offering a de facto debit card that anyone with a phone could use to make or accept for payments. Take a look outside the US and look at what is happening around the world. You might change your viewpoint.

  5. “Wouldn’t it be much easier to get the ones you needed or wanted when you are in the store shopping to see if there is a coupon off for batteries or laundry detergent?”

    But that is the problem…what do you want or need? That varies based on the time, day, reason you are shopping there, etc. I could be at Target grabbing a gallon of milk because it was on the way home and you could pop up 1000 coupons that might even be relevant for me some days but on this day they mean nothing because I am there for milk and then I want to get out and go home. Relevance is almost impossible to determine because there are so many factors at play that software will never be able to decipher.

    The idea of my phone telling me I should be looking at batteries or laundry detergent sounds outrageously annoying. I am with Ron here…sounds like a marketer driven “solution” for a problem that really isn’t there for most people.

  6. Trevor what about if you could just search for coupons by store on your mobile looking at only the items you want to see might be on sale or if there is a discount rather than having them “pop” up? I know a lot of people that would rather have the ability to quickly search on a mobile app instead of tearing out coupons and bringing in mailed discount coupons I see people carrying into some stores.

  7. There is a big difference between connecting the unbanked (for whom mobile phones may well be better than nothing) and developed markets where people have lots of existing payment options and lots of cynicism about people “helping” them buy stuff.

    It’s also important to recognise that most people around the world use prepay top-up mobile phones, with an average outstanding balance of <$5 (and often zero), so any purchases will still need to be linked somehow to another account, not the mobile phone bill. Getting a "bill" for phone service is itself a first-world rarity.


  8. I actually use a mobile wallet all the time to pay bills and see it as very convenient in the Philippines. Check out this video http://youtu.be/7HdnrEKrG_U

  9. In some ways, yes this could be more convenient, but the beauty for couponers is that they don’t have to organize by store. Not to mention, they are still going to have print coupons (maybe not one day in the far distant future) so now they are having to manage these coupons in two different places. Plus you have coupons that come from the store and those from the manufacturer. Then you get into the fact that the bank (or app producer) would need to have relationships with all these stores or I would have to have multiple apps to get access to all the coupons for the stores I shop at…

    OR I could just clip a few that are interesting to me and stick them in my car for when I need them. Honestly, thinking through it all, that sounds simpler to me.

    There have already been apps and sites that have worked on the discount/coupon online model and haven’t really had much success so far. Do a google search for coupons, there are hundreds of sites doing this already, not sure why my bank would think they could take all of that and be the place that will put it together for me. Plus, I don’t know if I’d want my bank to have that kind of visibility into my purchasing patterns knowing the connection they have to the rest of my finances.

  10. The beauty of a pure mobile wallet is that it can be used on any phone and even better for prepaid users. More than 70% of all Kenyans and the equivalent of 35% of the country’s GDP is now being transacted via mobile wallets. There are now almost twice as many people in Kenya with a mobile wallet compared to those with bank accounts. Talk about a game changer for getting people into the financial system.

  11. John Schulte says:

    I agree that value proposition to customers is the key missing piece in the mobile wallet debate, and mobile “offers” aren’t the killer app. However, there is a lot of potential to provide value in mobile wallets outside of offers, rewards, and the mobile “transaction” itself. For example, mobile wallet integration of PFM tools could be intriguing (ie immediate feedback on impact to balance and budget of a purchase). The point I would add is that there are innovation opportunities around mobile wallet that could drive customer value, but the lack of standards and cooperation among all the major players on the basics get in the way of progress.

  12. While we might be long way off from quantifying relevancy and putting a number to it, somehow we are all able to agree that an offer for coffee @ Dunkins Donut at Starbucks checkout is irrelevant. Likewise, it shouldn’t be so difficult to accept that the following offers are relevant: (1) 20% off pizza at 1PM (2) 30% off 1L Coke bottle when I have just paid for a pizza at the POS. Furthermore, it should be possible to design the offers platform to be self-learning, so relevancy can improve over a period of time. Many of us – including me – are tired of false positives and – worse – true negatives coming out of banks’ fraud detection systems. I for one am willing to encourge banks to get into offers, where inaccuracy is a lot less painful.

  13. We usually end up debating the desirability of offers based on our own personal preferences. Interestingly, almost all of the research I have seen says people would appreciate and use geolocational offers. In addition, I have also seen research on usage and the people who want/use the offers are in the higher, desirable demographic segments.

    Finally, I would prefer offers driven to my phone instead of having to ‘authorize’ offers in advance and then needing to remember what/where I authorized offers from.

    This benefit doesn’t offset some of the bigger barriers to adoption of mobile wallets, but it helps.

  14. jimncraig says:

    My wife gave me some insight into this issue the other day. She was complaining that e-commerce sites that she did not frequent often (namely, not Amazon) were difficult to use because they forced you to create an account to store all of your information…and making a purchase without being able to login (when you forget your username and password) to that account was nearly impossible.

    This made me think of PayPal and the potential of mobile wallets. Paypal is great for speeding purchases on e-commerce sites…handling purchaser authentication and facilitating payment without having to create an account on the merchant site. It however, does a horrible job of allowing the consumer manage how their purchase is paid (preferring of course to use the cheapest – for PayPal – option and making it hard to switch mid-purchase).

    Imagine a mobile wallet that eased the process of both making the purchase and managing the source of funds for the payment combined with spending/budget insights to help the consumer keep track of how their spending is impacting their short and long term (mostly short) financial situation. Maybe for the segment of consumers who like and actually use coupons, offers could be part of the value proposition…but it will never fly as a primary feature.

    As Ron says, the value of mobile wallet needs to be as great, if not greater, for the consumer than it is for the company offering the solution. I would love to see a solution that does what I just described…and I suspect so would my wife.

  15. That is a value I could get behind Jim. I don’t know how it looks in execution though (its going to be about whoever establishes the relationships first I would think that will win out). If I could minimize the number of sites I have to sign up for and remember passwords for…THAT would be a GREAT value that I would even pay for.

  16. jimncraig says:

    Writing business plan, lining up investors, and launching breathless PR effort now :-).

  17. Solution to your wife’s challenge is a password manager. I recommend Roboform but there are dozens of other options including built-in solutions available within most browsers…

    The reality is that mobile wallets offer little (and really no) incremental value to most consumers. Remember, that the top 20% of consumers account for ~ 60% of all retail spend. And most of these consumers aren’t super hungry for $0.30 coupons…

    I agree with the consensus that mobile wallet vendors will at some point identify feature(s) / function(s) that create true value for consumers but we are not there yet.

  18. Mobile payments – a solution in search of a problem

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