Research Management

The Trojan Horse with a Mobile Wallet Inside

, by Claudio Todesco
Bocconi researcher Anna Omarini describes how non banking companies sneak into the world of payment services

The electronic payment industry is rapidly evolving. Technological innovations and changing consumer needs have opened up the market to players from outside the world of banking. Fintech companies, telcos and tech giants are given the chance to win new customers and try to steal from banks the role of payment service provider.

An important role in this context is played by mobile wallets. They are virtual wallets that store payment card information and feature additional services on a mobile device. This is a fast growing market. According to the World Payments Report 2017 and Deutsche Bank, in 2019 a billion people will use mobile payments. In 2015 there were only 60 million of them. "Payments have always been the Cinderella of financial services", says Anna Omarini, who dealt with the issue in the working paper Fintech and the Future of the Payment Landscape: The Mobile Wallet Ecosystem. A Challenge for Retail Banks?. "They have always been ancillary to major services such as credit and investment, despite being a highly profitable business. Then, in the late 90s, payment became the gateway to the banking world for fintech companies".

Payment services are the Trojan Horse that has allowed Google, Samsung and Apple to access new customers by offering them financial and commercial services in the context of a wider ecosystem. "Banks still handle cashless payment services and they must continue to look after them by creating an attractive ecosystem that allows them to improve onboarding and retention. They cannot just safeguard their role in the payment system. The banks are there anyway, but they should find ways to make themselves visible to the users of mobile wallets".

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