Over the years, technology advancements have been responsible for transforming the lives of consumers and businesses alike. The speed of innovation is accelerating with each passing month and year.
From the way people communicate with each other to how families watch TV, technology has completely revolutionised the way people do things. The banking and financial services industries are no different and FinTech is now one of the fastest growing industries in the world.
One’s mobile phone or device has now become the gateway to one’s existence — socially and financially. It is the one device that connects people to internet, bank accounts, and retailers worldwide and it has transformed banking greatly. Consumers no longer need to visit their bank branch to manage their finances. Mobile and online banking solutions, with new and improved features, are now able to replace the need for physical bank branches and create direct banking models. .
New and alternative payment systems have led the way. Emerging worldwide, they are enabling consumers to initiate and complete transactions in new and innovative ways. For example, in the Netherlands, iDEAL, an online e-commerce payments service, introduced in 2005, has become the country’s most popular online payment method. It allows customers to buy on the Internet using direct online transfers from their bank account.
Banks have traditionally dominated the market, with access to payment infrastructures, card associations and the money needed to make them, creating products such as Pingit by Barclays. However, they are now being challenged by disruptive start-ups, challenger banks,online P2P lenders and P2P mobile money transfers.
Banks and financial services institutions who want to keep up with innovation need to take into consideration that:
- Consumers demand more secure, efficient and convenient payment instruments.
- Consumers are no longer satisfied with traditional, costly and time consuming methods, which often include a visit to their bank branch or finding an ATM.
- The growth of online commerce demands newer payment methods to be adaptable, fast, easy to use and friendly.
- New regulations, such as the Payments Services Directive 2 (PSD2), are forcing the payments industry to change. Any innovative proposal needs to be strictly compliant.
The payments industry is rapidly changing. Financial companies that understand consumer needs and the changing market, will be able to ride the innovation wave, while those who don’t will only lose relevancy.
Implementing new technologies, understanding consumers’ needs, as well as maintaining a secure environment is key, otherwise banks run the risk of being left behind.
However, the banking industry’s path towards new innovations is made more difficult by the increasing number of regulations and the huge financial cost of new products or services. Solutions like MYPINPAD integrate seamlessly with the banking industry’s existing infrastructures, adding a secure authentication platform in a very cost effective way, offering a superior end customer experience and flexibility for rapid deployment across any platform.