The term 20/20 refers to visual acuity, but with the year 2020 soon upon us, your payments strategy for the coming decade should be in sharp focus. That was the message from a webinar hosted earlier this year by PULSE, "Payments Outlook: Disruptive Trends and Emerging Battlegrounds," presented by Jordan McKee, Research Director, Customer Experience & Commerce with 451 Research.
It offers a look at the major industry trends of the past year and provides insights you can use to guide the evolution of your institutions payments strategy into 2020 and beyond. The webinar was just part of our ongoing mission to help financial institutions analyze and improve performance in key areas of their business in an increasingly competitive marketplace.
McKee stresses that when it comes to digital commerce, the only constant is change. He reviews examples of how, in just a few years, the payments landscape has changed dramatically. Real-time payment initiatives are operating at a global scale, digital wallets are embedded in every major operating system and new verification systems, like tokens are growing rapidly around the world.
And, in many ways, we're just getting started.
So, what exactly is changing?
Commerce—Old Style vs. New
McKee offers an analysis of key changes to the way commerce worked in yesterday's 'Old Style of Commerce' versus today's 'New Style of Commerce'—
- Payments as a cost of doing business vs. payments as a revenue driver—The account holder's experience has become much more strategic; payments are now seen as a product, one that is fundamental to a retailer's business.
- Payment systems as monolithic and proprietary vs. payments as flexible and API-driven—Today's systems invite participation; as a result, we're changing the way we're building payments products and the way we're thinking about collaboration.
- Data vs. intelligence—The role of data has fundamentally shifted in sentiment, influenced in large part by machine learning, fine-tuning authorization and improving transaction routing.
- Mono-distribution vs. ISVs, VARs, developers and tech giants—Gone are the days of a single, door-to-door distribution strategy. Multilevel distribution channels that include developers and technology giants like Apple and Google are the new ways to reach members, both merchants and consumers.
McKee identifies the current top trends in payments today and ways you can stay ahead of the ever-evolving digital landscape—
- Payment volume is being deflected into Card Not Present (CNP) channels—As issuers, that means we need to “follow the volume" to develop strategies to ensure account holders are using our cards in digital channels.
- Payments have become a direct input into the cardholder's experience—The way you're going to add value in digital is by enabling choice, removing friction and streamlining the onboarding process.
- Digital changes top-of-wallet dynamics—Digital changes everything. Make sure you deploy strategies to make your card an easy choice to be linked to wallets and card-on-file environments, wherever the cardholder wants to store it.
- Make fraud prevention a strategic priority—Focus on invisible infrastructure like machine learning, tokenization and 3D Secure 2.0 to push back against fraud without compromising the account holder's experience.
With this intelligence and data, perhaps you can begin creating a blueprint for continued success when navigating the constant evolution of payments.