The Center for Financial Professionals (CeFPro) spoke with some of the people speaking at the 2nd Annual Payments Forum 2019, including: Julian Sawyer, the chief operating officer at Starling Bank; Dougie Belmore, head of Payments Industry Engagement at Clydesdale Bank; and Peter Smith, the director of Seneca Investment Managers and independent industry consultant at FinTechReguLab.
How do you see the payments industry evolving over the next 6-12 months?
Sawyer: Over the next 12 months, the ‘platformacation’ (building a tool to allow software to communicate and share data) of services will become more apparent. Payment services providers are opening their application programming interfaces (APIs) and enabling companies across different industries to take an advantage of faster-moving technology. They can do this without burdening themselves with the strain of regulatory processes and building new infrastructures but are able to offer their customers access to new services and revenue streams.
Belmore: The advent of open banking provides an opportunity for the payments landscape to evolve in new ways.
As more ‘non-traditional’ players enter the market, providing new and innovative ways for customers to make transactions, there will be a breakdown of some of the old and established methods. Whilst many customers may not initially respond to the new and evolving landscape, there will be many who readily embrace the digital revolution and look to drive development in new directions.
With ever-evolving regulations being introduced to ensure customer protection, industry leaders must find a way to balance protection and service, ensuring customer demands are met.
Smith: The traditional retailer mindset has considered payments to be a necessary evil required to facilitate a sale. More recently, merchants have realised that payments can be a strategic lever. There is a deeper understanding that payment infrastructure is a critical factor in the digital experience factor and it directly influences a customer’s likelihood of converting and returning.
As a result, there has been enhanced focus on the role of payments in powering digital commerce experiences, as evidenced by wallets such as Kohl’s Pay and order-ahead apps like Shake Shack’s Shack App. Greater attention is also being paid to supporting local payment methods to help cross-border shoppers and deliver a streamlined checkout experience to reduce cart abandonment. Of course, the expense and margin compression associated with payments has not been forgotten, either. Digitalisation paves the way for more merchants to get creative with providing incentives to use a particular type of card to pay, as we’ve seen with Amazon Prime Reload and Uber Credits.
For many decades, payment products and services have been driven into the market almost exclusively by issuing and acquiring banks. Digitalisation is reshaping this distribution model, with payments migrating into native apps, point-of-sale (POS) software, wallets and other connected environments. Banks and payment companies now have a seemingly endless list of partners to align with, running the gamut from application developers and technology partners to emerging payment gateways and Independent software vendors (ISVs). This more complex partner ecosystem requires APIs and agility to ensure customers can receive the commerce experiences they value most.
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