Article origin: Computer Sweden
Freely translated by WestInt.

Why Apply doesn’t stand a chance against the banks in the battle for mobile wallets

Quick-footed IT companies like Apple, Google and Samsung are investing heavily in their mobile wallets, but any breakthrough on a broad front will not come until the much-berated old banks have made their choice.

That’s according to Sten Karlsson at West International, which develops transaction and payment systems. He was one of the speakers at Redeye’s seminar on mobile payments and the hot new area of fintech (financial technology).

“Obviously, Apple Pay was the first out with a mobile wallet, then Samsung and Google. But the ones who will succeed widely in the end are the banks, customers will quite simply get a mobile wallet from their day-to-day bank.

“Apple, Samsung and Google systems will no doubt continue to exist for a certain type of use, but where broad and in-depth use is concerned, that won’t happen until the banks issue their wallets”.

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Mobile wallets include the most commonly-used cards, as well as tokens and offers. Sten Karlsson draws parallels with the emergence of e-commerce and the fact that the biggest, well-established chains were slow to get off the mark.,

“When talk about e-commerce first started, it wasn’t IKEA that would continue to sell furniture or that H&M would sell clothes. It was other, new companies that would take over. But IKEA is still selling furniture and H&M is still selling clothes. Whatever people say in the beginning, the big beasts finally wake up and take over”.

At the same time, a lot of people are dissatisfied with their banks, which aren’t at the leading edge of digitization?

“No, people grind their teeth and complain about the banks, but when it comes down to it they basically trust them – and it’s trust that counts. Auntie Agda in Svenljunga would not accept one from anywhere else than her bank”.

In any event, it is clear that mobile payments will increase dramatically over the next few years. By 2018, it is estimated that 1.5 billion mobile wallets will be in existence, according to the analyst Juniper. Another analyst, Gartner, believes that one in two consumers in mature markets will be paying via their mobile or other portable technology in 2018.

Sten Karlsson says that mobile wallets have gone further in the USA and the UK.

“In Sweden, it’s been decided to do it in stages. First, wallets that can be used in e-commerce and wallets that can be used in physical shops won’t come until a later phase – I doubt whether it will happen this year”.

However, others at the seminar said that the situation right now is ripe for the emergence of new services. Pontus Mannberg, Stockholm Manager of the Oliver Wyman consultancy, says:

“If you look at the music industry, it’s 100% digitized and the business model has been transformed. The banks are in some kind of in-between period. Many have a branch network, which of course has been considerably slimmed down, but they don’t quite know what they should do there. At the same time, competitors that are totally digitized are arriving on the scene. This is paving the way to what is generally called “disruptive technology”, technologies that are shaking out whole industries.

“It might be something quite minor that arrives, so the established players take the view that “this is so small that it’s not going to bother us”. But then things go fast. Setting up a new account and a new business is so quick. And today it’s easy to get financing for fintech solutions, there are many people who want to invest”.

Mattias Malmqvist