FIS Modern Banking Platform
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May 4, 2017
Flexible payment mechanisms as a central pillar of modern retailing.
The term omnichannel may be overused and overhyped, but few would deny that a coherent omnichannel strategy is a fundamental business aim for forward-thinking merchants. Today’s customers are looking for seamless shopping experiences, regardless of whether they are browsing the web on their tablets, using a retailer’s app on their smartphone or visiting the retailer’s local branch. In a networked world, consumers have access to a huge amount of information and enjoy an equally vast selection pool. As a result, retailers need to be aware of what they expect and improve processes accordingly.
Increasingly, an omnichannel commerce strategy that combines both online and offline channels is vital to building a truly seamless shopping experiences.
That means more than a nice website, or a smartphone app with a consistently branded look and feel. Your strategy needs to encompass the entire process; from supply chain to the purchase, irrespective of the channel from which the consumer selects and pays for the goods. While the final buy transaction is, of course, the most important step in the process for the merchant, the payment itself does not lead an omnichannel strategy.
We are all familiar with what an omnichannel strategy means to banks: a seamless integration of tablet, smartphone, and branch. For example, customers could start a loan origination on a tablet at the breakfast table, continue on their smartphone while commuting to work on the train, then sign the paperwork in a branch at lunch.
Superficially, omnichannel is not so different for merchants. The customer could add items to a shopping cart on the retailer’s website from a tablet, add additional items from their smartphone, maybe call the help desk with a query, before paying in their preferred manner and dropping into their local store over lunch to pick up everything. The end-to-end experience remains consistent. The payment itself is just a small – though vitally important – part of the whole process.
Payments don’t deliver omnichannel strategy, but the ease with which they can be made is key to omnichannel success. So how can payments support a seamless omnichannel strategy and frictionless customer experience?
To effectively deliver to the consumer, the entire chain in an omnichannel strategy needs consolidation. This entails tying together the backend systems that deliver to service: ordering, inventory, and warehouses – for all locations. And, ideally, the various supplier systems need to be integrated so that future stock can be utilized to satisfy customer needs.
Customer preferences once tracked, provide an excellent way to notify customers about incoming stock and new product line releases. Technology can now log what items the customer is interested in and automatically make suggestions based on past purchases while taking into account new product lines coming down the line. If an item is sold out or otherwise unavailable at a particular store, you can tell the consumer where to find or give he or she the option to easily request or reserve it.
Purchases, whether online or in-store, should no longer simply rely on credit and debit cards. With emerging and innovative payment mechanisms increasingly available to customers – smartphone payments, contactless tap-and-go capabilities, wearable devices and more – merchants need to adapt with their customers’ preferences. These new mechanisms do not replace traditional transactional services but complement the card payments for those who prefer them.
Merchants need to get closer to customer payment patterns and learn their preferences; how do they like to pay? When a customer logs into your website, opens your app or connects to a contactless payment service in-store, their historical behavior can inform the payment options offered. There is an opportunity for merchants to suggest and guide customers towards more advantageous payment mechanisms, using their past behavior to suggest the most interesting and appropriate method to complete the transaction.
Merchants also need to remember the loyalty factor. Using loyalty points to make an instant offer to the customer through an immediate percentage discount on the purchase can be very attractive. Customers could split a bill between loyalty point redemption and a payment, thus offering major savings from their perspective. But these services must operate seamlessly across all channels, not just at the so they need to be extended to the web and smartphone app too. The aim is to improve the checkout process irrespective of the channel and demonstrate to the customer that you are adapting and adding real value to the experience.
Merchants need to follow a coherent omnichannel strategy in order to meet their customers’ demands, increase loyalty and drive revenue. The complete organizational structure has to be adapted, so that processes and data can traverse retail channel boundaries. It is important not to have separation for each channel but rather cooperate in order to make a holistic view possible.
Have you thought about your own omnichannel strategy?
Vice President of Product Strategy
Dan is a member of FIS’s Payments Product Strategy team and focuses on developing the long-term strategy for U.S. retail payment products. His background spans 19 years in financial services leading co-brand credit card programs in the retail, travel and loyalty sectors, as well as issuer-branded consumer and business card programs.
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