Independent Banker - October 2019 - 28

PORTFOLIO
Android Pay-and Samsung Pay in
July 2016, since the payments technology
was just as secure as traditional
plastic cards, if not more so, according
to Paul J. Falvey, the bank's president
and CEO. " There can be multiple cards
stored in a mobile wallet, " he says,
" but mobile wallets such as Apple Pay
do not store any card number data on
the device. "
The big three mobile wallets
have been available to customers of
$850 million-asset JD Bank in Jennings,
La., for three years, according
to Jeremy Guidry, its client experience
director. " What started the conversation
was the amount of customer calls
we received online, at branches, at call
centers, " he says. " They asked for this. "
Engaging younger customers in particular
has been a big driver, especially
since JD Bank has a branch in a major
college town-Lake Charles, La.-in
its region. " As our [existing] customer
base gets older, we have to think more
about attracting younger customers, "
Guidry adds. JD Bank's mobile wallet
does seem to have succeeded in
attracting customers of all kinds. The
bank has seen the percentage of its
active card base enrolled in mobile
wallet increase from 7% in the fi rst
year, to 15% in the second and then to
25% in the third year. Apple Pay has
seen the greatest uptick, Guidry says.
" Millennials are demanding digital
payments, moving beyond even
the mobile wallet, " says Pablo Cohan,
the senior vice president for digital
payments and labs for Purchase,
N.Y.-based Mastercard,
pointing
out that this technology
makes it
easier and more
secure to manage
subscription
payments for
application-based services like Uber,
Lyft and Spotify. In addition, early
adopter customers of mobile wallet
tend to be middle- to higher-tier credit
consumers and business customers,
people who community banks are
eager to win over, Cohan adds.
Similarly, Bank of New Hampshire
has experienced an approximately
63% increase in mobile wallet transactions
from 2017 to 2018 and a nearly
152% increase in the amount spent,
according to Falvey. He projects that
in 2019, the community bank will see
a 104% increase in transactions and
64% increase in spending. " It provides
The benefits and barriers
of mobile wallets
Customer benefits
Q Mobile wallet payments process faster than
traditional transactions.
Q They eliminate the need to carry a wallet or purse
when shopping.
Q Customers with wearable devices like an Apple
Watch can make purchases with their device.
Community bank benefits
Q The risk of financial loss associated with
merchant compromises is decreased due to
tokenization because the merchant doesn't receive
card information.
Q If banks can make it more convenient for
customers to use their debit card, greater usage
may equate to better customer satisfaction and
more interchange income.
Q The cost and eff ort associated with off ering mobile
wallet technology are relatively small.
Community bank barriers
Q A mobile wallet transaction requires the use of
biometrics-fingerprint or facial recognition-for
all purchases. For larger purchases, a PIN is
required, so a lost device does not result in fraud.
Q The debit card information is not stored on the
mobile device. If the device is lost, the card
information cannot be recovered.
Q Not all smartphones support mobile payments.
Q Merchant acceptance has been increasing slowly.
Apple recently announced that shortly, 65% of U.S.
retailers will accept Apple Pay.
26 Q ICBA Independent Banker Q October 2019
Independent Banker - October 2019

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