Wells Fargo recently unveiled the Wells Fargo Wallet for Android, becoming the second-largest U.S. bank behind Chase to develop a proprietary mobile wallet solution with POS functionality. The wallet will be embedded into Wells’ existing mobile banking application. Release is scheduled for Android phones beginning in the summer of 2016, while no plans have been announced for Apple devices.
Similar to competing wallets, POS functionality will be available via NFC. Payments will occur automatically when an unlocked phone is hovered over the POS device. Interestingly, Wells Fargo will continue to support third-party wallets, including Apple Pay and Android Pay. However, there are notable innovations in the Wells Fargo offering that may help it stand out in an increasingly crowded field. These include:
- Instant provisioning of Wells Fargo debit/credit cards—a significant improvement in user experience relative to setup processes of the merchant wallets and the so-called “Pays.”
- Integrated real-time checking account and credit balance information—likely a significant convenience benefit given the frequency with which mobile banking users check balances.
- Cardless ATM access at NFC-enabled Wells Fargo ATMs–time will tell if this functionality becomes popular with customers, but it should help drive adoption and usage of the wallet. [Editor’s note: The bank expects more than 40 percent of its branded ATMs will be NFC-enabled by the end of this year.]
- On/off card controls and rewards/loyalty programs in development—other wallets are integrating loyalty, but card controls could resonate with an increasingly security-conscious customer base.
The Wells Fargo Wallet and the likely emergence of other bank-branded offerings create a number of important implications for the payments industry. Notably:
- The introduction of financial institution proprietary wallets, along with the launches of major retailer initiatives, represent the next step in the evolution of mobile payments. Apple Pay remains the market leader, but it has lots of competition.
- Given the rapid proliferation of wallets over the past 18 months, it’s logical that leading issuers would offer their own products to maintain a competitive edge. The alternative is unappealing: ceding the focus of payments innovation to tech giants and retailers. Plus, banks have built-in mobile banking customers that already use their apps regularly. More than 17 million Wells Fargo customers use its mobile banking apps.
- Many of the features promoted by Wells Fargo, including a single, integrated banking application, card controls and instant provisioning, provide an advantage to FIs over non-FI wallets.
Mobile payments, after years of unfulfilled promise, are finally important. Consumer expectations are increasing. Banks of all sizes are feeling compelled to respond to these pressures and demonstrate their commitment to innovation. We expect other leading financial institutions to offer similar proprietary products in the following months to retain top-of-wallet status and remain relevant to tech-savvy customers.
Joshua Gilbert is a partner in the payments strategy and innovation practice with First Annapolis Consulting. His primary areas of focus include card issuing, enterprise payments strategy and mobile/alternative payments strategy. Josh regularly advises clients on the development and launch of new payments products as well as strategies to optimize the performance of existing services. He can be reached at Joshua.Gilbert@FirstAnnapolis.com.
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.