It gets even worse. Amazon’s launch of Local Register has caused quite a stir among the mobile payment standard-bearers Paypal and Square. Paymenteye gives a look at who runs the greatest danger stepping up to the giant, and what can safely be done to mitigate the latest advance.
The average consumer’s banking relationship is dominated by making payments. So why are banks doing so little to defend this critical beachhead?
That is the question McKinsey & Co. asks it in its August study, “The Digital Battle that Banks Must Win.”
The report finds that “nonbank attackers” from large telecommunications companies to nimble technology firms are defining the standards of digital banking as more consumers make payments on their smartphones. The smartphone is the “beachhead” where banks are most vulnerable to losing customers to competitors outside the banking industry.
“For now, the payments business remains squarely within the core bank franchise, but attackers such as Google, Apple and PayPal threaten critical source of revenue,” the study says.
These competitors have several advantages over traditional banks, including fewer regulatory constraints, a higher risk appetite, and greater leeway from customers.
The study outlines steps banks can take to get out of the defensive posture and drive traffic to their digital banking channels, starting with payments. It also divides consumers into eight profiles, based on point-of-service payment preferences.