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How Will Your Wallet Be Different?

By Mijael Feldman - GetXerpa
CEO & Founder

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By Mijael Feldman | CEO and Founder - Wed, 12/14/2022 - 09:00

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I still remember the first time I saw Simple, that amazing neobank in the US that helped you manage your money like you always dreamed of. It was so good (I only watched their unique videos and user reviews) that BBVA bought them in 2014. In the video, a guy walks to a pet store to buy his dog some toys. He then receives a notification showing him the purchase made and in the app, he sees the categorized purchase added to his pet budget.

They offered a debit card and an amazing app that allowed you to save, budget, and follow where your money is going. In May 2021, Simple closed and users were transferred to the main bank.

This may not seem like anything amazing or surprising, but most likely your current challenger bank app or your traditional bank offers some of the features mentioned above. But hey, this was 2013! Your banking experience is still doing what Simple offered nine years ago.

This brings me to the main point: Simple was (to some) the first neobank and offered amazing money experiences to its customers, a huge differentiator and competitive advantage against traditional banks that offered a dull and boring banking app. Switching your traditional bank for Simple was a no-brainer, but things are very different today.

In the last three to four years, we’ve seen a huge rise of neo/challenger banks, wallets, and prepaid cards linked to an app that aims to increase bankarization in Latin America. As Marc Andreessen said: “Every company will be a fintech company.” The reasons to make yourself a fintech company are many.

The market feels crowded and it is; fintech, retail and convenience stores, big techs, and even pharmacies and your everyday taxi app are launching a card and a wallet to tempt their loyal customers to spend their money.

Launching your own card is sexy and shows the CEO and the market that the company is riding the very profitable fintech wave. The business logic may be financial, by getting a slice of the interchange fee on every transaction made or making money on the balances kept in the wallet.

Maybe it’s strategic  and aims at bundling more services for  your customers, increasing loyalty, and creating a lock-in, just like Apple does with its hardware and software by developing products and services that join an ecosystem that creates enormous value for end users, making it impossible to leave.

Or maybe it’s a way to stay in daily contact with your customers and learn from their spending behaviors. As we like to say at getxerpa: “Show me where you spend and we’ll tell you who you are.” Analyzing your customer's spending behaviors can help you understand who is the person behind each purchase, segment them, and understand what is the next best action.

Or maybe, it’s all of the above. But this is not like Dennis Quaid's baseball movie with the famous quote: “Build it and they will come” (referring to the baseball field).

Launching a product is one thing, making something that people use on a daily basis is another. Creating habits is a very difficult thing to do, so the important question is, how are you going to make people add balance to your wallet and use your card recurrently?

As a fintech entrepreneur, I'm constantly trying the new wallets and apps launched (mostly in Mexico and Chile) to keep myself updated on the current trends. To my surprise, most of them are using the same go-to-market strategy, offering customers food discounts and free deliveries with their favorite food app, with the hope that these will create a habit of using your card as their top-of-wallet.

This is an attractive cue that usually gets people's attention and puts money into your wallet, but the next questions to ask yourself are, what happens when my competition offers a better discount? Is this a long-term strategy? What is going to make users come back after they redeem the discount? Am I giving them enough arguments to make them stay and continue using me, even if I stop the discounts?

Food delivery apps learned this the hard way. People are loyal to the restaurants, not the delivery app. If I'm a fan of Burger King, I'll order from whoever gives me more convenience on price or delivery time.

That’s where we come back to Simple. Being your customer's main bank account or wallet is something you get by creating enormous value for them and by having a mix of things that make you different and unique from the other alternatives in the market. That mix depends on your customer segment, their needs, and their problems. How fast you can discover this will depend on your focus and the resources available. 

Are you using your customer's data to understand who they are? Is your wallet solving your customer’s needs and helping them reach their goals, instead of just managing their payments? Is your wallet only used when you offer discounts?

Just remember, customers don’t want 15 different wallets on their phones. 

Photo by:   Mijael Feldman

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