Over the past few months, there has been a lot of speculation about how Covid-19 has had an immediate impact on payments. But, what will the payments landscape look like 12 months down the line? Evie Rusman speaks to experts from ING Bank, Transferwise and Moorwand about the recovery process post-Covid-19
It is safe to say, that already, the pandemic has altered our daily lives especially when it comes to how we pay for things. According to the Global Mobile Payment Methods 2020 and Covid-19’s Impact report, one fifth of the consumers surveyed believe contactless payments to be a cleaner alternative to other payment means such as cash.
Go deeper with GlobalData
As a result, proximity mobile payment users are on the rise, with pre-coronavirus projections estimating their number at more than one billion in 2020.
Speaking to EPI, Chantal Fokke Business Owner for Payments Processing at ING WB, discusses the immediate impacts.
She says: “Covid-19 has impacted the sector as a whole. In payments, we have seen that ATM traffic is significantly going down, and cash use has also dropped considerably. When things start to open up, we expect that people will have become accustomed to using digital methods of payment and that the use of cash will not return to the levels at which it was used in the pre-corona era. We have also seen that, with regards to payments, contactless use has increased. At ING we have ensured we have an increased contactless limit, making it easier for people to use contactless cards and devices.”
However, moving away from the immediate impacts, there is a lot of speculation about what life after Covid will look like. How will payments companies make the transition?
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataPayments recovery
As we move out of the pandemic, the recovery process may vary for different sectors. Luc Gueriane, Chief Commercial Officer at Moorwand, explains to EPI how fintechs must adapt in order to survive.
“The recovery will look different for each distinct corner of the fintech industry,” he says. “Fintechs that support contactless transactions – from mPOS to wearable payment providers – are well positioned to survive, if not thrive during the crisis. And the drop in physical payments has caused a rise in digital alternatives, putting online payment providers in an advantageous position.
“However, for firms working in travel and hospitality, they are going to struggle. Those in danger need to pivot fast to make it out the other side and should be thinking about altering their products and services to new audiences. We are likely to see some fatalities, but the fintech sector was born out of a crisis and will emerge leaner, stronger and more sustainable in the long-term.
“For all fintechs to head towards a successful recovery, they need to be doing three things: 1) looking after staff – London is a really competitive place for fintech talent. If you want to weather the storm you need to take care of your team, don’t give them a reason to leave. 2) Going above and beyond with customers – find ways to fix their biggest problems, it will create long-lasting partnerships. 3) Being fully transparent – if there was ever a time to be open and honest, it is now. Let partners and investors know what you need to get through the crisis. This will build trust and make recovery much easier.”
Advice
In order to remain successful, businesses must become even more efficient after Covid-19 as there is less room for error – it is almost a survival of the fittest scenario.
Speaking to EPI, Scott Johnson, VP Head of Product at Western Union, discusses how companies have had to become more careful and must continue with this attitude well into the future. He explains how this idea is not just payments-centric but other industries as well.
“I think many businesses are more challenged than usual to manage their working capital given the slow demand for goods and services right now. It means that companies are just going to be more careful about managing money, and I think that’s true really across industries,” he says. “And so we’ve been trying to help again by giving as much insight as we can into what’s going on so that when they do have to make or receive a payment, you can understand the best timing and rails, through which to do so.”
Johnson also emphasises how customer-centricity should be the priority focus for more companies as without the customer, there is no business.
He adds: “I think the key is just sticking to the fundamentals, making sure that the products and services that payments companies, build, solve actual customer problems, whether that’s paying an invoice or sending a remittance to a friend or a family member.
“The key is really just making sure that you’re focused on the customer that you’re building great experiences for the customer that allow them to get their business done quickly and efficiently and pleasantly. And I think as long as you’re really solving customer problems in a way that’s innovative and interesting. Then the companies that do that will exit Covid-19 in a strong position.”
Trends on the horizon
Covid-19 has meant that companies have had to rapidly change the way they operate as lockdown restrictions have forced services to move online. This means that trends that were forecast to emerge over the next coming year have accelerated. Johnson argues that new technologies will be at the forefront of innovation over the next few years.
“Covid-19 has certainly accelerated the trend of digital transformation,” he says. “And that’s, you know, again not unique to payments. But I think we’ve, the payments industry as a whole has had to really rapidly think about digital experiences in a different way.
“The trends I’m personally really excited about are speed and data. I’m really thrilled about this new faster payments infrastructure and the promise of being able to get money somewhere instantly. I think that’s what we’ve always wanted real-time gross settlement to be and it hasn’t quite gotten there yet. So, I think the products will be will be able to build on the back of those faster payments rails, which will be really exciting. And then along with that the ability to send a lot more data with the payment is also compelling.”
Artificial intelligence
Earlier this month, banking software provider Temenos released a report outlining that two-thirds of banking executives believe that new technologies such as AI will have the greatest impact on banking in the next five years.
The report, conducted by the Economist Intelligence Unit (EIU) on behalf of Temenos, showed that 66% of banking executives see new technologies as a driver, compared to 42% in 2019. In addition, 77% of respondents said AI will be a key differentiator between winning and losing banks.
Speaking on AI, Johnson says: “There is a lot of potential for AI in the payments and banking world for things like reconciliation. Banks and payments companies already have a rich set of data and layering AI on top of that would be pretty exciting, especially when you combine that with cloud and the ability to deploy AI and really processor intensive AI functions without having to stand up a lot of infrastructure in your own data centre. I think that’ll allow companies to start to explore, artificial intelligence and machine learning, without having to do really long and significant investments into infrastructure, which potentially means we’ll see a lot of creative solutions, coming out of that space in the next few years.”
Fintech/Bank partnerships
Another trend that is set to make headway is the rise of fintech/bank partnerships. Capgemini’s World Fintech Report 2020 said that in order to remain relevant banks need to get on board with the Open X era, which encourages banks and fintechs to work together.
Open X looks at four fundamental shifts in the sector:
- A move away from products to an emphasis on customer experience;
- Less emphasis on assets and more on data;
- Shared access instead of ownership, and
- Partnering rather than buying or building.
The argument is that banks will need to integrate with other players to provide a seamless customer experience. Vice Versa, fintechs need to collaborate with traditional incumbents as they do not tend to have the size and scale of operation required.
Speaking on these partnerships, Fokke says: “Fintech/bank partnerships are very important and will become more apparent in the future. I think in the short and mid-term, there will be some consolidation in the sector. ING is very strongly focused on innovation and working together with partners. Personally, within my portfolio is the partnership with TransferMate, where we want to offer easy-to-use international payments and solutions that are more efficient and cheaper to use. Ultimately, those kinds of partnerships are really important and for us a complementary offer. They allow us to offer customers services more suited to them.”
