A Futurist on the Future of Payments – Part 1

Anders Sörman-Nilsson is the founder of Thinque, a strategy think tank that helps executives and leaders convert disruptive questions into proactive future strategies. He recently spoke at a PULSE-sponsored event, where he shared insights with financial institutions and processors. We caught up with him afterward to ask some questions. Below is part 1 of our interview:

Payments & You: You are a futurist, so what do you foresee in terms of payments?

Anders Sorman-Nilsson: When it comes to the future of payments, it tends to be an evolution. Suddenly, sometimes things will roll over a bit faster, but even in the current era of Bitcoin and blockchain technologies, old-school forms of bartering still exist. So when it comes to the future of payments, the advances tend to be additive. Certainly, where we're seeing growth, it is about digital forms of payment – particularly those that are frictionless, or what I would call seamless. They remove the kind of friction that we often experience at the point of sale. Even in a business-to-business environment, we all know that procurement processes can be very lengthy and not always seamless.

P&Y: What do you believe is essential for PULSE participants to think about?

AS-N: First, examine what the customer or client journey looks like and then determine the types of traditional and technological modes of payment that you need to make available to connect with what I like to refer to as digital minds and analog hearts. Winning both digital minds and analog hearts is really the key thing for organizations moving forward, in terms of cultivating brand loyalty.

P&Y: You gather insights globally. What can U.S. financial institutions learn from other parts of the world?

AS-N: Asia today is a future lab. It took Alipay 12 months to reach $100 billion in payments. In contrast, it took the Development Bank of Singapore 280 bank branches and 50 years to reach that level. Alipay, with no bank branches, now has a lower cost of credit than any bank in the world, and they're the largest payment company in the world. Payments is such a critical part of any customer journey that innovating on payments and making them frictionless is so important for brands – particularly when the expectation of the consumer today is that instant gratification is nearly too slow.

P&Y: Can you walk us through what a typical customer journey looks like?

AS-N: It used to be quite linear in the good old days. It used to move people through five stages – moving from awareness to engagement, to an evaluation of your brand compared to other financial institutions, to hopefully a decision in your favor, and then finally to usage and loyalty. That's evolved to skipping between analog and digital touch points at each of those five stages, all the time comparing rates, mortgages or whatever it happens to be. So brands have to be aware that, when it comes to the moment of moving from evaluation to decision, and really making a purchase or investment decision, that final piece of the puzzle has to be seamless. It has to be frictionless because the payment part of the customer journey is so critical. And we all know what comes after a decision: usage, loyalty, word of mouth recommendations – maybe even brand advocacy if we get it right.

P&Y: Do you think fintech startups have been able to leap ahead of traditional financial institutions? If so, why?

AS-N: Generally, companies in the financial industry have legacy technologies. Without that old legacy tech and the focus on regulation, the fintechs can focus on innovation. And, where innovation is ripe, it's usually where there's a point of friction. A really good analysis if you want to innovate and be more creative and launch new services, would be to ask the question: Where does a customer suffer from frustration or friction along their customer journey from awareness to engagement, evaluation, decision, and usage? What are those moments of friction, and how do we make them seamless?

Want more? In part 2 of our interview, futurist Anders Sorman-Nilsson discusses fintechs and the role of community financial institutions.

The views and opinions provided in this article are those of Mr. Sörman-Nilsson and do not necessarily reflect those of PULSE or its affiliates. This article is intended for informational purposes, and is not intended as a substitute for professional advice.