The trend toward digital payments is only accelerating. Here’s how FinTechs can keep up with the increasing pace of technological developments.
As customers adopt new digital tools and financial institutions move towards a cloud-first infrastructure, the payments landscape continues to accelerate into the future. The pandemic has created new circumstances for both businesses and end-users. Customer relationships take place almost solely in a virtual environment, requiring both groups to learn new digital behaviors. A recent consumer survey from Capgemini found that almost half of consumers (45%) currently use digital payments more than pre-COVID-19, while 46% expect to increase their usage in the next 6-9 months.
This preference for mobile wallets and avoidance of cash is forcing companies to update their platform infrastructure, or even launch digital channels from scratch. This is part of a broader investment in technology. National digital sovereignty is becoming a reality, as companies gain access to greater numbers of tech providers and solutions — access that can transform their operations.
Keys to Staying Ahead in Digital Acceleration
While this digital transformation is creating a huge opportunity for financial institutions to pull away from the pack, there is also the risk of falling behind. The relentless pace of digital acceleration means that companies must have a dedicated technology strategy to keep up. Here are a few things they should be keeping in mind.
Prioritize Digital Transformation & Modernization
Today’s core payments functions require digital support, so investing in modernization must be a priority. If customers aren’t served through their preferred digital format, they may abandon their banking provider altogether. Ensuring that all areas of the business are equally supported and engaged with the appropriate technology, is necessary for a full-scale digital transformation.
Fortunately, many organizations now recognize the importance of modernization; the World Payments Report from Capgemini found that 65% of banks believe digital transformation will be the main driver of future initiatives. In practice, this means committing to a company-wide technology overhaul and making it a priority for all teams.
Focus on Mobile & Cashless Tools
The pandemic forced consumers to purchase most goods remotely, using a desktop or mobile platform. Due to the ease and convenience of these methods, many consumers are still opting for cashless tools — even when in a physical setting. In fact, McKinsey found that more than 75% of Americans use some form of digital payments, whether that’s a browser-based or in-app purchase, a mobile-supported in-store checkout, or a peer-to-peer transaction. Payments companies must therefore provide the infrastructure to support this.
Developing an efficient mobile experience should be a priority for any financial institution today, due to mobile’s growing popularity across all demographics. Integrating cashless digital options should also be high up on the list. Whether developing these products internally or partnering with third-party solutions — making them available is a must for any payments business.
Remember the Cloud is Integral
Embracing a digital-first strategy provides countless opportunities to expand services and refine the customer experience. This also requires having the computing power to handle far greater volumes of data and transactions. While a few businesses may opt to expand their physical server network, most organizations have determined that a cloud network is the best fit for their technology infrastructure.
With a cloud network in place, payments companies can scale their capacity as needed and store all information securely. A cloud provider can also help you support useful technology integrations that improve your service offerings while leveraging their built-in privacy protocols. Whatever the stage of their digital transformation, companies will benefit from remembering the important role cloud plays and utilizing each of its opportunities.
Keep User Experience at the Center
Ultimately, the purpose of staying ahead of the digital curve is to keep the customer satisfied. There is no use in deploying new technologies if they don’t improve the consumer experience and make your product more accessible, efficient, and enjoyable. With so many solutions in the market, payment institutions may find themselves spending on unnecessary tools which alienate their customers if they don’t keep the user experience at the center of their decision-making.
By listening to the customer base and observing trends in customer behavior, companies can identify what is truly needed in their platform. Only when they understand what will enhance the customer experience — and what will hinder it — can they be sure that they’re investing in the right modernization.
Staying Ahead of Digital Acceleration
Everyone knows that the future is increasingly digital but identifying the right path forward is a bit more complex. Deploying new technologies can be a time-consuming and expensive process, which means it’s imperative that businesses put in the legwork to understand what areas are worth the investment. One sure thing is that making digital transformation a business priority is crucial to reap the rewards.
In terms of specific focus areas, tracking consumer behavioral shifts reveals that mobile-first and cashless tools should continue to be a priority for all payments organizations. Leveraging the cloud to support new integrations will help set you up for success while listening to end-user feedback and checking in with the consumer will ensure that businesses stay on the right track and keep up with digital acceleration.