Open Banking, Open Finance and embedded finance and how the digital wallet and Super App are at the beating heart of the evolution of payments and banking services.
When so much is published and discussed about how banks can remain relevant, it can be difficult to pinpoint where exactly their efforts should be directed.
Equally, much has been touted about the advent of the so-called Super App, with awe-inspiring precedents being set for these in China in the form of We Chat and Alipay.
These apps are really interfaces between the physical and digital, which combine to create and/or serve consumer lifestyles. An interplay, if you will.
Really, digital wallets are apps and the evolution of the digital wallet, as is unfolding spiritedly before our eyes, is following in the footsteps of what the so-called super app has become.
Timely, then, a paper from Mobey Forum, taking stock of the journey of the digital wallet, and crucially, how banks can incorporate them into their future-proof strategy; indeed, maybe build their whole strategy around it.
Mobey Forum’s initial definition of a mobile wallet upon its establishment was as follows: “A Mobile Wallet is functionality on a mobile device that can securely interact with digitised valuables.”
What it now posits by way of definition is “A digital wallet is an interface to interact with and manage verified data and digitised assets securely.”
Much more definitive, the reference to verified data and digitised assets, each being an emerging payments paradigm in its own right, converges on the great challenge and also opportunity for banks.
More to the point, this is where banks can come into their own and play a leading role in their own future as well that of the digital wallet by leading the charge with its evolution.
Banks are in a great position as the original trusted custodians of consumer funds to take the next step, expand their offering and commercial gain by becoming the same for digital assets.
Furthermore, the report offers a likely scenario whereby the customer’s account as well as any digital assets they may have are central to a wallet and gated by an eID, through which other wallets can be linked.
Essentially, this means the bank becoming a digital identity issuer and custodian and from there can be central to the evolution of digital wallet super app built around the customer.
Bank digital identity ground has been covered before to varying degrees of success and appetite in many countries worldwide.
There are all sorts of issues in discussion around digital identity- from privacy to security, the use of biometric data or not- before the question of whether banks should provide them even comes into play.
It would also mean a bit of a leap in terms of banking app sophistication, which will be difficult for banks for the same reasons that migrating to a fully cloud-first, mobile-first digital offering is difficult for them.
Having said that, NatWest has ushered in a bank-verified digital identity, OneID, enabling online banking users across the UK, Sweden, Finland and Norway to verify their identity using their bank before signing a NatWest leasing agreement.
But this is quite a specific use case within its Structured Finance division in these countries.
Payments Cards & Mobile Opinion
Our guess is that, yes, the allure of digital asset custodianship and being central to the digital lifestyle of their customers will surely be strong for banks, but the prospect of eID creation can’t possibly trump other priorities, and can only be determined when they decide how their brand, i.e. their model is going to evolve.
It would take a concerted and collective effort.
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