From payment to transaction: the impact of a redefined digital economy

The world is making great strides towards a “digital payments revolution,” pushing end users to demand fast, frictionless, and borderless payments. What are the major trends to follow in 2022?

The era we live in now demands fast and transparent payments. It is what can lead an organization to real success, which has two main elements that we must take into account:

1. user experience for the consumer – relevant, contextual and secure;

2. the invisible engine that underpins the processing of this growing variety of payments.

Consumers want to deal with these things easily, effortlessly, quickly and at low cost. They are easily captivated by the new payment options; As we can see, Pay in Temporary or Buy Now, Pay Later (BNPL) credit facilities are growing with no signs of ending.

As we are on the processing and provider side, we see the prevailing Software-as-a-Service (SaaS) trend. Fintechs and financial institutions can now access cutting-edge technology faster on a SaaS platform, which means there is more focus on revenue and less on the tech stack, as experts are available throughout. throughout the process and can improve it as they go.

If we look at digital banks transforming into super apps, shopping the banking experience and beyond, we can see that the trends are combining and now creating improved products.

Although PSD2 was transformational, it left gaps that Open Finance could fill. What opportunities have already been generated and gained traction through Open Finance? How can it still be exploited?

While Open Banking has democratized the way we bank and pay, Open Finance will mark a turning point in how we integrate finance into the transactions of our daily lives. Think about how companies fund projects and trade. It affects a broader set of financial services ranging from loans, mortgages, investments, etc. It navigates non-financial sectors including commerce, smart city, mobility, government, healthcare, education and more.

For too long, traditional finance has been seen as a major barrier to inclusive credit. To break this pattern, the financial sector must act differently. We’re starting to see the rise of industry mash-ups that use smart data to improve lending decisions and increase financial inclusion. Going forward, Open Finance will have the ability to enable us to create products that help consumers make better choices and get hyper-personalized offers tailored to their lifestyles.

What is interesting is that the main relationship and the financial offer can come from non-financial institutions in various sectors, because they understand how to communicate with their customers and recognize their preferences and needs.

Mobile users have increased their screen time to 25%, what can banks do to prepare for a future dominated by great apps and mobile financial services?

Today, when you look around in any public space (or even your home), it’s hard to imagine how we’ve survived all these years without the existence of great apps. Their ability to meet consumer needs by including various customer preferences, all on one platform, is a major contributor to the increase in average screen time.

Millennials and Gen Z have made it clear how they want to manage their finances. Banks and other financial and non-financial institutions that embrace and adapt to Open Banking and API trends are the ones that will succeed in the future of mobile services. Super apps are also largely becoming a platform on which to bundle a wide range of services; from home loans to retail and groceries, while creating a seamless experience. Banks must be ready for partnerships that will support this consumer journey seamlessly; bridging real life and digital.

The growing interest in alternative currencies like crypto has put central bank digital currencies (CBDCs) on the agenda around the world. What do you think are the risks of countries misusing it as it develops? What could be the consequences?

There is considerable buzz in the market around CBDCs, stablecoins, and cryptocurrencies. We are currently in the experimental phase and 80% of central banks have carried out / are carrying out CBDC research at various levels.

It is important to understand the motivating factors behind CBDCs, including the markets they can serve. In developing economies, this typically involves improving financial inclusion, payment infrastructure, modernization, and perhaps responding to currency substitution threats. In developed economies, it’s about replacing cash and protecting currency globally, while competing with private payment systems.

While most banks take a self-protection approach, central banks do not have the desire to disrupt commercial banks as they have an important role in the financial ecosystem. One solution is to have a common platform where central bank reserves and commercial bank deposits can be tokenized. This would solve the fragmentation problem as they would all be compatible regulated liabilities, while at the same time opening up a world of Web 3.0 innovation.

What does the growth in payment-as-a-service (PaaS) adoption mean for today’s markets, especially in an increasingly non-cash environment?

Technology has become the essential enabler for any financial or fintech institution to stay competitive in today’s payments industry. While having a future-ready payments system is a must, using a one-stop cloud-native platform that handles all payment processing and servicing requirements is considered the ideal solution. A PaaS platform supports the operational and technology requirements related to payment processing for a bank or PSP, allowing them to focus their time and resources on more strategic efforts such as building partnerships, marketing and the development of a distribution strategy. It also means that the service provider is the one who keeps the platform up to date in terms of compliance, regulations, etc.

The ideal PaaS model offers various value-added services around its core, especially everything related to end-customer satisfaction. It is important that immediate users, such as banks and financial institutions, and end users can experience a smooth journey. For payment service providers, it is imperative to offer a complete and seamless customer experience from the point of purchase itself. Another key expectation of a good platform is to maintain a user-friendly app with access to all functions of commonly accepted payment methods like Google Pay and Apple Pay, in addition to the more “traditional” and regionally accepted ones.

Joining a “best practice” platform has become a must rather than an option, as the cost of processing tends to increase due to a greater variety of payment solutions.

About Jane Loginova

Jane wears many hats at BPC, a leading payment solutions company headquartered in Switzerland. She has worked for BPC for almost ten years and has global responsibility for corporate strategy, marketing and business growth. She successfully leads BPC’s development in the rapidly changing landscape of payments, banking, commerce and mobility.

About BPC

Founded in 1996, BPC has transformed over the years to provide innovative and proven, best-in-class solutions that fit today’s consumer lifestyle when banking, shopping or shopping. moves in urban and rural areas, bridging real life and the digital world. With 350 customers in 100 countries around the world, BPC collaborates with all players in the ecosystem ranging from leading banks to neo-banks, payment service providers (PSPs) to large processors, e-commerce giants to start-ups. -up merchants and government agencies to local hail transport companies.