After an eventful 2016, discover our predictions for the top 5 payment and fintech trends of 2017, which should open the sectors up to new perspectives, especially in relation to changing consumption habits!
1 – Fintegration: cooperation with banks and fintechs
The question to be asked in 2017 is not whether banks and fintech should collaborate or not, but rather HOW it should be done in order to use the strengths of both: the services developed by fintechs and the stability banks provide for the financial industry.
Commonly referred to as fintegration, the integration of fintech players into the existing banking and financial system is driven by strong European decisions relating to payment regulation, making exchanges between the two parties necessary.
The most concrete example of this collaboration can be summarised by three letters: API – or Application Programming Interface, a technological protocol enabling communication between different information systems, in our case those of banks and fintech, allowing the first to offer their customers the services offered by the latter.
2 – Instant payments: Payment at the speed of Internet
Sometimes referred to as ‘immediate’ or ‘real-time’ payments, instant payments are cleared immediately or close to immediately, irrelevant of the payment instrument used and the clearing and settlement arrangements. The Euro Retail Payments Board (ERPB) has asked the European Payments Council to develop and implement a scheme for instant payments in euro by November 2017. Harmonising real time payments within the SEPA zone should make Europe more competitive and enhance growth.
3 – PSD2: Reinforcing security and clarifying the role of payment players
Adopted on the 25th November 2015, the revised directive, PSD2, addresses issues relating to third party providers within the payments industry, namely Account Information Service Providers (AISP), which enable owners of numerous bank accounts to view all of their multibank details on one interface and Payment Initiation Services Providers (PISP), which initiate a payment from the user account to the merchant account. The initiative aims to spur innovation, while keeping a high level of security, especially due to strong authentication.
4 – Invisible payment or frictionless client experience
Why does ordering an Uber seem so effortless and painless? Not simply for the ride quality. Rather, it’s because at no point during the journey does the customer actually have to pay. No money changes hands, no card is swiped, no change is given.
Amazon recently created a buzz by announcing Amazon Go, a store where shoppers do not pay. Or to be more precise, the customer does not consciously pay. There are no registers, customers simply pick up what they want and “Just Walk Out”. Just like Uber: no wait, no credit card code error or counting change; all to promote the customer experience lived in the store. And if this practice was extended to all forms of commerce?
5 – Subscription economy: an opportunity for the payment players
Today, 68 million people in the world pay for a subscription to a music platform, which is much more preferred to making punctual purchases for each album. The entire ecosystem of subscription and pay as you go models is based on the principle of an improved customer experience and preferred to possession.
In this context, the choice of method of payment is key since it must compliment and support this business model based on a long term, frictionless and recurring basis.
Bearing in mind that, according to McKinsey, payment represents 43% of fintech startups, the development of the subscription economy should play an important role for the whole sector.
