2020 has been a big year for payments. Often the first area of FinTech to experience new technologies and innovations, transformation of this area has been exacerbated by the Covid-19 pandemic as online and offline businesses strive to retain customers by offering them an easy – and above all, safe – way to spend.
This week, we asked three FinTech leaders what they feel the most disruptive payments innovations have been recently.
“Providing users with real choice and flexibility has been a leading factor in payment innovation for both consumers and businesses,” says Marwan Forzley, CEO of global payments platform Veem. “For business payments, users previously had very little control or insight over their payment processes — especially within the context of cross-border transactions.
“Now, businesses of any size have the opportunity to select a payment solution that offers not only fair pricing on domestic and foreign exchange, but also increased functionality that provides them more control over the process. Control includes the ability to hold funds until the exchange rate is favourable, the ability to lock rates for future payables or receivables, and the ability to have the flexibility to have the payment sent and requested in local currency. This disruption created by fintech firms has influenced an increase in M&A and research and development by legacy financial institutions like banks and credit cards.”
For Paul Hampton, Payment Security Expert at Thales Group, which invests heavily in digital innovation such as FinTech, the rise in digital payments has meant big changes for security solutions. “The explosion of banking apps, contactless cards and mobile payments – alongside the rise in card not present (CNP) fraud – has led to serious innovation in security services and new ways to confirm the identity of shoppers,” he explains.
“One such method has been the increasing use of biometric authentication, which requires people to prove its them with the press of a finger, the use of facial recognition or even an iris scan instead of using a traditional password which is becoming increasingly complex and susceptible to being forgotten or stolen.”
Hampton adds as an example that Amazon’s new palm recognition technology, Amazon One, could really disrupt the point of sale in stores. “This is a bold move by Amazon as it looks to reinvent payment methods and put the latest technologies in front of customers. This advancement not only increases payment security, but has vastly improved the user experience, adding speed and convenience to the transaction.”
For Finastra, 2020 has brought a significant cultural shift for the organisations it works with as well as their customers – and banks are now dealing with networks that are far bigger than just themselves and consumers. “If payments are becoming a utility, banks need to reassess their role in the process and how to monetise and add value for customers by working with third parties and integrating their services,” says Global Head of Payments Paul Thomalla.
“This involves a complete change in culture and approach. It’s no longer just about the relationship between the bank and the customer, but also about the bank’s role in providing payment services as part of a wider ecosystem. One that delivers the best customer experience.”
Alongside this changing model, Thomalla adds that customers have become more digitally savvy – a gradual change that has been forced to speed up over the past year. “They’ve become used to making payments online and via mobile with real-time balance updates. If banks can deliver this to retail customers, why shouldn’t corporate customers expect the same too. Again, cultural expectations have changed and banks must respond accordingly.”
Whether it’s greater visibility on our own payments, innovations in the way we can pay without touching a PIN pad or even a card, or the transformation of the whole banking model to more of an ecosystem, it’s clear that innovation in payments isn’t slowing down. And it’s driven by one thing: the customer.