The fintech revolution has changed a wide range of financial services, but perhaps the area most innovated upon is how we make payments. Consumers and businesses alike have embraced fintech-based methods due to the added convenience they offer.
As such, it’s worth paying attention to key developments within the fintech payment sector. The following trends may define how these services evolve in the coming year.
Increased Demand for Mobile Payment Options
Products such as Apple Wallet and Apple Pay allow consumers to make purchases in stores without carrying cash. Experts predict this payment method will soon be more popular than credit cards.
Retailers should adapt fast. With more and more customers adopting mobile payment tools, the businesses that don’t accept this payment method will find themselves falling behind.
This is particularly true when you consider that older members of Generation Z are reaching the age of young adult consumers. Unlike any other generation (even millennials), they’ve literally grown up with smartphones and similar technologies. These young consumers won’t demand mobile payment options—they’ll simply expect them as a matter of course.
Enhanced Focus on Security
While making a purchase with your smartphone is a lot easier than remembering to bring your wallet with you every time you leave home, using a fintech payment app can expose your sensitive data. In light of recent large-scale data breaches, fintech developers will have to prioritize security and make sure users understand their data is safe if they want their products to succeed.
Improved UX Design
Fintech products that allow users to make purchases or send money via their phones have become so ubiquitous that users are no longer wowed by them. As the marketplace grows more competitive, apps should stand out by offering strong user experiences.
An app can no longer rely on attracting users simply by offering convenient payment features. It needs to be an intuitive product that’s easy and pleasing to use.
Studies indicate that more than half of millennial and Gen X consumers value loyalty and rewards programs. Moreover, 60 percent of this demographic is willing to switch brands if loyalty initiatives, such as discounts and points, are incorporated into the business’ app.
This represents a unique opportunity for fintech companies offering payment solutions; they can differentiate themselves from other mobile payment apps by offering attractive rewards, such as a flat percentage cash back with every purchase made through the app.
Though the fintech industry is skyrocketing, it doesn’t necessarily threaten the continued relevance of banks. When startups and traditional firms collaborate, they both win.
This will prove true as mobile payments grow more popular. Startups may offer innovation, but banks have advantages such as brand recognition and regulatory expertise. By working together, both can keep up with the changing times successfully and efficiently.
Greater Acceptance of Cryptocurrency
The true disruptive potential of cryptocurrency is yet to be seen, but the dramatic rise in the value of Bitcoin in 2018 drew a lot of attention. Many more businesses will likely experiment with accepting cryptocurrencies as a result. Whether it will be beneficial in the long run isn’t yet clear, but it’s highly likely many companies will explore the option in 2019.
Increased Options Overall
The trends already covered here make one thing obvious: consumers and businesses will soon have many options to choose from when selecting payment processing tools.
As new services emerge, traditional financial institutions may find they can no longer rely on processing fees as a reliable means of generating revenue.
Institutions will instead differentiate themselves from the competition by focusing more on offering unique services and products customers can’t find elsewhere. While they’ll have to invest in technical infrastructure to ensure their own payment tools work reliably, they’ll also have to innovate in more general ways.
This may require hiring a younger workforce. Banks and lending institutions can leverage their digitally savvy employees to understand what types of qualities make a brand stand out to young people.
Although banks can stay relevant now by partnering with fintech companies, they may still struggle in the future if they don’t focus on adopting a forward-thinking mindset throughout the organization. Hiring people who understand the power of technology ensures the next generation of leaders will keep institutions on pace with the changing times.