Even though it’s not clear who will “win” mobile payments or which players are here to stay, new data shows latecomers and nonessential players are floating into the periphery while the dominant players prepare for the future.
Fundraising for mobile wallet startups is on track to fall 73 percent in 2017 on a year-over-year basis, according to research released Monday from PwC’s financial technology strategy consulting platform, DeNovo. That figure should be taken as a sign of industry consolidation as well as preparation for a post-app world, said Michael Landau, fintech payments lead at PwC.
“Apps are the way to reach consumers in a mobile environment today, but how long will it be until apps aren’t the best way to reach them?" he said. "How many years will it take for the U.S. to adapt to the WeChat strategy like they have in China?”
The consulting and auditing giant shared the statistic as a single data point, one born of a wealth of data it has collected and analyzed in its proprietary intelligence platform. DeNovo does not cover public entities and the mobile wallets assessed aren’t particularly well-funded or well established.
Landau noted that the number of apps that people download has been falling, while pointing at a 2015 survey which taught the world that although people use an average of 24 apps each month, they spend 80 percent of their time in the same five.
“Consumers are really only really using a few apps at any given time so you have to make any app extremely valuable,” he said. “What is critically important regardless of context is authentication.”
Banks and startups alike are responding to that need to differentiate by investing in biometric authentication, which allows users to verify their identity when confirming a payments transaction or logging into their mobile banking apps, for example, by using their unique physical traits instead of a password from memory. Today, fingerprint authentication is most common, but many financial firms are closely studying eye, face, palm and voice recognition as well.
“It feels futuristic but the idea is any mobile wallet strategy needs to prepare for rapidly changing contexts in how they reach consumers,” Landau said.