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The changing face of retail banking

The face of low-level payments is changing rapidly and banks need to wise up rapidly before they get left behind in, what is, a lucrative and central competency for them. 

Going back five years, the world of retail banking was a very different and infinitely less scary place. Since then we’ve seen the meteoric rise of chip and pin, prepaid cards and most recently tap and go continually shaking up the market and keeping us all on our toes.

The crux is that retail banking is constantly changing at an alarming rate and it isn’t always banks leading the way. Indeed companies like PayPal, an ancient company in ‘internet years’, are beginning to recognise what a goldmine they could be sitting on. Just this year the company has started to offer advanced payment facilities linked to users’ online accounts.  

Ecommerce, rapidly growing in importance, obviously has a major part to play in this change and it is online players that are increasingly taking a lead in the marketplace. Again, PayPal reigns supreme within the eBay marketplace and now is beginning to spread across the ecommerce landscape.

One of the key ramifications of this is that consumers are finding traditional methods of payment increasingly unnecessary online – who needs to go and find their wallet when they can tap a password into PayPal and buy right away? 

In the long term, perhaps biometric identification, the prodigal son of the security industry, will come to fruition and negate the need for a physical payment system altogether. But for now it is clear there is a need to come to some sort of compromise where card and online payments are concerned.

Banks need to both make online payments quicker and easier whilst giving users some kind of incentive for their use to keep up with companies like PayPal. A reward programme letting online shoppers save or a discount system are just two examples of short to medium-term measures that can be put in place to encourage users to use traditional cards online.

Of course banks are far from dead and buried in retail banking, but it is clear that they must do something to avoid falling behind in online payments – an area that should really be theirs for the taking.


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