The State of Payments: July 2019
Author: Jim Tomaney, chief operating officer
A week is a long time in politics – a saying that is increasingly true for payments too. We are now two weeks into July 2019, so a good point perhaps to reflect on the state of the industry.
So far this year, Renovite has participated in - and contributed to - seven global payments conferences, with more to come. We’ve offered presentations and exhibited in cities from Las Vegas to London, Florida to the Singapore, Dubai to Bangkok.
We’ve talked to a lot of people in a lot of places about the state of payments. As we start to think about and build up to one of the year’s biggest moments, ATMIA’s Europe ATM & Payments InnovationSummit in Rome in October, it’s worth taking a few moments to reflect on the first half of this year.
Payments is an industry which is changing - and quickly. As we signposted in our commentary for Retail Banker International at the start of 2019, old technology trying to operate in a new world doesn’t cut the mustard anymore. Innovation and disruption in respect to financial services is becoming the new normal.
Here are four of our central observations from over the last six-months:
Demand for innovation is growing
For banks and other financial services organisations, offering a steady stream of new services is expected. Consumers are aware new and alternative payments are faster, easier, and safer and broadly speaking, more accessible, and they want them. In response, FIs are working hard to improve the consumer experience through an improved and seamless digital experience for fear of losing customers.
Cash decline continues
Cash still has its place, but it certainly isn’t king anymore. Sweden, France, the UK and Canada, for example, are all marching toward a ‘cashless society’. Some businesses don’t even accept it any longer because of the expense of handling it. Business Insider recently reported that in four years, noncash transactions are poised to exceed 1 trillion for the first time. In the UK, cash use is expected to end in 2026.
Digital wallets growth
Less mature markets, particularly in Asia, are leading the charge when it comes to new wallets and innovative payment types, especially in P2P payments. Alipay’s Google Ad reads: “Trust makes it simple. Experience fast, easy and safe online payments” – the keywords ‘trust, fast, easy, safe’ tell you all you need to know about what consumers want when it comes to transactions. Alipay now claims to have 1,000,000,000 users.
Tech giant currencies
Yes, Facebook is trying to create a currency, Libra, which it says will launch next year. Love them or hate them, it is happening. Facebook will let users make payments with Libra via its own apps, as well as on WhatsApp. Facebook isn’t the only one: Google, Samsung and of course Apple have stated their intention to enter the currency fore.
The best offence is a good defence
The rocket ship of consumer expectation has taken off, is gaining momentum, and won’t be coming back. It’s a one-way mission to a different way of buying and selling. There’s no sure-fire answer about where we’ll be this time next year. However, what banks and other FIs can do is to prepare for the inevitability of change by pre-emptively investing in technology designed for change – unlike today’s legacy architecture.
Enabling responsiveness requires agility. For organisations to deploy new services quickly and safely, they need technology and technology partners that strive to innovate using 21st-century cloud-native payment technology. Technology that doesn’t hinge on legacy upgrades, patches, and new layers built on top of old ones. Instead they need technology that offers all the real benefits of the cloud: lower costs, better security, elastic scalability, agility, portability, and high availability of service.