Mobile P2P Money Transfer Market: Challenges & Opportunities for the Banking Industry
As millennials spend countless hours on their mobiles socialising and communicating with their peers, smartphones are becoming an increasingly popular platform to make P2P money transfers. For the banking industry, growing millennial demand for mobile P2P transfers brings both challenges and opportunities.
Lackluster mobile P2P transfer facilities
Current mobile P2P transfer facilities provided by banks are counterintuitive, out of context and require a number of information fields to be filled out to make a simple transfer to a friend or family member. They make users leave the social applications where they spend the vast majority of their time and are filled with friction points that frustrate millennial customers. Most P2P bank facilities are no match when compared to instant and contextual transfer solutions now offered by non-traditional P2P providers.
According to a FICO Millennial Banking Insights and Opportunities report, over 50 percent of millennials are already using or considering non-traditional payment companies like PayPal or Venmo. Many of the world’s largest social media companies are also entering the space. Social media giants like Facebook and Snapchat are utilising their large millennial user bases to deliver instant and contextual payment experiences through their popular social platforms. There is also Google, who have relaunched Google Wallet with a specific focus on mobile P2P money transfers. Tech giants Apple are also currently investigating the market.
Millennial loyalty in decline
Mounting research is indicating that millennials are not as loyal to their bank as generations that preceded them. A survey by Norcross, Georgia-based Synergistics Research found that millennials are open to using a wide variety of non-traditional organisations for banking services. According to Facebook market research, 45 percent of millennials would switch banks, credit cards or brokerage accounts if a better option came along.
Trust & Security
As PayKey discovered, an impressive 87% of UK millennials trust their bank solutions over P2P transfer services offered by third party providers. PayKey’s findings join growing industry research that overwhelmingly illustrates that millennials prioritise security over the latest mobile P2P technologies. This is great news for banks, many of whom may be surprised about millennials favourable perceptions, given the hype surrounding new providers.
Growing millennial frustration toward the plethora of payment options available is a genuine opportunity for banks to provide a less fragmented payment experience. Millennials are overloaded with payment options and don’t want to juggle between several payment apps with different functionalities. Additionally, non-bank mobile P2P solutions are not integrated into a customer’s online banking experience which causes further fragmentation.
Massive growth potential
While it’s true that a number of non-traditional players have moved into the mobile P2P money transfer market, banks needn’t be too worried yet. Not only is the market massive and still wide open for business, but banks also have enormous growth potential by just tapping into their existing customer base. PayKey survey results show that there is substantial room for growth in the mobile P2P market for banks that can shift millennial customers who use bank websites for P2P transfers toward mobile banking applications. Banks have an opportunity to tap into their existing customer base that doesn’t currently use their banking app for P2P money transfers but does use it regularly for other financial services.
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