Capgemini has published a detailed report on some of the trends that will shake up and drive the global payments industry in the coming year. Here is a quick summary of some of the key trends that are discussed in the report.
1. Digital identity
Digital identity initiatives will become more important in ensuring cyber security and consumer safety. India, Italy, Peru, Singapore and the Philippines have already launched or initiated new national electronic identification (eID) programmes. Also, several leading banks are taking measures to develop a digital identity ecosystem.
2. Standards for innovation set to continue
Regulators have announced a raft of standardisation and risk-reduction initiatives – such as the EPC's SEPA Credit Transfer Instant, while regulators in Brazil and Mexico are working on new sets of rules for fintechs, as is the Central Bank of Iran. Another example is NACHA's Afinis standards initiative for APIs.
3. Data security and privacy
In Europe, GDPR brought stricter data security standards while China has also made significant additions to its cybersecurity laws, and countries such as Canada, Japan, and Israel are working toward data privacy and protection laws on a par with GDPR standards. The California Consumer Protection Act is a similar consumer data protection law in the US.
4. Targeted offerings enabled by analytics
Machine learning can combine transactional data and data from other sources to help banks better understand customer behaviour and improve their experience.
5. APIs will be payments catalyst
APIs can help enable collaboration and integration in the payments ecosystem, driven by initiatives such as the EU's PSD2 and the UK's Competition and Markets Authority (CMA).
6. Omnichannel payments
The latest technology advancements are enabling integration of multiple payment channels and instruments creating a frictionless omnichannel experience for customers. For example, the number of customers using voice assistants is increasing and is expected to reach 1.83 billion by 2021.
Financial service providers are increasingly offering a 'platform-as-a-service’, which can improve efficiency and could give payments incumbents greater network reach.
8. Instant cross-border payments
Real-time payments have emerged as a mature global trend paving the way for instant cross-border payment schemes and increased adoption of ISO 20022 standards. Belgium, the Republic of Congo, Hong Kong, Malaysia, Portugal and Spain all planned to launch instant-payments systems in 2018, while France, Hungary, and the Netherlands have announced national systems to go live by 2019. Canada’s Real-time payments rails (RTR) first phase is expected to go live by 2021, while Colombia and Peru are exploring similar schemes.
9. Mobile wallets
Payment firms including banks, payment service providers, and card networks are implementing mobile wallet solutions, while merchants, retailers, and e-commerce players are creating wallet solutions mainly to increase customer stickiness by creating a digital ecosystem of various services.
10. Bigtechs threat consolidates
Bigtechs such as Amazon, Alibaba, Facebook and Tencent have entered the financial services market, threatening incumbent banks that are slow to respond to the digitalisation of the industry.
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