Infolettre Automne 2018
An undeniable fact is that payments are evolving as digitalisation and globalisation are driving customers to demand more flexible, secure, faster and seamless payment services. In addition, the tighter regulations (i.e. PSD2, SEPA, Open Banking, AML, etc.) the technological advancements and the increasingly competitive landscape are leading banks to rethink their strategy and explore collaborations with FinTech providers to offer a broader range of solutions and further develop their operations within the digital landscape.
According to Accenture research Payments in the Digital Age, during the last few years, the investment in FinTech collaborations is increasing globally, especially in the payment sector. Banks that are grasping the opportunities digitilisation presents can experience a potential of 30 percent growth in their revenue by 2022. Furthermore, a report from the Boston Consulting Group (BCG) and Swift predicts global revenue in payments to grow by more than $1 trillion by 2027, as this was presented by Finextra. “BCG expects personalisation to be a central area of competition in retail payments, with digitally-savvy first movers taking share from more conservative rivals.”
So, what are the key challenges that are disrupting the payments industry and the way customers and banking organisations are interacting? How can banks respond effectively and balance customers’ needs, evolving regulations and tech innovation? Based on the findings of the Capgemini World Payments Report 2018, some of the major pillars that are transforming the payments sector and the traditional role of banks include the following:
- The emergence of new technologies and real-time, cross-border payments: Technological improvements (i.e. open APIs DLT, AI, blockchain, IoT, etc.) along with the growth of real-time, cross-border payments and data-rich services provide banks with powerful digital capabilities to deliver advanced products and services to their clients.
- Regulatory pressure, harmonisation of standards and open banking: New strict directives, such as PSD2 and Open banking boost partnerships, creating new opportunities to innovate and offer premium payment systems.
- Changing customer expectations: The changing expectations of the new-age customer for fast, flexible, secure and tailored payments transactions encourage banks to modernise their systems to successfully deliver higher automation, transparency, mobility, and efficiency.
- The rise of FinTechs collaborations: Collaboration between banking organisations and FinTech players is constantly rising. Banks that leverage synergies will be able to develop future-proof operating models and offer exceptional client services.
Faced with these challenges, banks should capitalise the power of innovation and redefine their legacy infrastructure. By enhancing their existing IT ecosystem or cooperating with established FinTechs, banks can streamline operations. Emerging technologies are the fundamental transformation dynamic that empower banks to build an agile and profitable organisation to meet regulatory requirements while providing competitive customer experience.
Profile’s FMS.next Payments is a complete payments solution that automates and monitors the full cycle of payments and efficiently ensures compliance with business workflows. The solution improves customer retention and business competitiveness through the creation of a specialised hub for cross-border payments, to maximise Return on Investment (ROI) and lower overall costs. FMS.next offers a PSD2 specific solution that enables payments across the platform.