The consumer payments landscape is undergoing a seismic shift, driven by a resurgence in meaningful interest rates and an accelerated digital disruption. As customer expectations evolve, the financial organizations that adapt will flourish, while those that don’t will risk irrelevance. In this article, we delve into actionable strategies that stem from an Accenture survey of 16,000 payments customers across 13 countries.
Embracing the age of personalized consumer payments
A paradigm shift is happening. Consumers are now leaning more towards digital wallets than traditional credit cards. According to Accenture study, over half of the customers prefer digital wallets, a clear sign of consumers seeking more control over their transactions. Additionally, Account-to-Account payments (A2A) and Buy Now Pay Later (BNPL) options have been integrated into people’s routines.
The yearning for ‘super-apps,’ which can handle all payment and tracking functionalities, is another groundbreaking trend. Although still predominantly in the Asia-Pacific region, companies like PayPal, Revolut, and Twitter are heading in this direction, potentially setting the stage for a universal adoption.
Why are consumers leaning toward these new methods? The answer lies in economic volatility—rampant inflation, rising interest rates, geopolitical issues, and bank liquidity concerns. These factors are driving the need for greater financial control, which next-gen payment options seem optimally poised to provide.
Trust in traditional banking: Advantage with limits
Banks still carry the badge of trust, with 84% of consumers confiding in them for secure payments. However, in the rapidly evolving financial ecosystem, trust alone won’t cut it. Customers, especially the disgruntled ones, are more than willing to look for alternative options, signaling that banks need to do more than rest on their laurels.
Roadblocks in payments
Consumers are vocal about their pain points in payment experiences. Slow payment processes, declined transactions, and incompatibility with preferred payment methods top the list. The takeaway? Customers are seeking a seamless yet empowering experience that offers them control and convenience.
Four pillars for consumer payments growth in 2023
- Partnerships for scale: Forming the right alliances can propel the rapid scaling of next-gen payment solutions. Zelle in the U.S. and Blik in Poland serve as stellar examples.
- Technology as an enabler: Incumbents need to ramp up their tech game. Strategic investments in Artificial Intelligence and cloud computing will fast-track transaction processes and simplify consumer interactions.
- Niche specialization: Zeroing in on specific customer needs or payment types can differentiate your brand. This requires deep customer insights and smart partnerships.
- Expanding the horizon: Move beyond being just a payment provider. In the age of super-apps and online marketplaces, utilizing dynamic data can help you become an integral part of your customer’s digital life.
The stakes have never been higher for the payments industry. Those who fail to keep pace with these disruptive trends could potentially forfeit up to $89 billion in revenue by 2025. It’s not just about safeguarding existing revenue streams but about being agile enough to capitalize on emergent opportunities.
Consumer behavior is not static; it’s a moving target influenced by a variety of global and personal factors. The keys to staying competitive in this fluid environment are adaptability, technological investment, and a keen focus on customer-centric solutions.
By embracing these strategies, payment providers can not only protect but also significantly grow their businesses, ensuring they remain pivotal players in the ever-evolving payments ecosystem.
