Too Big to Innovate? How Losing the Mobile Wallet Wars Might Make Those Banks Small Enough to Fail

Greg Bates, March 7th, 2013

VISA POS Solutions ProgramIn a study released by the US-based Carlisle & Gallagher Consulting Group, Finextra reports that the big venerable players are falling behind,

The front-runners selected by CG were LevelUp, PayPal, Square and Starbucks, who were praised for their ease of use, wide acceptability and loyalty enhancements. Competing applications from the nation’s biggest banks and each of the four card schemes, American Express, MasterCard, Discover, and Visa, failed to make the cut.

Adam O’Daniel of the Charlotte Business Journal points out that things are suddenly moving fast,

Peter Olynick, C&G’s Card and Payments practice leader, says the banks and other providers that emerge with superior products in the next year or two will be ahead of the game. He estimates 50% of smartphone users will be using mobile wallets within five years. C&G also recently found 48% of all consumers are interested in a mobile wallet.

The idea that big banks and credit card companies might go belly up if they lost the mobile wallet wars is nonsense, right? We haven’t heard anything so outlandish since the idea that newspapers could fall to the Internet, or bookstores fall to ebooks, or Rim fall to the iPhone, or Tower Records fall to iTunes, or …

It’s tempting to say that none of these examples apply. Big banks are big businesses and credit cards are just one segment for  them. But these examples ranging across many industries have one thing in common: the path to disruption has been through the consumer market, not the business to business market. Think Apple’s invasion of Rim: the iPhone was first a consumer device at a time when the majority of Blackberry users got their devices in connection with their jobs. So, too, the mobile payment arena is a consumer battleground. The examples suggest that, even for a diversified business (think Microsoft), danger can spread out from  the consumer arena when innovation arrives.

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