With 2020 right around the corner, it’s fair to say that the past decade has been game changing for global payments. While the beginning of the decade was rocky as markets emerged from the Global Financial Crisis, the following years saw some great advancements in the global payment arena, with most being pioneered thanks to the rise of fintech. Australia even appointed its first Minister for fintech earlier this year.
Mobile payments, open banking and a reduction in transfer fees are just three of the changes that have swept the industry. While no-one can look into a crystal ball and see what’s to come, these are my thoughts on how industry changes will continue to shape the landscape as we look forward to a new decade.
Things will keep getting faster and cheaper
Real-time services and payments will continue to evolve to keep up with rising consumer demands. In Australia, consumers are aware of the rollout of the New Payments Platform that’s providing instant payment capability. This is a global trend, with many other financial markets around the world implementing this capability or working towards such reforms. SWIFT - a messaging system that banks and other financial institutions use for international payments - is also rolling out a similar real-time payment capability for global payments.
Online capability and services are allowing even faster access to these services as they become available, and a vast number of fintech providers have jumped at the opportunity to compete in this space. With highly-skilled engineers able to iterate rapidly, automated technology, and no need for physical shopfronts, such providers can compete with far lower overheads than traditional banks. Smaller payments that were once prohibitively expensive due to bank fees can now be made thanks to these new innovations.
Smartphone payments will continue to dominate
China has been the leading figure in the growth of mobile payments, with 83% of all payments in the country being made via mobile in 2018, according to research firm Daxue Consulting. This figure jumped to 92% in major Chinese cities. The widespread use of QR codes - a two-dimensional barcode - in China further enhances the ease and speed with which mobile users can make payments. When you consider that smartphone access is providing round-the-clock support and consumers no longer need to physically enter a bank to have their queries answered, it becomes clear just how powerful smartphone technology is for enabling consumers to make payments from anywhere at any time.
Technology will continue to improve customer experience
Across all industries, technology is improving processes from front to back. At the front end, the user experience is being improved thanks to highly intuitive interfaces, chatbots that answer your questions, online 24-hour support for more challenging problems, and physical forms that are being replaced by webforms with digital signatures. There is no shortage of examples that show how more is being made possible thanks to an increase in the number of operators working in this space; large numbers of which have sophisticated technology and engineering teams that are focused on the next new enhancements to the customer experience.
The ability for payment providers to interface with banks and other service providers enables a more complete product offering that works fast. Invoices can be scanned with machine reading, which eliminates manual effort, saves time and removes errors. User details can be stored and re-used for future payments and payments can be tracked in real-time without the need to go to the bank or get stuck on hold waiting for an update.
AI and data will lead to personalisation
AI is replacing human effort in tasks that once required professional analysis, with these tasks able to be completed in a fraction of the time. Access to data and the ability to process huge amounts of information is providing many opportunities for businesses to constantly evolve. There is a never-ending list of ways to utilise data, all of which allow companies to better understand their customers. From targeted marketing and product pricing, to data mining that generates accurate predictions about customer needs; players in the payment space are able to constantly target new approaches for customer acquisition and retention, all while rapidly refining and adapting their approach to evolve far more quickly than ever before.
Payments and banking have traditionally been dominated by a small number of highly influential players, but as more and more new operators emerge, it’s clear that the market is going through a phase of disruption as we get ready to ring in a new decade. Technology is at the core of this shift, with fintechs and mobile payments changing the industry like never before. It’s clear that 2020 and beyond will make international payments less expensive and more accessible for all of us.
Andrew Fuller is CFO/COO of Cohort Go, a leading edtech platform that simplifies global payments for the entire international education ecosystem.