The mobile wallet sector has become one of the fastest-growing industries in the world, spurred on by the likes of Apple, Google, challenger banks, and FinTech innovators.
Analyst firm CB Insights estimates its current worth to be around $1 trillion worldwide – equivalent to a medium-sized economy. However, it forecasts that the market will grow to over $7 trillion over the next five years (well over twice the current GDP of the UK).
Riding that wave of valuations will be ‘super wallets’, AI-powered financial assistants that aid in personal budgeting, and a trend towards wallets merging with digital IDs. In the near future, we will be what we shop for, perhaps.
“With a wide reach and daily touchpoints, the digital wallet category is poised to have a substantive impact on individuals’ day-to-day lives,” says CB Insights’ latest report. “But only if new solutions can deliver on reliability, scale, and convenience.”
The drivers for this surge in demand are partly customers’ need for convenience and automation, particularly when it comes to impulse purchases.
Meanwhile, the Covid-19 pandemic has accelerated the need for contactless money management and ID solutions.
But it is also because wallets are increasingly embedded in our chosen devices. The key, then, will be tech providers persuading more ecommerce and digital services outlets to offer our preferred payment options.
So, who are the big players? The future is largely being shaped by FinTech innovators such as SoFi, Venmo, Revolut, MoneyLion, and Block, say the authors.
However, tech behemoths such as PayPal, Apple, Amazon, and Google are also aiming to become customers’ go-to money-management platforms, at least in the West.
In Asia, apps like AliPay and WeChat are widely adopted, and their use is encouraged in China.
As wallets develop, services such as loans, bill management, personal finance, insurance, investments, and digital banking are likely to become critical to the market, alongside smart assistants.
In this way, vendors and platforms will differentiate themselves from the competition, but may risk becoming too big as financial players in users’ lives, in Transform Finance’s estimation. The prospect of consumers perhaps being in debt to vastly wealthy Big Tech companies like Amazon, Apple, and Google is unpalatable.