The Mobile Banking-Mobile Payment Connection

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In a recent Credit Union Times article, as well as in a webinar I listened in on (presented by a competitor of mine who shall remain nameless), I’ve heard the following assertion:

Mobile banking adoption will drive mobile payment adoption.

The gist of the recommendation in the webinar was that banks and credit unions should drive adoption of mobile banking among their customers as a way to drive mobile payment adoption as it matures.

My take: Mobile shopping — not mobile banking — will drive mobile payments.

Interestingly, my competitor has published consumer data regarding technology adoption across countries in North America, Europe, and Asia. In the vast majority of countries, the adoption of online shopping (purchasing online, not just researching online) has historically outpaced — and continues to outpace — the adoption of online banking.

What did consumers do when the Internet started to take hold? They didn’t start buying things right away, nor did they start managing their bank accounts online. They started by shopping — i.e., researching.

As eCommerce opportunities expanded, consumers increasingly felt comfortable enough to make purchases online. The use of the channel to manage bank accounts quickly followed, but followed, nevertheless.

We’ll see a similar — although much more condensed — pattern with mobile payments and mobile banking.

In other words:

Mobile banking doesn’t drive mobile payments. Mobile shopping drives mobile payments, which in turn drives mobile banking.

The flow on mobile devices will be:

Am I getting the best price? –>  Check my balance –>  Buy it

For us fat cats, who don’t worry about our balances, we may check balances after the purchase. But regardless, mobile banking adoption isn’t going to be the key driver of mobile payment adoption.

Shopping –- which, in addition to price checking, includes mobile coupons and merchant-funded incentives –- will be the stronger impetus to mobile payments.

I’m not saying that mobile banking isn’t important. Offering mobile banking capabilities is an imperative — consumer interest and demand is overwhelming and growing. 

What I am saying is that banks and credit unions must get a whole lot better at mobile marketing — in the form of cross-selling, influencing choice of payment cards, merchant-funded reward offers — in order to reap potential benefits from mobile payment adoption.

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