Banks must take advantage of the opportunities offered by the open finance era to drive continuous improvement in digital wallets
By Wagner Martin, Director of Business Development at Veritran Brasil
Amid an unprecedented acceleration in the use of digital payment methods, it’s become indispensable for banks to offer a digital wallet to their customers.
Competition in financial services is now centred on developing convenient apps with first-class user experience. But before long, even a world-class UX alone won’t be sufficient: the most popular wallets will be the ones that offer the best additional functionality to their consumers.
This trend obliges banks to develop their digital wallets and strive to offer increasingly more benefits and experiences. And in the era of open finance, they must take advantage of new resources to keep their digital wallets one step ahead in addressing the needs of users.
How can a digital wallet be more practical and functional for users? By offering tools such as invisible payment management, personal finance advice, greater customization and even ideas far removed from finance. And behind all these capabilities is data: the new gold mine.
Invisible payment management covers any transaction that doesn’t involve a traditional payment method, such as credit or debit cards. For example, where a customer's account is charged after the service or product has been received, without the need for repeating user data or using a physical means of payment. This is already being done by transport apps that, once authorized, automatically charge the user at the end of a trip; but banks can take the lead with this technology and make frictionless payments widely accessible.
Another feature that can be added to wallets is financial advice. Banks can safeguard their customer information while at the same time promote good financial health amongtheir clients by, for example, recommending whether or not a customer purchases an item by instalments. They can even create a weekly or monthly balance so that users can see their consumption habits or main expenses.
With tools like this, the digital wallet can become a personal finance manager (PFM), offering unique value to the user.
The bank can also use this financial information to offer loans and propose personalized installments or to present new investment options. All this from a digital wallet that recognizes and gives answers based on the client's data, in a friendly, inviting and intuitive way.
There are other ways to improve the personalization of the wallet: for example, the option of giving it access to the users’ location to make relevant suggestions. This function has to respond intelligently to what the user would look for if they, say, found themselves in another city or country.
Now let's think outside the box. Let's imagine a digital wallet that offers you language courses when it notices you’re in a country where another language is spoken and in addition, it sells you a tourist guide. Or one that puts online investment courses at your fingertips, in case you’re interested in learning about the opportunities the market has to offer for your savings.
The sophisticated use of data forms the basis of all these strategies. It’s a matter of taking the information we have about clients, and that obtained with their consent from open finance alliances with third parties, and combining it with advanced analysis tools.
This way wallets are taking steps to becoming super apps; transcending digital payments and offering products that the customer previously found in two or more different apps.
The aforementioned tools and functions will help further increase the importance of an app in the minds of banking customers. But first, remember that having a solid UX foundation and wallet security is key.
And how can that be achieved? To begin with, the client has to be at the heart of the app's development to offer the best user experience from the moment of onboarding, which must be 100% digital.
Wallets protect customers' money and therefore security is paramount. In this area, biometrics continues to take center stage as an authentication tool. This technology, which analyses the user’s physical characteristics to confirm his or her identity, continues to show progress. In a few years’ time, we may be able to confirm our identity with simply a glance using iris biometry, while at the same time reducing the possibility of spoofing almost to zero.
In such a context, we can conclude that wallets are the gateway for banks to add value to their digital proposal, always keeping one eye on market trends and, with their customers’ approval, using their data and behavior to provide a personalized service.
The future of wallets goes beyond transactions and banks must take the lead.
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