Just 6.3% of Transactions Among UK Millennials Are Made Via Non-Bank P2P Solutions
New P2P payment solutions continue to garner a lot of attention in the media and banking industry. But despite all the hype, P2P payments via non-banking solutions represent just 6.3% of transactions according to a new survey conducted by PayKey.
Although survey findings strongly suggest that the current threat from non-bank P2P providers has been overstated, the results should not lead bank executives to a state of complacency. While P2P payments via non-banking solutions represent just 6.3% of transactions among UK millennials, non-traditional competitors are starting to gain traction in the P2P market.
The good news is that the mobile P2P transfer market is massive and still wide open for banks to make their mark. Third party P2P providers have only managed limited market penetration thus far which means banks have a great opportunity to capture significant numbers of millennial consumers who have not yet turned to these non-traditional payment solutions.
Banks must, however, act in a timely fashion. A host of powerful non-traditional players with well established millennial brands have moved into the market. Non-bank P2P provider and market leader Venmo for example, processed four billion dollars in P2P payments in Q2 of 2016 alone, up 141% year over year. In addition to new dedicated P2P providers, many of the world’s largest social media companies are also entering the market. Social media giants like Facebook and Snapchat are utilising their large millennial user bases to deliver instant and contextual payment experiences. To date, four out of the five biggest messengers have added payment platforms. In 2015 alone, WeChat processed an estimated $550 billion in payments.
Search titans Google have also entered the market. In 2015, the company relaunched Google Wallet with a specific focus on mobile P2P money transfers. There is also Apple, the world’s most valuable company. The global tech giant is currently investigating the possibility of adding the functionality of its Siri virtual assistant to its iMessage service that would enable hundreds of millions of iPhone users to perform P2P payment transactions.
Overall, it’s important for banks to understand that even though non-banking solutions represent a small percentage of transactions in the mobile P2P transfer market, competition from non-bank providers is just beginning to heat up. The time to make mobile P2P transfer solutions more attractive to millennials is now, while there is still an open market. With PSD2 enabling bank customers in the EU to use third-party providers to manage their finances and a changing regulatory environment in the US and Asia as well, banks should expect competition to increase dramatically in the next few years.