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Future Transformation in Payments Will Accelerate Global Commerce
Ease of use, security, cost of transactions, transfer and settlement speed, will determine how customers choose future payment platforms.
The emergence of alternative payments methods have impacted every consumer facing industry and in particular the retail banking industry. Foundational changes are influenced by large technology firms who have built payment platforms that are more easily used by consumers and integrated with by small businesses. Constant growth in FinTech investment is fueling new market entrants. Start-up payment organizations are running more efficient operations and have the ability to build more customized payment platforms. Disruptors like Stripe will continue to systematically change the merchant payment landscape.
Customers now have options and look to move money internationally, faster and at lower transaction costs. Opportunities for development in cross-border payments have intensified competition. As the global payment ecosystem grows it also becomes more complex. The diversity of offerings creates for greater connection points, more dependencies between corporations and vendors, increase potential fraud, and increased need for regulatory oversight.
Future growth in the payments will be driven by developments in how consumers use their smartphones. Market dynamics are changing as consumers are drawn to mobile platforms that allow for more real-time payments and provide for more engaging digital experiences. Companies are advancing mobile applications by taking transformational “leaps of faith,” entering into partnerships and integrating platforms within a complex global payment ecosystems.
Consumers are exposed to less secure payment networks, more sophisticated cyber-criminals and higher rates of fraud. In the future, greater use of encrypted digital currencies, like Bitcoin, may help in ensuring secure transactions. In general, blockchain has the capability of providing the framework needed to ensure greater payment security, lower transaction costs, and increase settlement speed, but also has implications on how enforcement agencies ensure that funds are used lawfully. With increased risk, organizations are hiring greater numbers of professionals with cybersecurity, anti-money laundering and sanctions expertise.
Partnerships between banks, major card brands and large technology firms are growing. This is forcing accelerated consolidation in the merchant services space. Financial technology organization M&A activity has increased – FIS’ acquisition of Worldpay, Fiserv’s acquisition of First Data and Global Payments’ acquisition of TSYS – impacting existing third party bank partnerships and talent dynamics.
Technology firms are offering competitive compensation for payments product expertise. Cards firms are losing talent to large technology firms in great numbers. In particular, there is focus is on acquiring talent having detailed knowledge of card networks and interchange fees. Banks acquires are increasing hiring of payment expertise, but struggle to acquire talent having experience building direct partnerships with ISVs. With greater market consolidation, demand for candidates with payments product integration, compliance and cybersecurity experience is increasing.
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