Welcome to this new digitalML blog series, TechTrends, where we’ll be rounding up industry news from across the banking sector. This week we’re looking at digital transformation in the payments sector as a key driver for incumbents’ success.
The payments sector was one of the first to feel the full force of digital disruption within the banking industry, with nimble digitally native startups taking chunks out of incumbents’ revenue streams. Cash to electronic payments was the catalyst, but now companies are going beyond by offering products like contactless cards, quick money transfer, mobile wallets, and more recently cryptocurrency via Blockchain, to meet customer expectations for better experience. And, if you’re unable to offer digital products like one of these to your customers, you’re behind the pack and possibly seeing a decline in loyalty. Successful digital transformation is pivotal to success. To the end user, these new innovations probably seem simple and straightforward, and something everyone should be offering, but they can’t happen over night, especially if you’re a large bank or payment company with many legacy systems and silos locking away your functionality. Technology may be the answer, but how you use it is the key to unlocking digital transformation in financial services.
To start off, let’s focus on some exciting digital transformation examples and banking technology trends:
As a company, Visa is leading the pack in the payments industry, continuously putting up double digit revenue growth. However, despite dominating the industry, they continue to improve and innovate through technology. By acquiring companies like Verifi, Earthport, and Payworks, Visa is building a business that makes electronic payments easier for their consumers, whether you’re a merchant or cardholder. All these moves are to help keep their perch in the market and be ahead in the race to digital transformation.
N26 launches Shared Spaces and now is fully available in the US
Last week, N26 announced it’s full launch in the U.S. The German Challenger bank had a successful beta test and now have open registration with full services. They’ve also announced a couple new features: “Shared Spaces,” an extension to their Shared feature and MoneyBeam. Shared Spaces allows up to 10 N26 users to share from one sub-account (deposit and withdraw). Goodbye difficult restaurant bill splitting and holiday expense spreadsheets. MoneyBeam is similar to Venmo; send money to other N26 users instantly. This is just the beginning for N26. The CEO is already eyeing Brazil.
After B2B Payments Embrace the Cloud: What’s Next?
B2B Payments have similar issues to large banks: fragmentation and data silos. Through the cloud, SaaS adoption, and using APIs, B2B Payments have advanced the integrated payments functionality. However, silos in corporate payments are still persistent and these large organizations need to understand how to fix the communication error between their various platforms. Data integration and modernizing corporate payments are still in the early stages of digital transformation, but by moving to the cloud, SaaS, and APIs, B2B Payments are using the tools to step into the right direction towards embracing digital transformation.
Whether it’s a company or a new product release, the trends happening in the payments industry are towards IT modernization through digital transformation strategies. By using platforms that can unify business and IT, turning APIs into new digital products like the ones Visa has done, and leveraging your current assets and using partners to create the next generation of interfaces, as an incumbent you have the ability to meet customer demand and rapidly innovate to beat both other incumbents AND disruptors like N26.