A confluence of forces is reshaping the payments landscape. Inflation, interest-rate pressures, capital market resets, commerce expectations, and societal responsibilities raise the bar for providers.
Whether gpi is the tipping point or not, customers demand real-time domestic systems and cross-border processing. This is forcing banks to adopt and correspondents to accelerate.
The emergence of the digital native
The payments industry is enjoying a boom in growth, driven by innovation and changing consumer behavior. But the future of payments is a shifting landscape where the winners will be those who can harness technology transformation, ecosystem participation, and operating model renewal to drive new value propositions for their customers.
Digital natives, born into a digital world and accustomed to a constant stream of new technologies, are poised to reshape the business. They have a unique set of requirements that traditional financial institutions should consider as they seek to capture this lucrative demographic group.
Real-time payments are on the rise and will continue accelerating in many markets as they are made more accessible thanks to cloud-based, modern platforms, APIs, composability, and upgraded infrastructure. As a result, we will see a proliferation of payment facilitators that can securely ingest and leverage consumer and merchant data – presenting radical opportunities for data monetization and unique customer offerings.
The rise of the Internet of Things
The Internet of Things is a massively disruptive force reshaping the world of payments. It enables users to connect their devices over the Internet and access payment networks to pay with their smartwatches, cars, refrigerators, wearables, and other devices.
The resulting ‘Internet of Payments’ is radically simplifying how people move value around the globe. It enables a new generation of payments that are invisible to consumers.
Across the payment ecosystem, banks, card networks, and nonbank providers are rethinking their business strategies to prepare for the future of payments. They are integrating real-time payment rails and providing overlay services to deliver a seamless experience for customers. They are enabling local innovation and global connectivity. And they are accelerating the migration to real-time payments even in markets with no domestic imperative. This is because they are seeing customers demand ever-faster amounts, which can only be delivered through a real-time payment system.
The Rise of Artificial Intelligence
Security is more critical than ever with more digitized payments and digital wallets. AI helps streamline the process by analyzing large amounts of data to detect and prevent fraud before it even happens.
Additionally, AI can help automate workflows and provide decision assistance. As a result, it can reduce the time employees spend on repetitive tasks, improving efficiency and productivity.
In addition, AI can help prevent payment fraud by identifying transaction outliers. This allows companies to process transactions faster and more accurately, increasing customer satisfaction and loyalty.
It can also improve predictive analytics by analyzing member data to identify business growth and expansion opportunities. As a result, it can increase member engagement and loyalty while decreasing costs.
The Rise of the Internet of Everything
The line between brick-and-mortar and digital commerce has blurred. Today, consumers demand omnichannel payments that are seamless and invisible. And, Gen-Z is the first generation to expect this in all their interactions with brands.
This trend is driving innovations in automation options for making payments. Smart fridges order groceries at supermarkets, cars pay for gas or recharging at stations, and voice assistants find and book tickets. These are just some ways IoT-enabled devices will make automated payments – a significant change from when humans initiated all transactions.
These changes are accelerating as regulatory demands push for open data access, and market pressures drive the need for real-time payment processing. As a result, many of the same players – from banks and card networks to merchant providers and third-party processors – are reshaping their offerings and investing in new capabilities. They are positioning themselves to take advantage of a global opportunity that offers a unique chance to innovate with new partners and solutions.