News & Views - Savantor

2018 - The mobile story continues

Sunday, 16 December 2018

As another year draws to a close, we can reflect on the key trends in payments over the past 12 months and anticipate how the industry is likely to evolve during the coming year.

One of the most prevalent trends is the continuing growth in the contactless and mobile markets as consumers become far more comfortable with using the technology. According to figures from MasterCard, almost one in two transactions are now contactless. As at September, during the year to date there was a 95% increase in contactless transactions, with the technology representing 46% of all transactions every month.

The evolution in payment behaviour by consumers who are happy to use their smartphone as the method of choice of facilitating payments, using Apple Pay or similar functionality, together with the continuing movement towards online shopping, is intrinsically linked to the retail market. The challenge for retailers is how they can manage and satisfy the requirements of their customers, particularly in online shopping. It will be interesting to see the year-end figures of payment methods and types once they are available, particularly for the run up to Christmas.

Digital-only banks have continued to grow in popularity with banks such as Monzo, Revolut and Atom. ‘Traditional’ banks are looking to counter this by setting up or becoming involved with digital start-ups to leverage the flexibility that the digital banks benefit from instead of being weighed down by their unwieldy legacy systems. 

At the same time as an increasing dependency of consumers on technology for payments, this year has also seen a number of significant banking and payment system failures. Although the UK banking industry has experienced multiple disruptive system failures – for example TSB, Barclays, RBS, Natwest and HSBC – there have also been more wide-reaching system issues like the Visa network problems experienced in June when Visa customers were impacted on a Europe-wide basis. 

In the UK the closure of bank branches has continued, causing problems to those who are not technically savvy or prefer a face-to-face style of banking.

A number of large company data breaches have taken place again this year, including Ticketmaster, Dixons Carphone and British Airways.

The large technology companies such as Amazon, Apple, and Google continue to make forays into the payments and financial services arena. Research undertaken during the year showed that 65% of US Prime subscribers would be prepared to open a bank account with Amazon.

This year also saw the introduction of Open Banking in January. Initially this has not seemed to have had a major impact, with apparently still only 20% of consumers in the UK even aware of its introduction according to recent figures. Nevertheless, Banks are beginning to offer functionality using Open Banking technology and it could be that its use could show a marked increase next year – providing more is done to make customers aware of it and its benefits. 

The uncertainty around Brexit has increasingly dominated the political landscape and whatever its outcome it is likely to have an impact on the financial sector in 2019.

Savantor wishes the very best for 2019 to all our MarketEye readers.

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