Last February, Bank of America was the first of a group of banks to implement Zelle into its mobile app. A mobile person-to-person payments service, Zelle allows users to send, receive and split payments within mobile banking apps. Bank of America, Chase, Citi and Wells Fargo are leading a group of 19 banks to gain a market share in the rapidly growing mobile P2P payments space, which has been dominated by the incredibly popular app, Venmo. How does Zelle stack up against Venmo?
The premier advantage that banks have over Venmo is brand recognition and trustworthiness. Presumably, most people already have their bank’s mobile app downloaded to their phone for purposes other than P2P payments. Banks believe that with Zelle, they can capitalize on a growing base of P2P users that is beginning to include non-millennials who might be more skeptical of entrusting their financial information and important transactions with lesser known third-party apps. The inherent trust that stems from brand recognition among clients is of paramount importance when it comes to mobile finance. What’s more, with Zelle, money hits a user’s account within minutes, as opposed to a third-party transaction that takes a full business day to complete.
Bank of America Mobile Payments Interface and Send Payment Screens
Venmo’s early start has set a precedent that will be difficult for banks to break. Users will commonly ask a peer to “Venmo” them, instead of asking to pay or charge them, a trend that solidifies the app’s standing as a household name. Convincing users to break this habit, one that’s become so entrenched that the app’s name has become verb, won’t be easy for banks, especially since Zelle is directly integrated into the banking apps and is not branded separately.
Venmo’s app is connected to the user’s Facebook account giving the user a much larger initial contact base. It even lets users search for one another by name or location. As of now, BofA’s app has a more arduous process, requiring users to add one another from their contacts or manually enter a name and phone number or email address. Another hurdle for banks, Venmo is more than just a P2P payment service and has come to represent a form of social media. Users are required to create a caption for each payment and, as they type, Venmo auto-suggests related emojis. Users can also view their Facebook friends’ payment activity with the option to like or comment on it. While this can be seen as a non-utilitarian feature, it’s certainly popular among Venmo users.
Venmo’s established market share clearly represents a challenge for banks as they enter the mobile P2P payments space. But brand recognition and unparalleled transaction speeds will help them grow their user base while opportunities to monetize the service arise.