Digital Wallets Are The Future Of Identification
In a recent article, and podcast appearance, David Birch, an internationally-recognized thought leader in digital identity and currencies, pointed out that digital wallets are the future of identification – their rise goes beyond just making payments online.
Birch argues that those who see digital wallets as merely a convenient way to select payment cards are missing the big picture, as digital wallets will become a central hub for storing and managing our digital identity. From our passports and driver’s license to our loyalty cards and even our health records, the potential uses of digital wallets are vast and go well beyond just financial transactions.
The Popularity of Digital Wallets
Digital wallets are becoming increasingly popular worldwide, with around 56% of users in 13 countries utilizing digital wallets more than five times a month, according to an Accenture survey. As physical wallets become less relevant, banks are developing digital wallets in response to the demand from customers. Wells Fargo, Bank of America, JPMorgan Chase, and others are creating digital wallets to help consumers pay online merchants.
The Decline of Cash and Rise of Direct-to-Account Payments
The shift towards digital wallets and the future of identification is also reflected in the continuing decline of cash. A decade ago, 60% of payments were made in cash, and UK Finance estimates that this will fall to 6% by 2031. As a result, banks are moving towards direct-to-account payments as an alternative to cards, which makes sense for both consumers and merchants.
The Role of Mobile Phones
Mobile phones are becoming the wallets of the future, with around half of Brits believing that physical wallets will become less relevant, according to Mastercard. Direct-to-account payments are growing in popularity, and it’s becoming increasingly crucial for banks to recognize the role digital identity will play in the future of digital financial services. The Mobey Forum has suggested that banks leverage their position as custodians of personal data to offer value-added digital identity services, allowing them to become brokers of trust in the digital economy.
It’s Time for a Wallet Strategy
We’ve been advising banks, governments, telcos, and other large organizations on their wallet strategy for years. David is correct – without a wallet strategy, you’re likely missing the target – or aiming at the wrong one.
It’s pretty simple. The popularity of digital wallets is rising, and banks and other players are responding to this demand by developing their own digital wallets. As physical wallets become less relevant, mobile phones are becoming the wallets of the future, and account-to-account payments are growing in popularity. Banks must recognize the importance of digital identity and their role in shaping the future of digital financial services, offering value-added digital identity services to become brokers of trust in the digital economy.
In his podcast appearance, Let’s talk about digital identity, hosted by Oscar Santolalla of Ubisecure, David emphasizes that digital currencies need some form of digital identity, and the need for identity might actually drive digital identity forward and help it develop into the mass market.
Digital currency needs some form of digital identity, that might actually drive digital identity forward and help digital identity to develop into the mass market.
In addition to the insights from David Birch, The Current and Future State of Digital Wallets report provides valuable guidance to organizations navigating the digital wallet industry and ecosystem. Continuum Loop is proud to have published the most comprehensive information that defines a digital wallet, clarifies the ecosystem, and provides recommendations on how organizations can move forward as the ecosystem develops.
The Future of Digital Wallets
Digital wallets are poised to transform the way we live and work. Birch’s insights remind us of the transformative potential of this technology and the many ways it will impact our lives beyond just making payments. As digital wallets continue to grow in popularity, organizations must stay aware of how they will shape our future and how they can leverage tools like the Trust Continuum™ Methodology to build trusted ecosystems that facilitate the safe and effective use of digital wallets.
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