Converge old and new payment methods

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As the world continues its transition to a mobile-centric world and online payments, several solutions have since entered the market to accelerate this transition. From digital wallets to cryptocurrency, payment providers have explored new and innovative ways to drive customer interest and demand.

This includes solutions such as Buy now, pay later (BNPL), central bank digital currencies (CBDC), digital wallets and QR codes. Southeast Asia may have been at the forefront of a number of these solutions, but innovators around the world are exploring new services and use cases for their subsequent markets.

Supporting the world of alternative payments

Everyday consumers are increasingly using methods classified as “alternative payments” that make it faster and easier to pay for goods and services. According to Cornerstone Advisors, a quarter of Gen Zers are crypto investors, and nearly three in ten plan to invest in 2022. These “alternative” payment methods are likely to become the norm. By 2030, 60% of global consumers will have transacted using an asset class other than fiat currency, according to an IDC report.

Despite this growing trend, traditional incumbents are losing market share. In 2020, 60% of global consumer payments were processed by non-traditional financial services institutions. Every business must be able to support these alternative payment methods and if traditional players want to compete with innovative e-commerce, fintechs and telecom operators, they will need to adopt the right payment technology capable of following an increasing number of classes. of assets.

The hidden cost of maintaining legacy technologies

To create these new payment technologies, banks and financial institutions must first modernize their payment infrastructure. Companies have done well in this department, but FIs are still limited by legacy systems.

The payment workflows and technology design of legacy platforms are rooted in traditional definitions of value, which creates enormous challenges when researching new payment methods. Creating new sets of solutions and updating products and services require additional integrations and technologies that existing technology simply cannot keep up with. As a result, financial institutions are using their budgets to maintain these legacy platforms and this cost is only increasing. In fact, global FI spending on existing payment technologies is expected to double to $80.3 billion in 2030, from $39.7 billion in 2020.

Integrated finance is in demand, and the industry needs new tools and technologies to create solutions that will allow businesses to innovate – and quickly. Without the capabilities and funds to sustain, FIs will be unable to revolutionize and complement in the increasingly competitive industry for portfolio market share.

Create smooth and customizable payments

The technology platforms of the future must offer flexibility. This means updating existing ecosystems to:

  • Deliver payout optimization across a wider range of existing and future asset classes
  • Enable rapid setup of new payment products
  • Interact seamlessly with other ecosystem services, such as data and security.

Moving to a highly fluid and customizable payment platform will allow institutions to create innovative payment propositions that meet consumer demand. Breaking free from legacy technology is a change, but collaborating with fintechs will help elevate the capabilities of traditional institutions to quickly develop new products and services to market.

Unify old and new payment methods

To compete effectively in capturing financial services and increasing share of wallet, payment platforms must become independent of value. Providing interoperability and integrating capabilities to develop flexible payment products that bridge the gap between old and new payment methods, regardless of asset class, is key to future success.

Non-traditional financial institutions may have had success so far, but traditional incumbents have the expertise and consumer confidence to take over the reins, they just need to partner with the right provider to acquire this technological know-how in order to regain control.

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