With 2018 well underway, I have had time to reflect on what to expect in the ever-changing world of payments this year. My reflections are split into New Trends, Growing Trends and Ongoing Trends, with this blog focusing on the New Trends.

These are the trends that may be familiar to some, but are becoming established and are likely to become evident to many when we look back on 2018.

New Trends

1. The consumer experience for payments becomes a battleground for banks, especially in Europe around authentication for PSD2 on third party applications
2. Challenger bank (or neo bank) adoption is much higher than in the past due to their superior customer experience for payments
3. Biometrics such as facial, voice and hand movement recognition, now robust enough for mass use (in part due to advances in machine learning), are adopted by banks and Fintechs as a weapon in the consumer experience battle, and also for securing cryptocurrency wallets
4. Retailer wallets for both ecommerce and instore payments start appearing in sectors such as supermarkets, fuel and quick service restaurants, emulating the success of Starbucks and Walmart, and focused on a slick checkout process using biometrics
5. Retailers start demanding new payment methods for recurring payments for subscription and credit-based services
6. Fintechs and banks see the importance of linking credit and payments, self-evident for many years with credit cards, but expect to see this as an emerging theme in payments innovation (and very different to the dead-end trend of “innovating” credit cards)
7. Voice activated payments start appearing as digital assistants such as Google Home, Alexa, Cortana, Siri etc grow in popularity
8. Central banks around the world warm to the idea of issuing their fiat currency on distributed ledger technology, with at least one making concrete plans to implement the technology (probably with a commercial bank or Fintech partner to bridge the gap with consumer propositions)
9. As banks adopt real time payments for the first time in economies such as Australia, Europe and the US, new products and services emerge to operate in real time, for example corporate cash management solutions for real time cross border payments, virtual accounts and fraud innovation.

The chief beneficiary of these trends is the consumer. Pro-active banks focused on true digital innovation have an opportunity to use these trends to provide new and very different consumer-friendly services and experiences. These banks can put clear-water between them and their less-enlightened competitors, taking market share from them; but fintechs and new entrants also have a unique opportunity to either compete with incumbent banks or supply technology and services to them.

The scene is set for some very new and exciting competitive payment dynamics in 2018. 

My next blog focuses on the Growing Trends in payments, those that are already evident and likely to strengthen in 2018.