Disruptive forces in digital paymentsHow can payment organizations be future-ready?

The need for change

With the mass adoption of ubiquitous connected devices, customers have become increasingly reliant on digital services

Mobile and digital payments have become the core innovation strategy of any payments organization

Payments providers are aware that digital is a must-have, but they are unsure of how to address the transformation challenge

Customers have progressed from using cash and physical cards to making transactions over digital platforms

m-commerce has risen to power: Customers research digital channels and shop online instead of visiting a physical store

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Key trends in digital payments3

P2P and B2B payments going digitalThe war against paper (cash and check) is on. In the P2P space, paym, venmo etc. are gaining traction, while in the B2B space, procure-to-pay electrification is garnering support

Tokenization StandardsAll card networks have agreed to use uniform tokenization standards

Smart POS

Smart POS recognizes your online searches and suggests purchases with instant offers

Passive PaymentsPayments that happen instantly and

invisibly. The checkout process is becoming fast and frictionless,

reducing shopping cart abandonment

Crypto currencies now mainstreamAustralian Commonwealth Bank is experimenting with Ripple. A lot of bitcoin remittance and blockchain service companies are coming up

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Digital touchpoints – journey of a digital consumer

Remote store

Near store

Near PoS

• Passive payments – In-app / traditional e-commerce quick checkouts

• Social-analytics-led recommendations• Personalized loyalty-based offers• Advertising networks and targeted

offers • Gamification

• Location-based offers – Geo-fencing, Beacons, check-ins

• Order ahead (Pick up in-store / drive-through)

• Smart PoS – instant offers based on profile targeting

• In-aisle self-service, checkout- scan and pay

• Wearable and mobile

Purchase intent

Purchase

trigger

Purchase

closure

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Going digital – SWOT for FIs and payments companies

•Partnership with technology startups

•API-fication of services

•Pricing transparency by startups

•Low margins by new players

•Legacy architecture – tight coupling makes change complicated

•High cost overhead compared to startups

•Regulations compliance takes huge budget

•Established customer trust

•Customer data for analytics

STRENGTH WEAKNESS

OPPORTUNITYTHREAT

Customer expectations are different

Cost of production and time to market has reduced

Facing newfound competition from

technology startups

Before you begin: Pre-requisites

Initiate user-oriented innovation processes

Choose the target market – Red ocean vs. blue ocean strategy

Build an adaptive architecture

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Chalk out a roadmap

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2

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The starting point should be to shortlist the most critical user journeys. The payments provider needs to identify the critical line of business – the one that defines the product

Design the development and implementation in a micro-managed phase-wise manner. Adoption of methodologies like Agile would be a good fit

The analysis should move from user journey to products. Need to revisit users’ journeys and apply digital improvements wherever possible

Step 1: User journey to product

Step 2: Micro managed and flexible

Step 3: Identify critical LOB

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Address change at all levels

Organisation

Technology

Market

• Clear and well-communicated change mandate

• Involve all CXO offices so that leadership and sponsorship are aligned

• Buy-and-build over buy-or-build: Buy the market leading solutions and then customize

• Open APIs to third parties – allow greater integration with retail apps and open new customer end-points

• Mass adoption: Focus on simple, high-volume processes first to promote mass adoption

• Be prepared for cannibalization: New digital services will shrink existing revenue from legacy offerings

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Final thoughts

Digital is a culture change

Iterate and improve

Look outside and learn

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