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Hi 5! The top five fintech stories we’re following today

top 5 weekly fintech stories

Digital wallets: lacking growth, getting creative

Accenture’s recent report that POS digital payments haven’t grown at all confirmed what we already knew — namely, the technology is ready, but users aren’t. Still, there’s some movement on the mobile payment horizon. Apple is making a conscious effort to get users comfortable using Apple Pay in ecommerce, and not just in retail. Meanwhile, Walmart’s isn’t twiddling its thumbs, and is now in talks to integrate other digital wallet options into its newly launched retail app.

Online lending’s blurred lines

We’re sometimes quick to draw distinctions between the incumbents and the upstarts. But in online lending, things are getting a bit blurred. A new partnership between Fannie Mae and SoFi shows how fintech partnerships can work. Partnering is starting to look more and more attractive, given that OnDeck is primarily using its own balance sheet to fund growing originations, while Lending Club investors continue to shrug off more losses.

What will those incumbents think of next?

Incumbents partner up with fintechs, they acquire them, they launch innovation labs, and sometimes they do what Bank Leumi did — disrupt itself from within with its new digital bank, Pepper.

Industry leaders share insights on success and fintech trends

It’s rare that fintech CEOs get the chance to really open up about the challenges and delights of their jobs. Tradestreaming’s smooth-talking Josh Liggett got them to share their CEO highs and lows. Other industry experts spoke of the major trends they see impacting fintech and finance.

Software, APIs, and SDKs

If you want to see just how banks, with more open systems and established software connectors, can evolve, here are 7 examples showing the power of banking APIs. Citi is one of the more recent incumbents to join the API fray with its new global API developer hub. In payments, CardFlight chose not to reinvent the wheel. The company built its tech on top of existing payment infrastructure, rather than building out something new. And finally, WTF are SDKs, and why you should care.

 

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Shocking news: Mobile payments aren’t growing

At this years Money 20/20 conference, Accenture presented its 2016 North America Digital Payments survey. The annual report used data from 4000 consumers in North America, tracking how they pay.

The report discusses how payments are becoming mainstream, which players are setting themselves up to be industry leaders, and the future of digital payments.

“Making payments is part of consumers’ everyday lives,” the author writes. “Before long, making digital payments will be too. Because after years of steady momentum, digital payments is on the verge of becoming mainstream—and there’s no turning back.”

But at the end of a section discussing the momentum of digital payments, Accenture threw in a tiny finding:

“Even so, the use of mobile payments at the point of sale, which represents a significant portion of transaction volumes, is limited. Just 19 percent of consumers pay in store with their phones like last year.”

Read that line again: “Just 19 percent of consumers pay in store with their phones like last year.” For those lacking a degree in awkward language translation, here is a visual representation of the sentence:

accenture

Read that again: Zero percent growth in mobile payments at POS.

Not one or half a point. Zero. Sin crecimiento. Nada. Zilch.

We’ve come across a few reports recently touting the growth of mobile payments, so what gives?. The problem lies in the epidemic plaguing mobile payment surveys. Most reports easily mix up mobile payments with mobile commerce. In this context, a mobile payment is a customer using a mobile payment device for a POS transaction. Mobile commerce is when a customer buys something on a mobile phone. The small difference in language doesn’t seem like much, but leads to two very different data sets.

That’s why Visa showed mobile payments soaring from 18 percent to 54 percent in a recent study. Vocalink’s newest report on millennials states up front that it considers mobile payments to be “any payment made from or via a mobile phone,” aka mobile commerce. How many people chose to buy Amazon and iTunes products from their mobile phones instead of computers doesn’t give the full picture of mobile payment growth.

The data may be new,  but the reasons Accenture gave for the lack of mobile payment growth sound eerily familiar.

“Those who have yet to (37 percent) point to a simple reason why. Cash and plastic cards meet their needs. The reality too is that merchants have been slow to invest in modern card readers. Even if people want to pay by smartphone, they often cannot.”

Consumer behavior and a lack of hardware you say? Hmmm. Wait, isn’t that what we’ve been saying all along? In case you don’t believe me, look here here and here.

We still agree with Accenture that mobile payments are the future, but aren’t sure when the future exactly is. Accenture uses 2020 as a rough estimate for mobile payments becoming a majority payment option, which isn’t that crazy. At the same time, it takes a long time to move from 19 to 50 percent when your growth is at zero.

Retailers moving to more advanced hardware will help growth. And over time, consumers will get more comfortable with mobile wallets. But let’s just remember that cards are the 800 pound gorilla of mobile payments and aren’t going away any time soon.