When Apple Pay launched three years ago, institutions that handle monetary transactions scoffed at the notion that the Cupertino, California-based company known for iPhones and sleek computers could make inroads into the banking industry. No one’s scoffing now.
Many were not bullish on Apple Pay simply because of the failure of Google Wallet, which appeared in 2013 and quickly tanked as many people viewed it as an alternative, fringe payment system that just wasn’t secure. Since then, Google has steadied itself in the contactless payments market, debuting Android Pay in May 2016 and slowly growing its banks partnerships.
Meanwhile, Apple Pay, with its pioneering biometrics authentication Touch ID, has quietly captured 90% of the contactless payments market, according to Techcrunch. All of these advancements have happened just in the last few years.
Why banks are concerned about Apple Pay and other mobile payment systems
Apple Pay’s proliferation, along with the rise of Amazon Pay and Android Pay’s steady incorporation into all things Google means the banks, which initially partnered with these tech companies for brand exchange, now see them as major competition.
And the future is only going to get brighter for mobile payments: As consumers’ banking info is being collected inside secure apps, customers will soon no longer have to pull out there credit or debit cards for most transactions. That means the banks will have to continue to play nice with the tech companies or face the possibility of being booted from the game.
Banking execs like Barclays CEO Jes Staley know that his industry needs to catch up with companies like Apple, Google and Amazon, who are quickly taking over the payment space.
“There are some tectonic shifts going on, driven by tech and the geopolitical environment,” Staley recently said at a finance gathering in Washington, according to Techcentral.com. “All the banks are very focused on the payments space. That may be where the battleground of finance is fought over the next 15 years.”
Those tectonic shifts that Staley mentioned are not confined to the United States. International banking systems are reacting to mobile payments in different ways.
Just this week, three of Australia’s largest banks — the Commonwealth Bank of Australia (CBA), and the National Australia Bank (NAB) and Westpac — joined forces to launch Beem Mobile, their own mobile payments system to take on Apple, Google and the like.
“Customers will soon be able to ‘Beem’ free payments instantly using any smartphone, regardless of who they bank with and without the need to add account details,” Westpac Chief Executive of Consumer Bank George Frazis said of the new Android and iOS app, according to tech site Zdnet.com.
It may already be too late in some respects: A new U.K. study found that more young adults preferred to do their banking on their phones rather than brick-and-mortar branches, a possibly ominous sign for the banking industry.