Five themes are driving change in payments today. Individually they have a significant impact on the way we pay. Combined, these effects are amplified, creating a powerful force on the payments landscape.
Faster Payments Accelerate Growth of Open Payments
Currently, several countries have or continue to modernize payment infrastructure and adopt faster payments. In addition to bringing settlement efficiencies, at the consumer facing front, the growth in faster payments networks would be instrumental in banks opening payment ecosystems to attract third party developers to create and deliver innovative credit transfers services. For instance, embedding immediate payment mechanisms with popular instant messaging apps for in-border and cross-border payments.
Payment Infrastructure for Omni-Channel Commerce
The way we pay is changing. As shopping habits evolve, e-commerce and m-commerce methods such as in-app and one-click commerce are becoming increasingly popular. In addition, the exponential growth of IoT is introducing a wealth of new payment use-cases. As most merchants manage multiple retail formats and channels, a genuine omni-channel payment strategy would break down barriers to improve sales efficiency in-store, after-sales service, reduce fraud and increase overall customer satisfaction. At the backend, banks continue to likewise invest in systems to centrally process and reconcile payments and manage merchants across channels. For banks, a unified services hub to onboard merchants and cater to card present and card not present sales would unlock significant efficiencies, reduce time to onboard and improve merchant stickiness.
Data Takes Centre Stage
With growing competition from non-banks, financial institutions would put considerable financial and strategic muscle into analytics to boost P&L levers. Banks have a treasure trove of payments data at their fingertips from cardholder data with data from the merchant side to unlock additional value. Inexorably banks would rely on real-time predictive insights to rapidly exploit new growth opportunities. For banks the top use cases include optimized customer journeys, real-time business moments, personalized offers, predictive analytics for optimizing channel efficiency and predictive fraud modelling.
Rise of Digital ID and Security
Digital identity is the new passport to access a range of products and services. The growth in the number of use cases compounds the threat potential. Banks would need to balance need for a frictionless service experience at checkout and regulatory mandates to maintain high levels of security. With the release of the new EMV 2.0 specifications, the interest in risk based authentication technology, risk-based would grow. The trust assessment allows for real-time, risk and trust-based decision making with adaptive responses to security-enable digital business. Traditional security techniques using ownership and control rather than trust will not work in the digital world.
Virtual Experience Economy Continues to Create Buzz
While these trends all suggest sizable movement under way across financial institutions it is FSS’s belief that not all trends will progress at the same rate. However, it is also FSSs expectation that software solutions not addressing these trends today may not be the most flexible of options and all financial institutions need to review their current vendors roadmaps very carefully… FSS today is working on all these areas, enabling banks to build new payment ecosystems and navigate the change.