Retail Banks Poised to Win Mobile Wallet Race – Payments Report

A new report says that banks are likely to be the big winners in the mobile wallet race, even though many people are using new players like fintech companies.

The report by the Global Payment Innovation Jury says that banks have more experience dealing with regulations and managing money safely. This will be more important as mobile wallets become more popular.

The new report predicts a surprising comeback by traditional banks in the mobile wallet race.

The 2024 Global Payment Innovation Jury Report, released by African payments giant Interswitch Group, challenges the current narrative.

Based on insights from over 130 payment experts worldwide, the report titled “Market Meltdown– Impacts on Infrastructure, Regulation and Innovation” highlights a significant shift in investor priorities.

Previously, investors were enamored with hyper-growth, even if it meant sacrificing profitability. Now, the focus has shifted towards companies with clear paths to making money. This change in priorities plays directly into the hands of established banks.

The report argues that banks have a distinct advantage: decades of experience navigating the labyrinthine world of financial regulations and safeguarding vast sums of money. As mobile wallets transition from niche technology to mainstream tool, these skills will be critical for ensuring secure and reliable transactions.

Fintech companies needn’t fret just yet. The report suggests they can still secure investment, particularly those developing artificial intelligence and tools to combat climate change. These areas are likely to attract funding freed up from the payments sector due to the investor focus on profitability.

However, when it comes to mobile wallet dominance, the report suggests tradition might win out. Banks’ established infrastructure and regulatory expertise position them well to capitalize on the booming mobile wallet market.

The report also explores other trends impacting the global payments landscape. It highlights the increasing importance of cost management for profitability, the struggles of cards in emerging markets dominated by mobile money, and the talent drain plaguing emerging market payment companies.

The report concludes with a surprising finding: Africa and the Middle East, despite economic challenges and limited investment, emerged as a runner-up to the Asia-Pacific region in terms of payment innovation. This is a testament to the resourcefulness of the continent’s entrepreneurs and policymakers.