The Future of Mobile Banking
Without physical locations, however, many consumers in the digital age are feeling more comfortable trusting their banking services to non-traditional companies. For example, in a 2014 report by the consulting firm Accenture, 25 percent of respondents said they would use mobile making services from the following companies: Amazon (AMZN), Google (GOOG) , Apple (AAPL), PayPal (EBAY) and Square. According to industry research group CEB Tower, investment in the mobile banking space will grow by over 14.5 percent a year on average, with an estimated $2.9 billion of capital investment by the year 2017.
ApplePay and Google Wallet have already been rolled out to consumers to test this new area of non-banks leveraging their technology to deliver banking services. These services pose not only a threat to traditional banks, but to payment processors and networks, including Visa (V) and Mastercard (MC), as well. For example Venmo, Square and PayPal allow individuals to accept and pay with credit cards directly with each other. For today’s mobile banking customers, security is a major concern and they trust technology companies with their digital data more so than traditional banks. (For more, see: Apple Pay vs Google Wallet: How They Work)
Decentralized digital currencies—Bitcoin being the most prominent—another newcomer to the global financial scene. Mobile apps allow holders of these cryptocurrencies to perform transactions with real-world merchants and send payments back and forth between individuals. These systems, while perhaps poorly understood by the public now, may prove to be the true future of mobile banking. Bitcoin transactions are incredibly cheap, incurring only a fraction of traditional credit card or PayPal fees. They are also secure: the bitcoin network itself is virtually un-hackable, and any hacking or theft has occurred due to either malfeasance or a lack of cybersecurity at the merchant side. These are the same vulnerabilities exposed when banking sites are hacked, identities are stolen or companies, such as Target (TGT) or Home Depot (HD), are breached. (See also: The Six Biggest Misconceptions About Bitcoin).