Digital wallets have emerged as one of the crucial players in the digital transformation journey of the banking sector. With their convenient and secure payment options, they have successfully captured the attention of consumers and businesses alike.

According to a research paper, there were over 2.8 billion mobile wallet apps in use by the end of 2020, and this number is expected to grow by about 74% over the next few years, reaching 4.8 billion by the end of 2025.

In addition, numerous research firms predict that the mobile wallet market will increase at a compound annual growth rate of above 20% through 2028. As the industry expands, mobile wallet solutions are becoming more diverse.

Open Banking is a rapidly growing area of the financial services industry that has the potential to revolutionize the way banks interact with their customers. By opening up access to banks’ customer data and services to other financial service providers, Open Banking allows developers to build more advanced and innovative mobile payment solutions that will help improve the overall user experience by making payments more smooth and more secure.

As the world of financial technology continues to advance, Open Banking and APIs are emerging as essential tools for scaling mobile wallets’ offerings. By opening up access to banks’ customer data and services to other financial service providers, Open Banking enables digital wallet solutions to offer their users more advanced and personalized services.

APIs play a crucial role in scaling mobile wallets and Open Banking. APIs allow developers to build more robust and sophisticated mobile payment applications, which can, in turn, provide users with a more seamless and intuitive payment experience. APIs also enable mobile wallets to tap into a broader range of services banks offer, such as investment services or peer-to-peer lending. By leveraging banks’ infrastructure, digital wallet platforms can streamline processes and reduce costs. It can result in more competitive user pricing and a better overall experience.

These essential mobile wallet functional requirements will enable them to scale with Open Banking and APIs. By implementing these requirements, banks and financial institutions can provide users with an enhanced and secure payment experience while maintaining compliance with relevant standards and regulations.

User authentication

User Authentication

The mobile wallet application must be able to verify the user's identity and authenticate their access to the wallet. User authentication can be performed through various means, such as biometric authentication (e.g., fingerprint, face recognition), a password, or a security pin.

Financial account management

Financial Account Management

The mobile wallet application must enable users to manage finance-related services like checking accounts and other payment methods.

Money transfer and payments

Money Transfer and Payments

The mobile wallet application must allow users to transfer money to other users, pay for goods and services in-store or online, and receive payments from other users.

Financial management

Financial Management

The mobile wallet application will help users track their transactions, manage their financial budget, and receive notifications for pending and recent payments.

Security

Security

The mobile wallet application must prioritize security to protect users' sensitive financial information and transactions. It includes encryption, multi-factor authentication, and secure transaction processing should be in place

Customer support and feedback

Customer Support and Feedback

The mobile wallet application must provide customer support through various channels, such as email, chat, or phone support, and enable users to provide feedback and suggestions.

Technology integration

Integration with Other Technologies

The mobile wallet application must integrate with other technologies, such as mobile operating systems, IoT devices, and payment terminals, to provide seamless and reliable payment experiences.

Scalability

Scalability

The mobile wallet application must be built with scalability, allowing it to handle increasing numbers of users, transactions, and financial institutions while maintaining performance and reliability.

Compliant

Compliance

The mobile wallet application must comply with relevant regulatory and security standards, such as PCI DSS and GDPR, to protect the user's personal and financial information.

User experience

User Experience

The mobile wallet application must provide a user-friendly and intuitive interface, allowing users to easily access and manage their financial accounts, transfer money, and make payments.

One of the key benefits of APIs for mobile wallets is data management. By accessing banks’ customer data via APIs, mobile wallets can offer more personalized and customized services, such as personalized offers or loyalty programs based on customers’ spending habits and preferences. It can improve the user experience by making payments more seamless and intuitive.
In addition to data management, APIs also help to enhance security in mobile payment solutions. By enabling secure communication between mobile wallets and banks, APIs can protect sensitive data from unauthorized access, such as account numbers and transaction history. It can build trust between users and mobile wallets and enhance customer data protection.
In summary, combining Open Banking, APIs, and mobile wallets is influential in scaling financial technology. Mobile wallet solutions transform customers’ interactions with their banks by providing a more personalized and seamless payment experience, enhanced security, and comprehensive services. As these technologies evolve, we expect to see more advanced and innovative mobile payment solutions emerge, focusing on convenience, safety, and user experience.
As a result, the market for digital wallet solution providers is expanding fast. E-wallet as a service could be one of the most important elements influencing the future of fintech. With banking as a service model, this growth will enable the creation of a new ecosystem in the financial services sector.