In my last post, I wrote about a PwC report entitled Blurred Lines that forecasts new market entrants and start-ups in financial services could attract more than $150 billion globally in investment during the next 3-5 years. As a result, all aspects of financial services will be disrupted.
PwC says that new digital technologies are in the process of reshaping the value proposition of existing financial products and services. While the capacity of incumbents to assimilate innovative ideas should not be underestimated, the disruption of the financial sector is clearly underway.
The report says that banks are adopting new solutions to improve and simplify operations. This fosters a move away from physical channels and towards digital/mobile delivery. Open development and software-as- a-service (SaaS) solutions have been central to giving banks the ability to streamline. The incorporation of APIs (application program interfaces) enables third parties to develop value-added solutions and features that can easily be integrated with bank platforms. SaaS solutions help banks offer customers a wider array of options –which are constantly upgraded, without banks having to invest in the requisite research, design, and development of new technology.
Mobile smartphone adoption is a major driver of changing payments patterns. The report suggests that: ‘Today’s mobile-first consumers expect immediacy, convenience, and security to be integral to payments. In our culture of on-demand considered unacceptable, motivating both incumbents and newcomers to develop solutions that enable transfer of funds globally in something closer to real-time.’
PwC says end users want a consistent “omnichannel experience” in banking and payments. Digital wallets are key to streamlining the user experience and enabling reduced friction at the checkout. Traditional loyalty to financial institutions is being diminished and barriers to entry from third parties are lowered. This means the competitive landscape is fluid and potentially changeable, as newcomers have demonstrated.
Incumbents that are slow to adapt to change could well find themselves losing market share to companies that may not have a traditional payments pedigree, but that have a critical mass of users and the network connectivity. This enables payment experiences that are considered at least equivalent to the status quo. While most of these solutions “ride the rails” of traditional banking, in doing so they risk losing control of the customer experience and ceding ground to innovators who conduct transactions as they see fit.
At VersaPay we apply this thinking to our clients’ businesses and the way in which we enable their customers to pay them. We help clients accept multiple forms of payments that are secure, electronic and fast. Ultimately our clients gain greater control over their financial operations, their working capital, and their business.