Around the World, Financial Institutions Must Make Payments a Priority
In my work at Fiserv, I've had the opportunity to experience firsthand the payments innovation that is occurring around the world. The pace of change in the payments landscape is not just in emerging economies; it is happening just as fast in developed markets. In developed markets the transformational shifts are brought on by the growing presence of non-banks and new governmental regulations. In developing economies, the goal is to help lift millions out of poverty through financial inclusion initiatives. For example, Australia and the U.K. are working hard to realize the promise of real-time payments. In Cambodia, Colombia and India mobile phones are helping extend electronic payments capabilities to consumers who've never even had bank accounts.
The one common thread across all these markets is that the ubiquity of mobile devices globally is changing the way people interact with businesses and each other, and that's a game-changer for payments. In many countries, the number of mobile phones in use surpasses the number of consumer bank accounts. Companies that provide services on these mobile devices have been quick to realize the potential of supporting a variety of payment transaction types for their existing customers. These include alternative payments providers like PayPal, Alipay in China, Yellowpepper in Latin America, as well as telecommunication providers like Vodafone, Tigo in Africa and Latin America, and Globe in the Philippines. The list continues to grow, and global brands like Google, Apple and Facebook are also exploring options on how best to participate in the digital payments ecosystem. These companies see an opportunity to get a piece of the payments value chain at the point of engagement and drive greater monetization of their customer footprints.
By putting consumers in the center and providing them a host of options for conducting different types of transactions, these non-banks are fragmenting payment relationships. Financial institutions have been slow to respond and some have even outsourced their digital relationships to these non-bank providers. As electronic transactions continue to rise and as mobile devices become THE medium of engagement, financial institutions are at risk of disintermediation, and could lose the ability to engage directly with those customers in the future.
It's not too late. To remain at the center of consumers' financial lives, financial institutions must invest in placing consumers at the center of the payment experience. That starts with enabling banking services through channels that best meet the needs of the institution's customer base – such as ATM, online, mobile and tablet. But it doesn't end there. Financial institutions have to provide access to tools that make it easy to for businesses and consumers to pay and get paid. With the cost of technology decreasing, financial institutions can now provide access to tools such as mobile point of sale solutions for their small business customers, and mobile bill payment and personal payment solutions for their retail customers. They will need to integrate these solutions into the larger payments ecosystem to provide consumers the ability to conduct any transaction, regardless of channel, at the speed to which consumers have grown accustomed when using other digital services.
Of course, each market and each institution is unique, but as mobile devices increasingly become the medium for accessing daily services, financial institutions that have the right solutions and strategy in place will remain the preferred destination for consumers to pay and get paid.