Podcast: Adopting the digital wallet

The digital wallet market is saturated and has several established players, but this has not stopped new competitors from entering the space. Despite being one of the late arrivals to the space, Paze, a digital wallet being launched by a consortium of banks, including U.S. Bank , Truist , JPMorgan Chase and PNC , is coming to market in Q3, Peter Galvin , chief growth officer at payments fintech NMI told Bank Automation News in this episode of “The Buzz” podcast. Paze will face an upward climb in an established market in which Apple and Google have their own internal wallets embedded within consumer devices, Galvin said, adding that the major challenge is getting customers to use Paze and ensuring that merchants enable acceptance of Paze as another option to rival established digital wallets. “What is the differentiation that they can provide that drives me as a consumer, or me as a merchant, to add that capability to my commerce page?” Galvin said, noting that getting consumers to add the wallet to their mobile devices will require incentivization. Listen as NMI’s Galvin discusses how Paze can compete with Apple and Google’s offerings using customer education and existing banking relationships to help drive adoption. Subscribe to The Buzz Podcast on iTunes , Spotify , Google podcasts , or download the episode . The following is a transcript generated by AI technology that has been lightly edited but still contains errors. Brian Stone 0:04 Hello, and welcome to The Buzz, a Bank Automation News podcast. My name is Brian Stone, and I'm the Associate Editor at Bank Automation News. Joining me today is Peter Galvin, Chief Growth Officer at NMI. Peter discusses how banks can streamline the customer and merchant adoption of the upcoming Paze wallet, the technological challenges faced by launching this new wallet, and why its cybersecurity measures may be better than its current competitors.Peter Galvin 0:31 What makes the pays digital wallet so significant is it's backed by a number of different financial institutions. And I think that, you know, having that backing is very helpful, because it's some of the research that we've seen, has shown that many consumers are almost most consumers look to get their, you know, new financial information from their, from their banking partnerships. And that's also true of merchants. So part of the part of the opportunity with as is that, because the banks have both merchant relationships, and consumer relationships, they can bring those two together so that a digital wallet in that case can be used by the consumers and to their their merchant banks. Brian Stone 1:16 Is that Is that what primarily differentiates it from its, you know, Apple wallet type counterparts? Peter Galvin 1:25 I think from what we've seen, I think that is true, right, is that people generally very much trust banks. They, you know, they look at banks for, you know, security, anti fraud, and for relationships. And the expectation from some of the consumer studies that we've seen is that consumers still, even though there's a lot of other FinTech organizations, almost half of them look to their their banking and their banking relationships to provide them insights onto new types of technology that they may want to use. So I think pas has, you know, that's the opportunity pass has, I think there's also probably a few challenges that they face, given that they're a little more of a late entrant into this marketplace. But that certainly is the basis of where their strengths lie is that they do have those existing relationships, they do have the ability to potentially attach pas to, to any of their online banking applications. And so if you go into your online banking application, for example, and then there's an offer for pas, they have the opportunity to get to lots and lots more consumers and merchants and and help them build more stickier relationships with those, with those consumers and merchants through offering something like paths. Brian Stone 2:54 So I want to get into something that you mentioned in your in your previous answer, which is challenges. You know, one of them that you brought up was was them being sort of a late, late to the game rather, what other sorts of challenges do you foresee with this digital wallet? Peter Galvin 3:13 Well, I think that the biggest challenge is how do you get the digital wallet on someone's phone? Right? So what is the incentive? What is the differentiation that they can provide that drives, you know, me, as a consumer, or me as a merchant to add that capability to my Commerce page, for example. And part of it is the challenges that you've already, you know, as a consumer, if you have an Apple phone or a Google phone, you may already have those native wallets, in your, in your, on your phones and are using those today? I think an example of a good challenge is if you look at the early adopters of you know, things like Apple Pay and Google Pay, what they found was the first credit card that was put into that digital wallet was the credit card that's used most often. And many of the other credit cards, for example, or payments, that they could have been debit cards as well, weren't you? So I think that's the challenge that pas has is how do you get? What is it that incentivizes consumers to be able to take and download that wallet? And what are the benefits that they get from doing that? The second piece is you also need the merchants, right? So you need the merchants to be able to easily accept that pass app as part of their e commerce journey or even as part of you know, potentially if they want to move to, you know, physical stores or point of sale. They need to be able to have the merchants accept that wallet as well. And so those are the biggest challenges because you are already got, you know, Google Apple Pay Pal as you know has kind of primary payment options on many of these merchant pages. And, you know, there are other technologies to they're competing with, which is like buy now pay later, for example. So there is a little bit of there could be a little bit of, from a merchant standpoint, that they've got so many payment methods on their, on their web pages that it could get started to get a little bit overwhelming for a consumer. Brian Stone 5:25 Yeah, and one of the things that you talked about was was, you know, I guess informing customers of the potential benefits of using pas, how can these, you know, banks that are teaming up to launch this mobile wallet, sort of educate their customers? And in a broader sense, and sort of inform them of those, you know, potential benefits of using it? Peter Galvin 5:50 Yeah, well, I think the primary opportunity they really have is either through their existing applications, you know, mobile applications that they have on, on a phone or a tablet, or through their online banking interfaces, right. And that's, that's the way that like, if you think about when you go into your, your account, you know, if you're going online, for example, into your account, you start to see a number of different offers, usually from, from your banking, or financial institution, and those offers sometimes, or different types of loans or new technologies and services. So I think as part of that process, right, they're going to need to be able to, to provide both the education and the capability to easily integrate that into, into my, my, my phone or tablet, or, again, on somebody's web page. And I think that's the beginning. I think the other part is, is that, you know, part of that is also a brand capability that they need to go after. And so, you know, there probably need to spend as a consortium, some money on marketing and branding, to be able to, you know, reach more people and a much wider audience. But I think some of the best opportunities, especially as they're looking to move into this digital wallet, app, application space, is using how they're interconnecting with their customers today, and especially, you know, when you think about a digital wallet, how are you interconnecting with your, you know, consumers and merchants digitally, so you're doing that either through a, through a, through your mobile app, or you're doing it online through your online banking opportunity. And so I think those are kind of the two, the two ways that they can begin to educate and to drive adoption of PAs to their either their consumers or the merchants. Brian Stone 7:44 Yeah, we can use pas as sort of the the launch point for this broader question. You know, one of the one of the things I always hear from my interview subjects is banking, financial services is not a typically a quick moving market, like they're slow to, to change, you know, make wholesale changes, things like that. Why do you think the financial services industry, you know, banks included, are typically slow to be able to inform their users of these new technologies, you know, like, you can use pairs as the example here? Peter Galvin 8:21 Well, I think there's a built in conservatism with banks, which I think in general is a good thing. You you want your bank to, to be somewhat conservative, because they're, they're actually dealing with your money. Some of the other FinTech startups that, you know, they're, they can be a little more fast or loose, because they're maybe not, they're not as regulated. And they're also not necessarily, like always dealing directly with your money. And so I think in the cases of banks, they are they are conservative by nature, for a number of reasons, right, they at the at the end of the day, their main job is to protect, you know, their depositors and and their their bondholders and their stockholders, right? And so they are very concerned about things like fraud, making sure that they're compliant, and making sure that they're, you know, there's no opportunity for any of these, you know, anything bad to happen, because there's a big brand, you know, reputation that many of these banks have, that maybe some other you know, FinTech organization or FinTech company doesn't have to rely on right. And so if you think about how banks, you know, go to market and think about themselves, you know, it's they're been in business for a long time. They're trusted, you know, a lot of the things that you think about a bank, and the reason you go to a bank is because of their maybe a little bit more conservative. And I think if you look at some of the survey results, you know, even though there are a lot of these new fintechs and a lot of new organizations, you still saw that about half of the consumers that we spoke to still look to their bank to be able to give them give them information on new technologies and new capabilities. And I think that has a lot to do with that trust factor. And so where I think, you know, I think banks are much more, they're conservative, in a way to make sure that nothing bad bad happens. Right. And so I think that's the, the main driver for some of that, you know, kind of conservative slow moving, you know, types of activities that they get, they get accused of Brian Stone 10:27 the last question I had here, sort of wrapping all of this up, you know, we've talked about what these banks can do, and especially with pas to sort of get the word out, you know, increased marketing, things like that. And then we just talked about the considerations that these banks have to make. So with all of this said, What can, in this case, pas, what can it do to make adoption of, you know, this mobile wallet, for example, more efficient and moving forward, Peter Galvin 10:54 I think that they, they have to, you know, do a couple things. One is, first of all, lean into that security trust, anti fraud kind of capability that that banks are known for. I think the other part is, you know, consortiums are always difficult, and so ensuring that, you know, the banks are all aligned on the goals and that they're trying to achieve. So if you have a number of different, you know, people in a consortium, and they're not aligned with how how they're going to go to market or how they're going to have their, their consumers, their clients, consumers or merchants adopt this technology, then you get, you know, you get some friction in that in that overall relationship. And also you need to properly resource it right. So you know, you are there there are other incumbents out there with digital wallets already. So you you need to understand that you are not in that necessarily leadership position. And so you need to make sure that you're, you know, funding the technology and making sure the technology works, making sure you're talking to you, you know, and and are considered a trusted adviser for your clients and merchants. And also, you know, continue to build those good relationships and make make make the opportunity for downloading or using that digital wallet. Very easy. You know, convenience is one of the key things that consumers are looking for today. And so it needs to be very convenient, you know, convenient to download convenient, easy to use convenient to make purchases, and it needs to be somewhat ubiquitous in the market to be able to, you know, expand expand their value proposition. Brian Stone 12:44 You've been listening to the buzz, a bank automation news podcast, please follow us on Twitter and LinkedIn. And as a reminder, you can rate this podcast on your platform of choice, be sure to visit us at Bank automation news.com

Podcast: Adopting the digital wallet

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Podcast: Adopting the digital wallet

Paze digital wallet expected to launch in Q3

Venture firm QED raises $925M for fintech investing

5 questions with … Wells Fargo’s Treasury Head John Hunter

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