Mobile wallets and current accounts: Friends or foes?

A recent study by Commonwealth Bank of Australia predicts a tipping point for the future use of mobile wallets, saying that smartphones will replace physical wallets by 2021 and that one in two people questioned expect that the majority of payments will be made via a mobile wallet in the future. Internet and smartphone technology have revolutionised a number of industries and changed whole ecosystems in today’s economy. Nevertheless, for the payments industry some essential questions lack closer discussion: the different roles of, and relation between, mobile wallets and current accounts are somehow opaque. Based on a review of the introduction of the current account as an essential part of the business model of German banks in the late 1950s, this paper analyses the future relation between wallets and bank accounts. For a future payment ecosystem, four dimensions will be characteristic: trust, security and stability, clearing based on interoperability, and the ‘shopping experience’ of the consumer. Payment messages can be expected to be exchanged by various channels and/or clearing systems. But providing current account and settlement with irrevocable transfer of liquidity are, sui generis, features to be provided by banks. Cooperation and coexistence of different players in a two-sided/two-layer market will be key factors to provide a trusted basis for a payments eco­system.