Disruptive forces in digital payments

Disruptive forces in digital payments

• 1.
  Disruptive forces indigital payments How can payment organizations be future-ready?
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  The need forchange With the mass adoption of ubiquitous connected devices, customers have become increasingly reliant on digital services Mobile and digital payments have become the core innovation strategy of any payments organization Payments providers are aware that digital is a must-have, but they are unsure of how to address the transformation challenge Customers have progressed from using cash and physical cards to making transactions over digital platforms m-commerce has risen to power: Customers research digital channels and shop online instead of visiting a physical store 2
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  Key trends indigital payments 3 P2P and B2B payments going digital The war against paper (cash and check) is on. In the P2P space, paym, venmo etc. are gaining traction, while in the B2B space, procure-to-pay electrification is garnering support Tokenization Standards All card networks have agreed to use uniform tokenization standards Smart POS Smart POS recognizes your online searches and suggests purchases with instant offers Passive Payments Payments that happen instantly and invisibly. The checkout process is becoming fast and frictionless, reducing shopping cart abandonment Crypto currencies now mainstream Australian Commonwealth Bank is experimenting with Ripple. A lot of bitcoin remittance and blockchain service companies are coming up
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  Digital touchpoints –journey of a digital consumer 4 Remote store Near store Near PoS • Passive payments – In-app / traditional e-commerce quick checkouts • Social-analytics-led recommendations • Personalized loyalty-based offers • Advertising networks and targeted offers • Gamification • Location-based offers – Geo- fencing, Beacons, check-ins • Order ahead (Pick up in-store / drive-through) • Smart PoS – instant offers based on profile targeting • In-aisle self-service, checkout- scan and pay • Wearable and mobile Purchase intent Purchase trigger Purchase closure
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  Going digital –SWOT for FIs and payments companies 5 •Partnership with technology startups •API-fication of services •Pricing transparency by startups •Low margins by new players •Legacy architecture – tight coupling makes change complicated •High cost overhead compared to startups •Regulations compliance takes huge budget •Established customer trust •Customer data for analytics STRENGTH WEAKNESS OPPORTUNITYTHREAT Customer expectations are different Cost of production and time to market has reduced Facing newfound competition from technology startups
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  Before you begin:Pre-requisites Initiate user-oriented innovation processes Choose the target market – Red ocean vs. blue ocean strategy Build an adaptive architecture 5
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  Chalk out aroadmap 7 1 2 3 The starting point should be to shortlist the most critical user journeys. The payments provider needs to identify the critical line of business – the one that defines the product Design the development and implementation in a micro-managed phase-wise manner. Adoption of methodologies like Agile would be a good fit The analysis should move from user journey to products. Need to revisit users’ journeys and apply digital improvements wherever possible Step 1: User journey to product Step 2: Micro managed and flexible Step 3: Identify critical LOB
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  Address change atall levels 8 Organisation Technology Market • Clear and well-communicated change mandate • Involve all CXO offices so that leadership and sponsorship are aligned • Buy-and-build over buy-or-build: Buy the market leading solutions and then customize • Open APIs to third parties – allow greater integration with retail apps and open new customer end-points • Mass adoption: Focus on simple, high-volume processes first to promote mass adoption • Be prepared for cannibalization: New digital services will shrink existing revenue from legacy offerings
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  Final thoughts 9 Digital isa culture change Iterate and improve Look outside and learn
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