New Payments Opportunities Arise in the New Normal

Last year, the financial industry witnessed some significant shakeups. Big tech players such as Apple and Facebook had begun to enter the payment scene. Analysts across the board were predicting 2020 to be the year big tech would make a grand entrance and launch one-stop shop integrations to support contactless, cashless and real-time transactions. However, this year brought a different wave of change, impacting financial institutions, providers and integrators of all sizes at varying levels – but in all cases, requiring rapid responses to meet the needs of various stakeholders.

With stay-at-home orders in place and credit unions shuttering their doors to footfall traffic, consumers and businesses were forced to shift all financial transactions to digital platforms. Managers of brick-and-mortar locations had no choice but to rapidly deploy online services to accommodate the forced change in consumer preferences. According to McKinsey & Company, the retail banking industry experienced up to three years of digital preference acceleration by the mid-year point in 2020. The integration of legacy methods – loan approvals, repayments, instant access to funds – and digital experiences would generally take several months to even years to deploy, and require planned budget allocations and staged rollouts over time.

But most financial institutions and providers had no choice but to jump the curve. One by one, brick-and-mortar lobbies turned digital. For those surviving the surge, the speed to implementation nearly happened overnight. Months and years literally turned into days and weeks, in many cases. Tech infrastructures and digital offerings were scaled quickly, allowing institutions to offer most if not all services to clients online. While forced acceleration may have been deemed a burden at the time, in reality it has enabled financial institutions to up-level their offerings to fully match consumer preferences – more often than not, bringing them to the digital devices they frequent daily.

As we look to the future and consider what’s next, going back does not seem to be an option. Instead, financial institutions now have the opportunity to expand and continue to deliver digital alternatives to consumers – reaping the benefits of an enhanced customer or member experience, improved operations and tapping new revenue streams via omnichannel transactions. Moving forward, credit unions should consider reassessing and reprioritizing their solutions, then ultimately revisiting their infrastructures to avoid further catastrophe in the future. Rather than remaining stagnant, they should proactively aim to dedicate adequate resources to maintain and securely operate services that have recently been deployed. While a new digital transformation era has been embarked upon, several other areas will garner attention, including data, measurement and continuous upgrades.

Predictions made at the close of 2019 have become dismantled. Below is an overview of what the financial industry can expect to see in the second half of 2020.

1. We will continue to witness rapid growth and the expansion of single, unified channels. As digital continues to evolve, we can expect providers to create unified channels for their offerings and communications. The overarching key to differentiating yourself amongst other competitors and their services is to provide an exceptional user experience. To achieve this, providers rely on data and the ability to interpret each user’s personalized preferences to deliver frictionless transactions and experiences. It is not unusual for companies to have multiple platforms to support and provide different offerings or services. Each platform may produce different data sets and, in turn, may be problematic when it comes to data aggregation or interpretation. For data to be actionable, providers must be able to interpret and apply it to their product roadmaps to continually enhance overall operational efficiency such as quicker approvals, processing times or access on behalf of the consumer.

2. Payment channels will become communication channels, to better support and market directly to consumers with efficiency and predictability. The shift to digital channels has also opened the door for new opportunities in how providers can communicate. With users spending more time on specific channels – accessing their accounts, making payments, applying for loans and more – there is an untapped opportunity to engage. Rather than taking specific communications outside of the platform (think email or phone), providers should consider creating in-app features for easy, accessible and hassle-free messaging. By doing this, providers turn one-way payment capabilities and channels into a two-way, omnichannel platform with the opportunity to provide individualized support and promote new products. This will further help ease the loss of the personalized service and interaction in banking.

3. Digital lobbies and contactless payments will continue to emerge, creating more options for consumers. Consumers have transitioned to the contactless world. Over the last few years, we’ve anticipated the adoption of contactless payments to continue to rise and attributed the increase of digitization primarily to millennials and Gen Z. In April, Mastercard Contactless Consumer Polling reported that 51% of Americans used some form of contactless payment method, a number that has most likely increased or will over the coming years. This is a new era. We’ve now witnessed an increase in older generations leaning into contactless payments. Consumers have relied on the self-service model. They’re leaning into AI and on-demand services have become the everyday norm. Because of this, competition for online, contactless payment options will likely continue to increase.

4. Measurement will become prominent. The pandemic has shined a spotlight on measurement. For financial institutions to provide better services, they must make measurement a priority. Without it, there is no way to determine a return on investment. Over the next few months, we can expect to see channel traffic monitoring increase. Measurement will grant channel providers the ability to assess their client’s infrastructure and recommend service enhancements or upgrades. Upon assessment, institutions can then make data-backed decisions on where they need to scale to better meet consumer preferences and behaviors.

While 2020 may have sparked the industry’s largest crisis since the 2008 economic fall, it has also given us a unique opportunity to scale and build resilience. The push to transform and meet consumer demands digitally has genuinely been a stress test for institutions, partners and consumers. As we continue to push forward and serve our clients in a more digital world, we must remember to keep evolving.

Susan Perlmutter Chief Revenue Officer REPAY, Atlanta