Ten trends set to influence the payments industry
2020 will certainly be well – even if not fondly – remembered. A pandemic locked the world down, the way we work changed and the real consequences of Brexit lies just around the corner. With all this in mind, I’ve taken time to contemplate what 2021 might have in store:
1. During times of economic stress, cash management and liquidity becomes ever more critical. That has led to the growing popularity of treasury management solutions that link money-in and money-out, providing a clear line of sight into your finances. It’s likely we’ll see these solutions attract investment in 2021 as banks offer sophisticated, white-labelled cash management apps to their corporate customers.
2. Interoperability across multiple payment rails will bring more choice for consumers and businesses. In a world increasingly dominated by application programming interface (APIs), payments will become faster and easier to track.
3. Open Banking may evolve into open finance as it matures and we’re likely to see a growing number of value-add applications in corporate payments. We’ll see more account-to-account payments rather than traditional card networks, and white-labelling by the High Street Banks will help bring open banking to the market.
4. ISO 20022 will accelerate the digitisation of payments by enabling machine-readable, structured data to travel as XML tags in payment messages, which will improve straight-through-processing (STP) and compliance with anti-money laundering and know your customer (AML/KYC) requirements. Shipping invoices, for example, might contain bills of lading, loading documents and other key information embedded in the payment, making reconciliation simpler.
5.The G20 has launched an initiative into the pain points around cross-border payments, aiming to establish a roadmap for a frictionless future. It’s long overdue and hopefully 2021 will be the year that cross-border payments become simpler, faster and more secure.
6. Innovations in overlay technology are increasing, as by overlaying new services on existing systems, companies can avoid ripping and replacing expensive infrastructure. A good example of this is Visa B2B Connect being overlaid on Swift to improve cross-border transactions.
7. Public cloud platforms are gaining acceptance as a solution for financial services. Until recently, chief information security officers (CISOs) considered the likes of Azure and Amazon Web Services (AWS) to lack the security level demanded, but, as this year’s Sibos conference proved, public cloud solutions are at the heart of many financial offerings.
8. Whilst the consumer market has led the way in payment innovations, the business community looks set to catch up as technology providers look to these opportunities.
9. COVID-19 has accelerated digital transformation massively for businesses. The question is, how can we harness these changes for the better within fintech culture – a question that will shape 2021?
10. Financial crime remains a huge issue. As we move to an automated, real-time, remote and cloud-based world, the security and due diligence balance will remain essential. Controls must keep up with how e-commerce operates to avoid unnecessary losses.
Hopefully, 2021 will see normality return alongside new opportunities. No matter what the year ahead has in store, the financial services and payments sectors have a bright future, should such trends continue to develop.