News & Views - Savantor

Looking forward

Thursday, 16 January 2020

As we enter both a New Year and a new decade, we can pause and consider the trends and/or predictions which seem likely to shape the payments market over the coming few months.

Whilst the market has always been influenced by consumer choice, this is becoming even more pronounced with the range of options available for everyday banking driven predominantly by new banking technology, including banking apps, Challenger banks, Open Banking and the ease and speed of account switching. The growth in the use of financial apps is due to a great extent to the convenience of managing transactions by mobile phone. Convenience together with lifestyle choice has resulted in a challenge to choice driven by brand loyalty, which has helped the new Challenger banks, as well as digital offerings from the incumbent banks, to succeed.

The role of big technology companies such as Google, Amazon, Facebook and Apple continues to have significant impact upon the payments sector. These companies already have significant interest in many areas which are evolving within the sphere of payments, such as social media, AI and wearables; now they are actively searching for ways to enter into the financial services, for example, the Apple credit card. The potential for payment capabilities of these companies is likely to play a significant role in the payments market over the next few years.

It will also be interesting to see how cryptocurrencies evolve and whether they develop a leading role within payments. The announcement about the Libra currency from Facebook last year initially generated a lot of excitement and drew both positive and negative feedback; since then however it seems to have become weighed down with opposition from both government and regulatory bodies and whether it can manage a way past these hurdles to become an acceptable and accepted mainstream form of payment will be key to its attempts to establish itself.

Alongside all the positive developments within the industry, fraud and security will continue to be an area of growth. The use of two-factor authentication (2FA) is now widespread and strong customer authentication (SCA) is in the process of being fully rolled out.

Biometrics using finger, iris or voice recognition is now widely used as a means of security ID for payments and is likely to play a growing role in preventing fraud as technology becomes more refined. Nevertheless, incidents involving not only individual fraud but the hacking of major systems – Travelex is one of the most recent examples – are likely to continue.

Finally, there has been much discussion about the future role of AI and it seems likely that its use within payments will grow and develop further, particularly in helping make payments more secure and reducing fraud. AI technology will allow payments to be made more intuitively (think Alexa and Siri) with minimal input from the user; a trend likely to be welcomed by consumers from the perspective of convenience.

Whilst the points above are not intended to be an exhaustive list of future trends, they nevertheless provide an indication of the way the market is evolving and some of the key areas which seem likely to play a noticeable role going forward.

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