The payment industry around the world is facing a deep structural change challenge. The need to follow the customers' use of mobile technologies to buy anywhere at anytime is driving merchants toward the adoption of more complex and powerful technology. Along with it, corporates see the raise of new solutions to improve transparency and predictability of payments, so they can avoid much of the obstacles that trap liquidity in bureaucracy.
With consumers at the center of a multichannel shopping scenario, in-app shop is displacing cash's convenience, with versatility and acceptance, by payments anywhere, anytime, automated and personalized; cash's control, as it is limited by the amount you can carry, by smart tools that afford a much broader financial management; and cash's value, as it is "free", by extended tools that tailor services to customers' needs and location.
This is only achievable if multi-channels really converge, allowing merchants to forge partnerships with data analytics companies that will provide insights on the customers' search-evaluate-buy-bond cycle. Digital wallets are there to ease this convergence, as some of them will determine the best deals by weighting card offers, store cupons and loyalty points, not ignoring data ownership and privacy.
As data is the core competitive requirement in multichannel commerce, payment companies should use Big Data to adjust its aggressiveness in specific customer segments at specific moments of time, launch new marketing programs, like micro-campaigning, cross-selling and retention, and focus on reducing frauds and enabling spend comparisons.
Integration between merchants and payment companies is crucial also, as loyalty programs enters a new age. Depending on each market, these programs may enable tailored offers by segments, by consumers' purchase pattern, by location and by giving loyalty currency that consumers can redeem across a network of merchants.
All these new services, integrations and scenarios bring new regulations and they come with new business opportunities for depository institutions and third-party processors that compete directly with banks for customer and corporate transactions and the associated data. To be able to differentiate themselves, depository institutions will need to integrate more diverse financial services on their digital platforms, providing more competitive rates on financing, access to mortgage applications and services, mutual funds and stock trades, and financial planning tools.
To face these new market threats, banks must build new revenue models to strengthen fee income, specially in major markets, where low interest rates are a challenge to the current model that works with interest income on daily balances.
Along with this, there is the innovation in corporate banking business models promised by the blockchain technology, in which each transaction generates a “block” containing an authenticated history of all prior transactions in the network, bonding participants in a marketplace without intermediaries. If distributed ledgers become the basis for the booking and transfer of public securities, they will bring about significant changes in post trade activities such as clearing, custody and cash management.
To fully support customers, strategic partnerships and integration is crucial, and the expected result is to gain access, skills and expertise necessary to implement an end-to-end integration that allows consumers to go through the whole search-evaluate-buy-bond cycle.
On the other hand of the many successfully launched next-generation payment solutions, banks are struggling to find a path that leads them to innovative digital solutions. So, acquisition of some of the almost 5000 FinTechs is a highly attractive way to build skills and scale rapidly, despite the known challenges of integrating cultures and systems.
To win in the new payments arena, banks and other service providers must strike the right balance between defensive moves and creative destruction.
Nobiletec is a multi-national consultancy firm specializes in B2B, B2C and P2P FinTech solutions.