Future of payments
This article is part of a series of articles on the future of payments. Read more.
Need to know
- Nearly 40% of U.S. consumers have now used at least one digital payment service, according to a 2018 study from Mintel, and more than 60% of consumers are already regular users of mobile banking apps
- The latest TSYS US Consumer Payment Study reports 82% of the 18-24 age group is familiar with in-app payments, and 27% of this group has loaded a debit card into a mobile wallet
- With non-cash transaction estimated to accelerate at a compound annual growth rate (CAGR) of 12.7% globally (and 21.6% in emerging markets) from 2016 to 2021, the e-wallet revolution is well on its way
- Fuelled by near-universal acceptance of mobile payments, the leading mobile payment apps in China – Alipay and WeChat Pay – have quickly expanded out of their original use cases and built formidable platforms that integrate with all kinds of e-commerce opportunities and offline services
- The platformisation of payment apps is a prominent reality in China’s digital space, but there are signs that some U.S. players are also taking notes with Apple introducing its Apple Pay-branded credit card
- A direct consequence of this platformisation of mobile payments is that it disintermediates banks and credit card companies from consumers. As mobile payment apps become all-encompassing service portals, they take control of the user experience and hijack the customer relationship that banks and credit card companies used to own
- As payment becomes more and more automated, thanks to the rise of on-demand services and IoT commerce, payments are becoming invisible. This further removes the banks and credit card brands from the customer relationship
- Banks and financial services have a lot to do to hold onto the customer relationship they have cultivated and leverage that to gracefully transition their services to better handle increasingly mobile and automated payments
- Banks and financial services can negotiate with digital platform owners to add some brand identifiers into the mix to reassert brand presence, such as a unique visual or audio cue when one completes a mobile payment
- As a leverage to earn back the control over customer relationship, banks and financial services should consider offering 24/7 customer service, classes to educate consumers on personal finance management, or actively engaging in corporate social responsibility
- Banks and financial services will need to become fintech companies themselves. Whether it is developing digital financial products in house, or investing in promising fintech startups, they need to find a way to deliver user experiences that can rival the digital services created by the tech giants or risk losing the customer relationship and becoming commoditised service suppliers.
- The escalating payment revolution is the perfect time for banks and financial service brands to redefine and deepen their relationship with customers