Jamie Smith, commenting on the “proof of personality” (which serve to highlight the central importance of digital identity in the new economy), notes that innovation is “very often about combining two existing ideas in a new way”. He gave the example of combining digital wallets and artificial objects. intelligence as the locus of such innovation and I must say that I agree with him. I think we are indeed heading towards a world of very smart wallets. By this I mean wallets that have interfaces with associated intelligent agents to support transactions that are too boring (e.g., paying for parking) or too confusing (e.g., deciding whether to put available money into a bank account). ‘tax-advantaged cash savings or another). based on actions) that most of us face.
What is a wallet for?
I’m not alone in thinking that financial services players urgently need to develop robust portfolio strategies and that they can start by shedding the idea that wallets are for payments. They are not. I share Tom Noyes’ point of view: wallets will be at the center of consumers’ concerns trust and interaction with the world at large and, in fact, the pivot between the real and virtual worlds. But what will contain these large-scale digital wallets that will be so essential for work, rest and play in the not too distant future?
Famous payments expert Richard Crone, another person I always pay attention to, recently wrote that the true value of a digital wallet lies not in its ability to handle payments but as a platform to “leverage verified federated identity» and that such a platform will use AI to provide new services. In fact, I could even go further and say that the best performing wallets will be used more by agents than people and therefore add something about APIs to the description, but you get the general point.
(I’m a big believer in the idea that instead of wasting money trying to educate consumers about finance, it’s better to give them robots to control their finances for them.)
Smart wallets will then have considerable utility. But they may be even more important than payment devices, money managers and digital driver’s license containers. As Kaliya Young and Lucy Yang say, smart wallets are going to play an important role in running an organization. relationships and interactions Another channel is with their customers and consumer applications that leverage digital wallets. Like many other people (e.g. Jamie Smith), I would go even further and say that this other channel will become key to Jamie’s business and perspective on digital wallet as a safe channel Connecting the brand and customers seems like a good way forward. A portable connection that’s more secure than texting, smarter than email, and more secure, private, and more portable than mobile apps. This view of wallets as evolving beyond the web and mobile apps suggests an evolution that will completely disrupt customer engagement.
If service providers, brands and other organizations have a channel to consumers that incorporates privacy and integrity, it could really change the landscape, as the current environment is unsustainable. Just look at this (superbly well written) story from a consumer lose tens of thousands to a Zelle fraudster because there was no way of knowing if the entrepreneur he was sending money to was actually the real entrepreneur or not. It is unreasonable to expect consumers to become experts in computer security, cryptography and digital signatures. We need to get to the point where a message appears in my (let’s say) bank wallet saying “please can you confirm $10,000 to Joey Donuts Pools”. I may be asked that the message is actually coming from Joey Donuts Pools through my bank and the money is really going to Joey Donuts Pools without having to do this Nothing at all because if the message wasn’t really from Joey Donuts Pools, it would never show up in my bank wallet at all.
Channels and consumers
The secure channel between businesses and consumers, the AI-driven financial manager, and the convenient pivot between real and virtual. Smart wallets are going to be huge and we already have all the technology we need to make them work. We have secure elements and digital signatures, we have encryption and strong authentication, we have smartphone and account plans. Any robot worth its salt should be able to relieve me of the burden of processing bills and payments from Joey Donuts*.
(There’s another aspect to this move toward smart wallets that’s just as important as security, and that’s privacy. If consumers actually decide to manage their digital identity via credentials in digital wallets, then technologies such as Zero-Knowledge Proofs can come into play to provide a whole new level of privacy, more suited to the new age, but that’s something to explore another time.)
Digital wallets are the world’s leading e-commerce payment method, accounting for half of the value of global transactions and with the total value of digital wallet transactions expected to increase from $9 trillion in 2023 to some 16,000 billion dollars in 2028 (growth of 77%) I think most financial services organizations work hard to develop their portfolio strategies. If not, it may already be too late.