Modern Money

Banks Lagging Behind in the Mobile World

If banks don't get mobile, they will become increasingly irrelevant in the future.
  • Why it matters

    Why it matters

    Aggressive new players including PayPal, Apple Pay, Google Wallet and Yapital are grabbing customers by offering fast, safe mobile payment transactions, leaving Germany’s financial institutions in the dust and seemingly without a cohesive plan on how to catch up.

  • Facts


    • PayPal is cutting loose from Ebay, which will free them up to develop additional market services.
    • With 15 million customers and a high level of consumer confidence in Germany, Paypal is outstripping many of the country’s largest banks.
    • Most payment transactions in German still happen by credit and debit cards, online debit card transactions via banks still rely on the use of security codes.
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Theodor Weimer, the management board spokesperson of Bavarian bank HypoVereinsbank, clearly identified the enemy at a meeting in Frankfurt recently. “The real battle will not be fought between the banks,” said Mr. Weimer. “The danger is the non- banks and near-banks.”

He specifically named PayPal in his remarks, but he might well have been referring to the rapidly growing numbers of new service providers such as Apple Pay, Google Wallet or Yapital.

While banks understand the threat these new services pose, the industry has not reacted with any cohesive strategy for meeting the challenge. PayPal has long outperformed them in online trading. If the banks don’t change their thinking and soon, the same will happen to them with mobile payments.

The fact that PayPal is breaking loose from Ebay and plans to go public is the final wakeup call for banks. Once PayPal is independent of the online auction house, it will be much more flexible, since Ebay was an impediment to its growth. Some online shops, including Amazon, refused to integrate PayPal as a method of payment because of its connection to Ebay.

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