Bankers frequently ask us how mobile payments will generate revenues and profits. But an even more burning question may be: How much do banks stand to lose by not providing a robust mobile payments offering?
Some consumers maintain a combination of a checking and savings account and perhaps a brokerage account or mortgage with their bank. Consider the risk to that bank if a national retailer with a financial services franchise including thousands of branch outlets, or a new entrant such as PayPal, inserts itself into that customer relationship by offering a mobile wallet with enticing discounts and loyalty rewards.
In this worst-case scenario, the bank loses that valued credit card relationship along with the deposit base as the customer redirects his cash flow. The potential threat is significant: the six largest credit card issuers in the U.S. earned a combined $92 billion in revenue during fiscal year 2012 from their credit card businesses.
Via Russ Merz, Ph.D.