Accenture recently completed a payments study of 1,500 consumers in North America which helped devise the following 10 mega Payment Trends that they believe will shape the future of payments. Check out the Accenture Driving the Future of Payments: 10 Mega Trends for full details – following is a quick recap:
Payment Trend 1: Gen-Z will soon be a Big Deal
- Keep in mind the study was in Canada and the US where Gen Z is predicted to constitute 40% of all US consumers by 2020
- Gen-Z don’t know a world without Google, Amazon, Facebook and Apple – they are “naturally digital” and want things now – the “see now, but now” generation
- Gen-Z love mobile banking apps, with 69% using them – compare that with just 17% of baby boomers
- When these guys enter the workforce, start buying houses – the gap between incumbent and digital banking providers will reshape the industry
Payment Trend 2: Data Customer Experience is the New Gold
- Just as Google owns the web search space, Accenture suggest that providers that can be present and relevant during the entire payment process will be winners
- The future of Payments is about much more than the transaction, Millenials and Gen-Z want additional advisory/expense management services/ seamless payments
- Open Banking is happening:
- Millenials and Gen-Z are more willing than any previous generation to share their bank account information with third party providers
- Regulation such as PSD2 will in Europe, for now, make it easier for third parties to access account information and initiate payments
Payment Trend 3: Mobile Payments will Take Off
- Following on from the above Open Banking will give rise to more powerful mobile banking payments
- The threat is clear, as Accenture put it “Banks are essentially two APIs away from losing a big chunk of their mobile app traffic“
- Consumers will increasingly want their payments information in 1 place, giving rise to aggregators
Payment Trend 4: Customers want to be Rewarded
- Here Accenture talk about next generation rewards, since they believe that the current friction between rewards and interchange fees are not sustainable
- Consumers want bigger rewards, the digitisation of coupons and offers, real-time and experienced base rewards
Payment Trend 5: Next Generation Payments will work with Ecosystems
- Markets, regulation is enabling (dare i say it, forcing) collaboration to happen in new ways
- Connected networks and working within ecosystems, Accenture suggest, is enabling companies to increase their capabilities and reach in unprecedented ways. Historically this would have involved high costs, lengthy build periods and tremendous risk
Payment Trend 6: Banks and Fintech’s Collaborate
- Similar to the above, but here focusing on fintech companies and banks – contrasting organisations with complementary strengths
- Accenture describe the benefits of fintech companies – niche business models, innovative technologies with a transformational impact on financial services
- Banks on the other hand are looking to are in build, buy and partner with fintechs – describing it as a “powerful mutual dependency”
Payment Trend 7: New Tech will Disrupt the Entire Payments Process
- This one is all about potential – historically accounts are thought of as a string of numbers, in the future accounts are becoming a software code
- New tech is turning everything payments upside down
- Code will probably kill the credit/debit card, your sign-on details will likely become virtual
- Blockchain, augmented reality, biometrics and other technology will all reinvent all aspects of payments
Payment Trend 8: Payments will be Accepted Everywhere
- Technology will keep changing and enabling new ways of accepting and making payments
- There are an increasing number of ways to accept payments, a trend that is essentially now device enabled – this universal acceptance of payments will change the traditional relationship between all parties in the payments space
Payment Trend 9: The Fraud Threat Ain’t Goin’ Anywhere
- With each wave of payments innovation, payment fraud has never stopped or gone away, it has simply moved/evolved
- This will continue to happen into the future, fraudsters will innovate, build workarounds and collaborate with one another to break down new security defences
- The goal Accenture believe should be to “out-innovate the fraudsters”
Payment Trend 10: Legacy Payment Systems Need to be Ripped Out & Replaced
- The Accenture message is clear – survival requires a complete overhaul of existing legacy systems
- The demands of modern systems – Real time payments, tokenisation, API integration, proxy/delivery services, global messaging standards (ISO20022), agile, open/flexible systems – all require modern payments systems
Source: DRIVING THE FUTURE OF PAYMENTS 10 MEGA TRENDS – Accenture
Interesting stuff, eh?