This post is part of Gallup's ongoing series on the shifting landscape for financial institutions. It provides insights into channel optimization, emerging customer behaviors and preferences, product penetration and relationship growth, engaging the most critical affluent and business customers, and reshaping banks' overall value proposition.

A search for "digital wallet reviews" literally turns up hundreds of results. Yet, analysis of a recent Gallup survey finds that only 2% of Americans actually use digital wallets. While 13% of smartphone owners actually have a digital wallet app, the majority of those who do have an app (76%), rarely -- if ever -- use it. A real contrast exists between these figures and the perceived interest in digital wallets.

Digital wallets receive plenty of attention, but adoption is quite low. While there may be many reasons for the lack of consumer interest, digital wallet providers surely have work to do on their value propositions. Blanket value propositions for digital wallets tend to fall along the lines of "a fast, easy and secure way to make payments," and "it stores credit, debit and loyalty cards, eliminating the need to carry a physical wallet."

These advantages may sound good, but when broken down and scrutinized, they are not resonating with American smartphone users. And they barely appeal to current consumers of the technology. When asked, 38% of respondents with digital wallets say there is no single greatest benefit of using the app.

Security Concerns Create Skepticism

Current value propositions for digital wallets are failing to connect with consumers, most likely due to a lack of confidence in the apps. The majority of non-users (55%) cite security concerns as their primary reason for avoiding digital wallets, followed by not knowing enough about them (21%). Most respondents simply do not place a great deal of trust in the technology behind digital wallets.

But while consumers' security concerns are related to much more than the actual digital wallet software, they are also skeptical of the companies behind them. When it comes to keeping their personal information secure, only 19% of respondents say they have a lot of trust in their cellphone platforms, and only 15% say they have a lot of trust in their cellphone carrier. To put those numbers in perspective, 14% of respondents say they have a lot of trust in the federal government to keep their information secure, and 60% say the same about their primary bank.

Trust in the process is obviously critical, but it is by no means the end of the story. Even customers who say they have a lot of trust in their cellphone platform don't often see the value of digital wallets. Only 4% of these trusting smartphone users say they are extremely likely to start using a digital wallet in the next 12 months. Conversely, 53% of them say they are extremely unlikely to start using a digital wallet.

Convenience Is Questionable

Digital wallets are often marketed as being a faster and easier method of payment. The obvious next question is, "Faster and easier than what?" If the answer is a credit, debit or loyalty card, the time saved with a digital wallet (i.e., tapping a button on the phone and holding it near a scanner) versus pulling a card out of a wallet and swiping it, cannot be very large. And a digital wallet is certainly not easier than a physical card if the digital wallet is not accepted at the point of sale.

Non-users often point to the same concerns when asked about their reluctance to adopt a digital wallet. After security concerns and lack of product knowledge, non-users also say they don't want a digital wallet because they don't see the benefits over physical cards (14%), and they don't believe that digital wallets are accepted in enough places to be useful (5%).

Even current users don't find digital wallets to be all that convenient. Only 3% of digital wallet users say they paid with their digital wallet at retail locations every time it was available as an option.

Practicality, Functionality Fall Short

Digital wallets are touted for their convenience over physical wallets, but in reality, physical wallets are still more practical. While digital wallets can certainly store credit, debit and loyalty cards, they are not currently considered to be a valid form of government-issued identification in the U.S. Digital wallets also fail to be an ideal vehicle for storing other identification cards, paper-punch loyalty cards, parking stubs, membership cards, business cards, dry-cleaning receipts and all the other scraps that find their way into a wallet. Presumably, digital wallet users still need a way of storing all these random cards and pieces of paper.

Many digital wallets can also store data like digital movie tickets or boarding passes. But digital wallet users most likely have other apps to buy and store movie tickets, and airline apps can pull up boarding passes and also alert users when their flight is delayed or the gate changes. In other words, these apps (and physical wallets, for that matter) have functionality that digital wallets simply do not match.

Building a Better Value Proposition

The industry has so far created digital wallets with merchants or payment processors in mind, but has not yet made a compelling offer for consumers. To remedy this, digital wallets -- like any other service offering -- should be helpful, easy to use and make customers feel special. In more concrete terms, developers should identify the problems consumers are trying to overcome and create an app that helps address those problems in an intuitive way. They should also reward customers for doing business with them.

For example, most consumers are not looking for faster ways to spend their money. However, they may want better ways to save their money. Digital wallet developers could build functionality into their apps that answer the following questions about possible purchases:

Is this the best price available on this product?

Are there coupons available online?

Is there a similar product available that costs less?

All of these capabilities are offered by other apps with very user-friendly designs and could be meaningfully integrated into digital wallets.

Similarly, many consumers want easier ways to manage their personal finances. As an obvious solution, digital wallets could be built to capture receipts and categorize spending. As with consumer trust, bank-based digital wallets have a sizable advantage in this area. Banks can create digital wallets that alert users to their spending limits, bank deposits and other customer-defined parameters. Bank-based apps can also differentiate themselves by tracking customer spending across physical and online retailers and across all payment methods against a customer's plan in the bank's personal finance management platform.

Digital wallet providers have an opportunity to do more with loyalty programs and prepaid cards as well. Tracking balances on these cards can be hard enough with too many cards. Digital wallets that are consistently smart enough to spend down prepaid cards before turning to credit cards, or to spend on one card until a particular loyalty reward is reached, would make managing these payments easier.

Finally, convincing consumers to change their spending habits is difficult. Digital wallet developers could learn a lesson here from Chinese apps WeChat by Tencent and Alipay by Alibaba. These apps saw huge adoption rates during the Chinese New Year by combining "red envelope" giveaways and online payments with gamification, social networking and media events.

Digital wallet providers can make life easier for their customers without being boring. Developers should think of how to inspire consumers to change their behaviors to help them reach a personal goal, for example, and reward them for staying on the right course. Otherwise, the best that developers can do is reward consumers for changing their payment habits. And based on the low adoption of digital wallets, the value of changing payment habits alone is a very difficult case to make to consumers.