Four payment trends disrupting the world of financial services

As 2020 shrank our physical worlds, the digital world rushed to fill the space. In fact, by the end of that year, overall digital consumption had risen by more than 30%. ¹

Social media, e-commerce and online video give consumers the speed, choice and convenience they need to stay entertained wherever they are. But now, these same considerations must find their place in financial services. As the digital world lays the groundwork for a cashless future, financial services companies should enable consumers to pay, borrow and manage their money – wherever they are.

This disruption is creating opportunities in the physical and digital worlds. So, as part of Payments 2025, a thought leadership campaign from Worldpay, we are aiming to help financial services companies identify and capitalize on these opportunities.

Read on to discover four trends that could change the world(s) of financial services.

The speed of payments

AI technology and machine learning algorithms learn fast, spotting patterns to recommend the fastest way to complete a task or make a decision.

Customers already come into contact with algorithms on a daily basis. AI helps them do everything from try new recipes to pick what to watch on television. The digital world’s high standard for speed of service could be why more than six in 10 consumers say they also plan to use faster payments in the future.² So, what will these faster payments look like?

Automation can do for payments what it’s doing for entertainment – optimizing the customer experience by speeding up manual or complex processes. AI can, for example, verify a customer’s identity and accept a payment via voice message. It’s all to enable faster payments for customers. Or an algorithm could more accurately detect the difference between a legitimate payment and a fraudulent one to reduce chargebacks, something we can help you achieve with Disputes Defender.

A personal experience

The same algorithms enabling faster payments are also keeping them personal. Targeting technology and data analytics in financial services can have a similar outcome – a greater understanding around how customers make payments, end-to-end evaluation of the customer experience and tailored services and advice for individuals. At Worldpay, we draw on the comprehensive Ethos fintech data ecosystem to collect customer payment insights. And fintechs around the world find creative ways to put their insights to work for personalization.

An industry-specific example of this is an insurance firm that has partnered with an automotive manufacturer to offer real-time insurance rates based around customers’ driving data. So, rather a rate based on age, gender or credit history, they’re rewarded for the quality of their driving.

Another fintech uses data to track the user’s spending and encourage them to build better habits. It even includes a mood tracker that can suggest when the user might want to save or spend more – while still keeping them on track to meet their targets.

Flexibility without friction

The speed and personalization of the digital world also have benefits for the physical world. Over the last few years, contactless payments, voice-based solutions and open banking have grown to give customers the flexibility to pay their way and swap between payment preferences in an instant.

Eight in 10 consumers already used contactless payments by 2020³ , and by 2021, 13.1 billion were made in the UK alone. ⁴ Perhaps the most common is the simple tap of the card, but contactless includes so many other ways to pay. The market for voice-based payment solutions, for example, is expected to reach $14.66 billion by 2030.⁵ And open banking, which allows consumers to manage their money through third-party services, is forecast to have 132.2 million global users by 2024.⁶

As contactless payments are adopted in all their forms, financial services companies need to make sure they’re prepared to offer flexible, frictionless solutions.

Freedom backed by security

For financial services customers, these trends are all about opening new ways to interact with their money. For financial services providers, that freedom must be backed by security around consumers’ personal data. Not just for their sake, but for yours; 85% of US e-commerce consumers will end their relationship with a brand after just one instance of data theft or payment fraud. ⁷

Fortunately for consumers and providers, physical and digital, there is a range of security solutions available to protect data throughout the customer experience. These include AI tools like tokenization, real-time transaction monitoring, point-to-point encryption and biometrics like fingerprint or iris scanners and facial recognition. At Worldpay, we recommend FraudSight we recommend FraudSight, an award-winning multi-layered fraud management tool that uses data, technology and experience to stay ahead of online criminals – and protect your business and its customers.

Worlds collide, trends disrupt

The digital world is setting the standard for customer experiences. But the technology to meet this standard already exists. As part of your future payments strategy, examine the needs of your customers and how they make payments. Then turn to a partner to help you make optimizations for faster payments and greater personalization, flexibility and security.

To discover more financial services industry payment insights, make sure to stay tuned to Payments 2025 and read our Future for Financial Service Payments infographic.

And, as always, you can get in touch to learn more about anything you’ve read here.

Payments 2025 is a thought leadership campaign launched by Worldpay to highlight the key trends shaping the future of payments. Using our many years of experience and leveraging our vast network of specialists from across the payments industry and beyond, we will share expert opinions and recommendations as well as explore the social, economic, technological and environmental factors that will inform the future and help our merchants to prepare for tomorrow.

References

¹ WARC (2021) COVID-19 causes digital consumption to rise by over 30%, forming new and lasting consumer habits. Available at:
https://www.warc.com/newsandopinion/opinion/covid-19-causes-digital-consumption-to-rise-by-over-30-forming-new-and-lasting-consumer-habits/en-gb/4209

² The Federal Reserve (2022) Federal Reserve survey: Consumers demanding faster payment options to fit their digital, always-on lives. Available at:
https://www.frbservices.org/news/press-releases/051622-survey-consumers-faster-payment

³ Mastercard (2020) Mastercard Study Shows Consumers Globally Make the Move to Contactless Payments for Everyday Purchases, Seeking Touch-Free Payment Experiences. Available at:
https://www.mastercard.com/news/press/press-releases/2020/april/mastercard-study-shows-consumers-globally-make-the-move-to-contactless-payments-for-everyday-purchases-seeking-touch-free-payment-experiences/

⁴ UK Finance (2021) Average contactless payment increases by almost 30 per cent since new £100 limit was introduced. Available at:
https://www.ukfinance.org.uk/press/press-releases/average-contactless-payment-increases-almost-30-cent-new-%25C2%25A3100-limit-was-introduced

⁵ Grand View Research (2022) Voice And Speech Recognition Market Size, Share & Trends Analysis Report By Function (Speech, Voice Recognition), By Technology (Artificial Intelligence Based, Non-Artificial Intelligence Based), By Vertical (Healthcare, BFSI), And Segment Forecasts, 2022 – 2030. Available at:
https://www.grandviewresearch.com/industry-analysis/voice-based-payments-market-report

⁶Statista (2022) Number of open banking users worldwide in 2020 with forecasts from 2021 to 2024, by region. Available at:
https://www.statista.com/statistics/1228771/open-banking-users-worldwide

⁷ PYMENTS (2021) The Trust Quotient: How Online Merchants Build Trust With First-Time Customers. Available at:
https://www.pymnts.com/study/the-trust-quotient-merchants-digital-security-data-protection-shopping/