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Digital Wallets: For Many, Becoming The Preferred Way To Spend

This Month in Retail Banking

For a rapidly growing number of consumers, spending means using a digital card on their phone to instantly debit their bank account. To capitalize on the trend, banks increasingly need to provide new and new-to-digital existing customers a smooth, frictionless experience that ensures quick adoption and continued usage 

But for banks, these digital wallets represent as much of a conundrum as an opportunity. They provide customers easy access to their accounts and can be activated almost instantly, unlike a physical card that needs to arrive in the mail. But because the interface is no longer through the bank’s app, providers cede control of much of the user experience to the phone’s technology and each wallet’s ecosystem. 

Another issue is what to do about digitally acquired customers, who may be among the most likely to use digital wallets. They’re far less sticky than those originated in branch and display lower balances, or no balances at all in the first month, according to Curinos research. 

To help retain these customers and grow their account balance, leading banks, especially fintechs, are offering digital wallet access as part of their customer onboarding. Increasingly, they’re weaving digital card setup and wallet integration seamlessly into the opening of accounts. For several of these providers, that’s included savings accounts as well as their main checking accounts, which has helped them own more of the digital wallet’s precious spending real estate. 

As with cards that sit in a physical wallet, banks will want theirs to be the digital card of choice. That’s led to cashback offers, savings roundups and other spending incentives. The process may be changing to digital, but some of the best ideas to capture share of wallet are timeless.

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