U.S. banks are reportedly working together to launch a digital wallet that will rival the likes of Apple Pay and PayPal.
Analyst’s take on the upcoming e-wallet
On Monday, the Wall Street Journal reported big banks, including JPMorgan, Wells Fargo, and the Bank of America to have joined forces with a few other banks to launch an e-wallet.
These financial behemoths also expect their digital wallet to help minimise fraud. Nonetheless, Wolfe Research’s Darrin Peller does not see it as much of a threat for the notable third-party wallet operators.
Growth rates of payment volume through fintechs versus at banks is generally three to four times faster. So, we don’t think banks have a good track record of forming a cohesive group to compete effectively.
The news arrives only days after the U.S. banks reported results for their fourth financial quarters (find out more).
Can banks really displace an Apple Pay?
Peller also noted the dominance of Apple Pay considering more than half of the U.S. smartphone owners have an iPhone. On CNBC’s “TechCheck”, he said:
Use of Apple Pay at POS is up 60% because it works, it’s easy. PayPal is investing heavily in improving its checkout experience. It’s hard to imagine banks spending that much time and money on it and dislodging an Apple Pay.
The yet-to-be-named digital wallet will roll out in the back half of 2023 and will be managed by “Early Warning Services LLC” – a joint venture comprising several banks that also operates Zelle.
Bank stocks (Invesco KBW Bank ETF) have gained more than 10% over the past month.
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