Wells Fargo doubles down on payments tech (WFG)

Wells Fargo doubles down on payments tech (WFG)

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Wells Fargo recently announced that it had formed a new  group, called Payments, Virtual Solutions, and Innovations, in order to better build out “innovative digital banking experiences,” according to a press release.

The group, which will focus on three key areas — payments, artificial intelligence, and APIs — will likely push digital initiatives towards consumers and better hone the firm’s path forward as the banking industry becomes increasingly disrupted by technology and competition increases.

The move could help Wells Fargo grow through embracing technology that customers seem to want. Though it seems that the worst is behind the bank, since its scandal in late 2016, the firm has seen difficulty in a few critical area. Digital banking has been the major driver of customer actions for the firm in the past several years, and it’s likely this will continue.

As such, an investment in this division, and a restructuring to make sure these ideas are being approached in ways that make sense and that align with current consumer trends and preferences, could help the firm better build out its digital and mobile offerings. That could draw in new consumers, especially of a younger, digital-savvy generation, and help better engage existing ones, therefore potentially helping lower attrition and increase product usage. 

Peer-to-peer (P2P) payments, defined as informal payments made from one person to another, have long been a prominent feature of the payments industry.

That’s because individuals transfer funds to each other on a regular basis, whether it's to make a recurring payment, reimburse a friend, or split a dinner bill.  

Cash and checks have historically dominated the P2P ecosystem, and they’re still a popular tool. But as smartphones become a primary computing device, top digital platforms, like Venmo and Google Wallet, have enabled customers to turn away from cash and make those payments digitally with ease. Over the next few years, though overall P2P spend will remain constant, a shift to mobile payments across the board and increased spending power from the digital-savvy younger generation will cause the mobile P2P industry to skyrocket. 

That poses a problem for firms providing these services, though. Historically, most of these players have taken on mobile P2P at a loss because it’s a low-friction way to onboard users and won’t catch on unless it’s free, or largely free, to consumers. But as it becomes more popular and starts to eat into these firms’ traditional streams of revenue, finding ways to monetize is increasingly important. That could mean moving P2P functionality into more profitable environments, leveraging existing networks of friends to encourage spending, or offering value-added services at a nominal fee.

Jaime Toplin, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on mobile P2P payments that examines what’s driving this shift to mobile P2P and explains why companies need to find a way to capitalize on it quickly. It discusses how firms can use the tools they have to gain in the P2P space, details several cases, and evaluates which strategies might be the most effective in monetizing these platforms.

Here are some key takeaways from the report:

• Consumers still want mobile P2P services, and they’re turning to them. Individuals pay their peers on a regular basis, and as smartphones are increasingly used as computing devices, these consumers look to such services for fast and easy ways to pay. 
• Monetizing P2P is more important than ever. Initially, P2P was a valuable onboarding tool for companies, and when it was still a small segment, taking it on at little value or a loss didn’t have major implications. But as volume grows and user bases scale fast, finding ways to monetize quickly should be a priority for firms looking to stay ahead.
• New technology could put some apps ahead of their peers. P2P continues to rely on networks, especially for informal, social transactions. But rather than having a large network, it’s becoming important for firms to understand their user bases and the networks within them. This means that chat apps, and leveraging bot and AI technology, may offer a distinct advantage.

In full, the report:

• Forecasts the growth of the P2P market, and what portion of that will come from mobile channels, through 2021.
• Explains the factors driving that growth and details why it will come from increased usage, not increased spend per user.
• Evaluates why mobile P2P isn’t profitable for companies, and details several cases of attempts to monetize.
• Assesses which of these strategies could be most successful, and what companies need to leverage to succeed in the space.
• Provides context from other markets to explain shifting trends.

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See Also:

• Wells Fargo app could grow engagements
• Wells Fargo is making all its ATMs cardless
• THE MICROPAYMENTS REPORT: Problems and solutions for low-value payments

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February 14, 2017 at 03:36AM