Future of Financial Services: Digital Wallet Services
In this episode of The Change Officer podcast, Vuk Zlatarov spoke to Pierre-Marie Desbazeille. Pierre is the Chief Operating Officer of Al-Futtaim Group, one of the largest retail groups in the MENA region.
They discussed the launch of Al-Futtaim’s digital wallet along with how smartphone penetration and new mobile payment tools are creating massive opportunities for the retail sector and extending the reach for the un & under-banked population. Here is a recap of the podcast.
Growing Smartphone Penetration Is Creating More Opportunities For Retailers
In the last 2-3 years, there have been drastic customer behavior shifts caused by increased smartphone penetration. These changes are creating more opportunities for retailers with vaster product access thanks to digital wallet payment solutions, especially for the demographics that lack financial inclusion such as unbanked and underbanked populations.
As of 2021,1.4 billion adults globally remain unbanked, without access to traditional financial tools and services. Increased access to smartphones, along with COVID-19 boosting the adoption of digital financial tools such as mobile wallets, has completely changed the retail landscape, how customers shop and overall acceleration in shopping behavior.
Mobile Commerce Is Changing The Way Consumers Shop
Today, more consumers in urban and rural regions have access to retail products thanks to smartphones. While ecommerce was a priority for retailers in the past, today the focus is primarily on mobile commerce (mcommerce) because 3 out of 4 consumers make their online purchases using a smartphone. In the last 5 years, revenue from mobile purchase sales have multiplied by more than 3.5 times thanks to a growing smartphone adoption of 66% globally.
Consumers Are Becoming More Impatient
Buyers no longer have to wait to get home and use their computer to place an online order. The majority of purchases and payment transactions can now be made 24/7 using a smartphone. This is making consumers more impatient and have an “I want it now!” attitude. They are no longer willing to wait a few days, but expect their orders to be delivered within a few hours.
This has created a huge challenge for retailers, especially small ones, who are struggling to adapt to these expectations and compete with large stores that offer same day delivery. Studies have shown that almost 65% of consumers abandon their cart if the estimated delivery time is 5 days or more. Although this is adding extra costs for retailers, many are working to provide faster delivery for their consumers.
Retailers Are Looking To Digital Wallets As Value Added Tools For Their Customers
Smartphones and increase in mcommerce are also creating different opportunities for retailers to stand out by providing fintech solutions and incentives to their customers. To adapt to new customer needs and changing behaviors, retail conglomerate Al-Futtaim Group rolled out new seamless mobile wallet tools for their customers. Because smartphone penetration has such high rates, digital wallets have cross-global reach and are available to a much larger demographic.
Al-Futtaim’s first fitech solution was a reward app, which was later followed by a digital wallet. Because Al-Futtaim is a retail company that didn’t want to lose sight of their core products and goals, the organization decided to work with various 3rd party providers specializing in different fintech features. These tech start-ups were able to create white label digital wallet solutions which were later customized to fit the Al-Futtaim’s brand. This also gave the retailer the flexibility to continuously get rid of useless or roll out new features.
The first fintech tool launched in 2020 and it was a loyalty program called Blue Rewards. It allowed customers to earn 1% reward, along with exclusive offers, while purchasing from Al-Futtaim Group’s retailers. The cash-back reward was an incentive to get new customers to engage with the app and spend more. After some trial and error, the retailer rolled out a closed loop mobile wallet which was used to accumulate, spend and/or redeem the cashback with Al-Futtaim’s retailers.
Al-Futtaim’s Digital Wallet Journey
In 2021, digital wallets were relatively new and users had to be educated on their advantages and how to use them. While they knew what a wallet was, they were struggling to figure out how to use a digital one.
To help them, the retailer rolled out a new feature that allowed them to top up their mobile wallets, just like a gift card. The last step of the conglomerate’s fintech transformation was to change the closed loop digital wallet to an open loop, allowing users to spend their cash rewards not only on Al-Futtaim group of retailers, but anywhere they wanted.
For Al-Futtaim, creating these fintech tools was a huge undertaking and the goal was not only to engage with customers, but also to learn from them. Studies showed that with every new fintech product and/or feature, there was the same gauss curve pattern where the adoption went up and then slowly came down.
This realization confirmed the importance of continuing to promote and explain the new digital wallet functions to customers. Simultaneously, it was equally important to collect feedback, resolve issues and continuously roll out new engaging features. The organization created an on-going trial and error process that gave insight into what features were useless and what new features to add..
This constant feedback loop also helped Al-Futtaim identify the most important engagement driver and value that customers were looking for while using the digital wallet: ease of use. Knowing this not only gave clear direction as to how to solve customer pain points, but also what new mobile wallet tools to create by asking “What problem are we trying to solve with this new feature?”
Mobile Wallets Are The New Normal
Today, there are 3.4 global digital wallet users  with that number expected to go up to 5.2 billion by 2026. Little by little, customers are beginning to see the value of digital payments, understanding that it is a convenient alternative to traditional payment methods.
Digital wallets are becoming an integral part of everyday consumer payments transactions. With competition growing within the retail sector, non-fintech companies are beginning to understand the importance of offering value-added fintech tools in order to create customer loyalty by providing incentives and easy payment transactions.
To stay true and focus on their core business, retailers can partner with companies such as HollyWally specializing in customized B2B2C white label digital wallet solutions. By offering these mobile payment tools, retailers can gain a competitive advantage and flourish in an over-saturated sector.
 50 research-backed web personalization statistics, Dynamic Yield
 Mobile Commerce Sales In 2022, Oberlo
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 42% of Online Shoppers Abandon Shopping Carts Due to Delivery Dates, Tyche Softwares
[5 & 6] More than 60% of world population will use digital wallets by 2026, Computer Weekly