As customer expectations evolve with the times, so does the way we conduct our payments. The arrival of a new financial ecosystem means that companies we may not have associated before with financial services, are now operating in this space, whether that’s
tech, telco, or e-commerce companies. If the traditional financial services institutions (FIs) intend to remain competitive in this new era, they will need to ensure they have future ready payment technology in place to capitalise on new revenue streams and
be present in the financial services land grab that’s about to take place.
It’s time for the future
Innovation in the payments sector is currently at unparalleled levels. Our desire and need for change has brought about developments, influenced by factors such as an increasing number of people using their mobile devices to interact with the financial side
of their lives, the adoption of open API technology, and a global pandemic.
Moving forward, companies need to ensure that they are using payment platforms that are designed to keep up with the proliferation of payment types. To prevent themselves from falling behind, it is imperative they possess the infrastructure to be future
ready. The payment platforms of today will also need to be the ones of tomorrow, that means implementing technology that is quick to deploy and can adapt to future currencies and payment types but also has the stability when supporting existing asset classes
and payment methods.
In my previous blog, I mentioned a recent IDC InfoBrief which found that 73% of FIs across the globe currently possess paytech infrastructures that are ill-equipped to handle payments beyond 2023. A lot of these FIs face issues with payment workflows or
technology design obstacles when using their legacy platforms. These platforms are handicapped by their inability to support more than just traditional values for asset classes, which of course means they struggle to adapt. Reliance on these systems will only
lead to stagnant innovation that’s focused on legacy technology rather than market demand. Failure to adapt to these demands could see financial service institutions lose out on over $250bn in revenue from payments alone.
Although the payments industry has been evolving, banks and other companies are guilty of still using legacy systems. Which is potentially why by 2030, it’s expected that 74% of consumer payments with be handled by non-traditional FIs. The traditional financial
services institutions are already facing the consequences of aging paytech infrastructures, and the rise of new payment service providers and digital banks will only propagate that. To keep up with the changing market demands FIs will need to move with agility.
The financial services land grab
The financial services land grab is underway, as we’re seeing across most industries, the desire for companies to take centre stage in customers’ financial lives has become increasingly prominent. FIs are not the only ones aiming to integrate their products
or services into a person’s every day. We have seen the likes of telco providers participate in the practice, with the end goal of becoming a centralised financial hub for customers where they can cross sell their products and services to ‘own’ a customer.
As things stand, traditional FIs are due to lose the stranglehold they once had on the consumer payments market. This will continue until they find a way to move on from outdated paytech. And while this land grab takes place, competition for payments will
continue to increase, as companies see the opportunity to be an active participant in the lives of customers. Consumer demand is at the heart of payment innovation, so financial service institutions will need to cater to that by processing payments regardless
of whether they are fiat, crypto or even a denomination that is yet to exist.
In the end, the core message is that paytech infrastructure needs to transform to offer speed in deployment, be configurable, and most importantly, be future ready.