The COVID-19 pandemic has been a highly influential driving force behind the recent wave of innovation within the payment sector. Businesses and financial institutions have needed to act quickly to stay ahead of the resulting trends and changes. Those who have been quick to adapt have seen the benefits of incorporating new technologies — improved efficiency and happier customers.Halfway into 2021, the payment industry is expected to accelerate the adoption of alternative payment methods. Here are some essential trends to keep an eye on the remainder of this year.
The pandemic has been the catalyst for countries worldwide to begin adopting digital services. The payment industry witnessed a huge decline in the use of physical money, while contactless and mobile payments increased.
The popularity of digital payments was steadily on the rise before countries imposed lockdowns. Businesses already using this technology found themselves ahead of the curve for adopting contactless options. This has been crucial for many businesses as contactless payments have increased in popularity in certain European countries over the last year. Places like Belgium, Germany, and Switzerland, which initially were slow to adopt contactless payments, reportedly relied more on such transactions during the COVID-19 pandemic.
The driving forces behind this trend are the growth of e-commerce and the increased use of mobile devices. When COVID-19 worsened, governments worldwide recommended a shift to cashless systems to minimize the spread of the virus.
Electronic payment systems such as Payconiq will continue to rise and include the capability to use QR-codes to pay for purchases. This technology will make it easier for banks and businesses to meet the ever-increasing demand for flexible payment options.
One of the latest global trends to keep an eye on is global open banking. As it is now, the traditional banking approach no longer provides for the needs of the digitized world. Many banks in Germany, France, and the UK claim that they are looking to implement open banking initiatives in the coming months.
The banking system is known for its huge customer base, brand recognition, and massive capital of trust and legitimacy. However, traditional banks lack the ability to meet the increasing demand for customer personalization. They have a hard time getting up to speed in terms of innovation and high-end technology.
These gaps in service mean that it’s vital for them to collaborate with fintech companies to keep up with the changing world while achieving a sustainable return on investment. Banks are now increasingly working alongside numerous fintech companies in the hopes of cutting down on expenses without incurring losses.
Businesses and banks that can find a way to jump on this trend now will benefit in the long run. One report stated that this trend is expected to improve organic revenue growth by up to 10% in the next 3 to 5 years.
Due to the inherent ubiquity of cloud migration, several legacy systems have started to modernize in the hopes of reapingthe benefits of cloud services. Many banks and financial institutions still currently use efficient legacy systems, but this will soon change.
As many banks and businesses have seen with other aspects of their operations, incorporating cloud technology will ultimately prove to be a worthwhile investment. The adoption of cloud services will allow payment processors to access, store, and process data through the internet and not just on physical drives. Scalability, agility, improved security, and lower operational costs are the four main reasons that make cloud technology increasingly tempting.
We should expect significant changes in the world of payments throughout 2021. Businesses need to prepare to stay ahead of their competition by providing global, seamless, secure, and agile payment solutions. Organizations need to implement forward-thinking strategies to survive and flourish in the extremely competitive payments industry.
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