Evolving technologies and innovative fintechs are making financial services faster and more convenient than ever. Digital wallets are a prime example, with the total number of users set to exceed 5.2 billion globally in 2026, up from 3.4 billion in 2022.
Of course, there are some who remain skeptical about the security aspect of digital wallets, and biometric authentication technology has emerged as a potential solution. So, as financial technology continues to evolve to meet changing consumer expectations, what’s next for digital wallets, and how will biometrics enhance their next incarnation?
The rise of the super wallet
The last few years not only accelerated growth of electronic payments, but made consumers accustomed to the convenience they offer. Now they expect even more, and a single-function app approach already feels outdated. Looking ahead, new digital wallets will need to include financial offerings that go beyond facilitating payments, such as loans, insurance, investing, and digital banking.
The result will be more financial super apps, or super wallets: each a connected ecosystem where users can manage payments, savings, investments, crypto, budgets, loans, insurance, and more, in one place.
Buy Now Pay Later (BNPL) is sure to play a part in the future of digital wallets, as will new actors in the form of big banks, who are wading into the digital wallet water. Wells Fargo, U.S. Bank, and PNC, are among those who have started to develop their own digital wallet to ‘address long-standing payment problems in e-commerce.’ Whether they are able to offer the functionality, flexibility and innovation of a super wallet to persuade customers to abandon their existing wallets remains to be seen, but no doubt security will be front of mind. After all, achieving supper wallet status means integrating an unprecedented level of third-party components – think BNPL, deals, loyalty offers, and more.
While the growing super app trend is a great step in enhancing the user experience, as well as increasing company bottom lines, risk management needs to be at the forefront of development because the risk of being attacked inside a super app is much greater than a single-purpose app.
Super apps are a goldmine of personal identity information including contact lists, IP addresses, chat histories, web search terms, bank details, transactions, and more, so biometric verification will be needed for that extra layer of authentication, without adding unnecessary friction.
Crypto wallets will leverage biometrics for security
As of August 2022, the number of crypto wallet users reached more than 84 million worldwide, up from around 76 million users the previous year, and the global crypto wallet market size was valued at $8.42 billion.
This is expected to grow even further at a compound annual growth rate (CAGR) of 24.8 percent from 2023 to 2030. But following news that Trezor crypto wallets have fallen victim to phishing attacks, it’s clear there are still security hurdles facing this tech.
Dealing in cryptocurrency is not without risk. Apart from closely monitoring the price volatility, technical complexity and governance, keeping the private keys safe and protecting them from scams and hackers is vital in cryptocurrency trading. Hardware wallet devices are inherently more secure as they hold private keys a secure physical device disconnected from the internet, leaving them less vulnerable to hackers.
As cryptocurrency and crypto wallets increase in popularity, biometrics can help to level up security. The move to introduce biometrics into crypto wallets is already in progress, with some brands evaluating and implementing the technology because it successfully walks the line between security and convenience for crypto users.
A Visa survey conducted last year revealed that 86 percent of consumers were enthused to use biometrics for authentication when making payments, and 70 percent said it was simpler to use than passwords or PINs. This makes biometric technology the perfect partner for the super wallets and crypto wallets of the future.
The next step in the evolution of digital wallets
With so many already embracing digital wallets as a convenient, fast, and secure payment method, could they replace cards and cash altogether and become the new normal? I’m excited to find out as I and the wider team at PPS continue our work at the forefront of the innovations driving the evolution of the digital wallet. I’m confident it’s an evolution that includes multi-factor biometric authentication.