A week is a long time in politics – a saying that is increasingly true for payments too. We are now two weeks into July 2019, so a good point perhaps to reflect on the state of the industry.
Payments is an industry which is changing - and quickly. Old technology trying to operate in a new world doesn’t cut the mustard anymore. Innovation and disruption in respect to financial services is becoming the new normal.
Here are four central observations from over the last six-months:
Demand for innovation is growing
For banks and other financial services organisations, offering a steady stream of new services is expected. Consumers are aware new and alternative payments are faster, easier, and safer and broadly speaking, more accessible, and they want them. In response,
FIs are working hard to improve the consumer experience through an improved and seamless digital experience for fear of losing customers.
Cash decline continues
Cash still has its place, but it certainly isn’t king anymore. Sweden, France, the UK and Canada, for example, are all marching toward a ‘cashless society’. Some businesses don’t even accept it any longer because of the expense of handling it. Business Insider
recently reported that in four years, noncash transactions are poised to exceed 1 trillion for the first time. In the UK,
cash use is expected to end in 2026.
Digital wallets growth
Less mature markets, particularly in Asia, are leading the charge when it comes to new wallets and innovative payment types, especially in P2P payments.
Alipay’s Google Ad reads: “Trust makes it simple. Experience fast, easy and safe online payments” – the keywords
‘trust, fast, easy, safe’ tell you all you need to know about what consumers want when it comes to transactions. Alipay now claims to have 1,000,000,000 users.
Tech giant currencies
Yes, Facebook is trying to create a currency, Libra, which it says will launch next year. Love them or hate them, it is happening. Facebook will let users make payments with Libra via its own apps,
as well as on WhatsApp. Facebook isn’t the only one: Google, Samsung and of course Apple have stated their intention to enter the currency fore.
The best offence is a good defence
The rocket ship of consumer expectation has taken off, is gaining momentum, and won’t be coming back. It’s a one-way mission to a different way of buying and selling.
There’s no sure-fire answer about where we’ll be this time next year. However, what banks and other FIs should think about how best they can prepare for change because like it or not, it is coming and it is going to reward those who are ready for it.