2013: The Year Of The Digital Wallet

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Having named Big Data the most annoying buzzword of 2012, you might be wondering what I think the early candidates for most annoying buzzword of 2013 are.

Actually, I know that nobody is wondering, but that’s not going to stop from me telling you (after all, what is the purpose of a blog, if not to push one’s own ideas on the rest of the world, whether the rest of the world wants them or not).

So, here you go: In 2013, everybody and their mother will launch a digital wallet.

Mass adoption of mobile payments (in the US, at least) isn’t quite here yet, but that won’t stop tons of technology providers, financial institutions, and large retailers/merchants from offering mobile apps that they will call digital wallets.

In fact, I might just refer to my blog as a “digital wallet.” It”s digital, and allows me to store things (ideas), and isn’t that what a wallet does? Let you store things?

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Bank Systems and Technology ran an article on 5 Predictions About the Future of Digital Wallets that bears some analysis. Included in its list of predictions are the following:

“By some estimates, 70% or more of all e-commerce transactions are abandoned at checkout, valued at roughly $18 billion a year. There are many reasons for this … But no one likes the 16-digit hunt-and-peck. No one. Which is why the onramp for digital wallets is likely to come, not in the form of mobile transactions in cafes and gas stations, but rather, online, because, ironically enough, that’s where the friction is.” — Tech writer Jeffrey O’Brien in a recent Mashable.com article

My take: Disagree. First off, people don’t abandon carts online because they have to type in their credit card number. They abandon for a number of reasons, one of which is that many online retailers only show the best price for an item if you put in the cart. Second, if people didn’t want to do the “16-digit hunt-and-peck, they could easily store their card number online, and let it be auto-filled. I’m not doing that, but hey, you can if you want.

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“Banks should think twice before going down the path of launching their own branded independent wallets. For some, it might make sense, but many others will likely be better off focusing on making their payment credentials available and top of wallet in the wallets already out in the market, as well as enhancing and extending their mobile banking platforms with value-added services, including payments.” — Senior Analyst with another research firm.

My take: Damn, I hate to publicly disagree with a competing research firm. But I am.

What value-added do banks provide their customers today? Security? Guarantee that money will be moved when it’s supposed to be, and there in the account when it’s supposed to be?

Those are pretty low on the Maslow hierarchy of banking value. People want added convenience to do the things they do, and help making better financial decisions, big and little. That’s the promise of a digital wallet — convenience and advice. If banks don’t brand their own digital wallets, someone else will — and deliver more value to consumers. I didn’t say that every bank had to build their own digital wallet. But providing and branding their own wallet will be a big battlefield over the next few years.

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“It’s about providing an entire shopping experience and ensuring people get relevant offers for what they are buying. And that doesn’t happen unless you have data.” — PayPal President David Marcus

My take: 99% right. The first and third points (about the shopping experience and having data) are spot on. But people don’t care about getting “relevant offers.” That’s marketing-speak.

People care about getting the best price for what they’re buying, and choosing the best product for them when there’s a choice. That’s the shopping experience. If a better price is available somewhere, people want to know. If the digital wallet offers them the ability to find the better price, then people will use the digital wallet.

The question is: How does that “better price” get into the digital wallet? Well, it could be price comparison functionality. Or someone could make an offer.

The notion of relevance is misunderstood. Marketers have delusions of relevance. Relevance can’t be quantified (and therefore not measured).  It’s a highly subjective, and worse, transient condition.

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So there you have it. My prediction that 2013 will be the year of the digital wallet.

I know I’m going to be right. 

Today, everybody who wants to push Big Data slaps that label on everything that happens (regardless of whether or not it’s really “big data” or not). Next year, I’ll be able to claim that everything that FIs, retailers, and merchants do in the area of shopping and banking falls under the banner of Digital Wallets.

Now, if I could only figure out what the stock market is going to do.

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