This year sees a rise in the use of digital payments following the pandemic as well as the growing utilisation of digital wallets by millennials and generation Z. Given the key role digitisation plays in people’s lives, accelerated by the Covid-19 pandemic, it is undeniable that payments will continue to become increasingly cashless and digital payments are at the epicentre of the transformation.

The heavy reliance upon digital wallets calls for fintech companies to enhance and advance the digital payment process and make it a user centric experience. With more and more advancements being seen in this sphere, consumers now require payment processes that are framed around user demand and preferences.

The rapid growth of the payments industry during the pandemic has only made 2022 a more crucial year for the ecosystem of digital wallets, digital banks and fintech as there will be a greater focus by consumers upon them.

What do users want?

The pandemic has dramatically shifted consumer focus towards using non-traditional payment methods such as payment links, digital wallets and QR codes as opposed to traditional banking institutions and credit cards.

A recent study by Juniper Research found the number of digital wallet users is on track to exceed 4.4 billion by 2025. The research also found QR codes to account for 40% of all digital wallet transactions in 2025.

The rapid growth of the fintech ecosystem, with its range of digital banks and wallets, has meant that user preference for these payment methods has never been of greater significance. This is clear with many fintech companies adopting user-centric approach to beat out a product-first approach to provide the innovation that delivers seamless payment process for customers.

Throughout 2022 we are likely to see more technical advancements in the payment process, as we are already seeing a mass drive towards cashless payments with newer methods introduced such as voice payments.

Digital concepts are going to win

We believe the winners in 2022 will be the fintech companies, particularly those who have vast experience in operating in emerging markets. Through experience of operating in developing markets, they have been able to cultivate the understanding required to create payment processes framed around user preference.

Furthermore, there is a huge demand for greater emphasis on user experience demanded by the end users, particularly driven by generation Z and millennials; these are generations that grew up with technology and are naturally savvy to using digital method of payments from digital wallet services, contactless payments, peer-to-peer payment to cryptocurrency payments. In fact, some millennials claim to use up to nine digital wallets.

What we need to remember is that this population requires a fully digital shopping experience. That, in combination with the pandemic has resulted in a higher demand for digital and contactless payment transactions. This generation of consumers are known to be digital-first generations. Naturally, they demand a fully digital experience when it comes to Know-Your-Customer (KYC) processes and onboarding. Their main engagement platform with brands is through social media, apps and digital channels. They expect personalised and tailored responses from brands.

Undoubtedly the pandemic has played a huge part in the transfer of face-to-face processes to digital format. Nevertheless, we are also seeing somewhat of a reverse path in which the expansion of digital services has transformed in a way in which it provides new options that incorporate face-to-face modalities. For instance, the use of a QR code to pay for filling up petrol or the use of digital wallet at a restaurant. These types of services are likely to further develop and advance in 2022.

Spoilt for choice

These B2C companies tailor their processes around user demand and preferences, providing them with tailored solutions around what is most comfortable for customers. Just like their users, these companies are digital natives, which means they understand how to create and produce high security environments which are advance, friendly, and responsive, without having to affect the user’s experience in shopping or paying. This also allows them to understand the needs of the end users more by creating effective digital channels to communicate and create a more personalised service as opposed to traditional environments.

These types of companies have had success in emerging markets, where access to traditional banks and financial companies are still very limited, and the network infrastructure is not as advanced as developed markets. Digital developments in these countries have gained popularity so quickly, as we have witnessed in India, where AstroPay operates.

It’s now or never

Over the course of this year, we have seen a rise in digital payments as well as collaboration between payment companies and merchants, which shows how these companies are starting to be trusted by more and more merchants globally and end users in utilising new digital payment processes.

The shift of the physical world to a more digitalised community has brought new challenges for the fintech industry. As more businesses are becoming digital, the need for speed, convenience, and personalisation demanded by consumers continues to grow exponentially. Fintech companies who have the most experience in operating in emerging markets are best situated for this role as they have the expertise in paving the way for a digital world and earning customers’ trust as well as understanding their users from a digital-first perspective.

As the requirements for digitisation of countless processes have grown, it is now an obligation for companies to be able to provide an excellent customer journey and shopping experience. This can be achieved through collaboration with the right technology partners and fintechs must place a focus on user centric approach or otherwise they will risk losing out.