There has been plenty to keep bankers up at night in 2019: consolidation among large vendors, ongoing tech innovation and the increasing insistence by consumers for digital experiences that meet their ever-evolving expectations, to name a few.
In addition, responding to these various dynamics has created more complex relationships between financial institutions and their most important vendors. There are three areas in particular where this is true.
- Insomnia Due to Payments M&A. At the beginning of 2019, Fiserv and First Data announced their large, high-profile merger, giving the financial services industry a sneak peak of what was about to come. Shortly following were the announcements of FIS and Worldpay and then of the TSYS and Global Payments deal.
While the consolidation trend has been going on in this environment for years, the difference in these recent cases is not only the vendor focus, but also the sheer size of the players involved, which materially reduces the level of competition in the marketplace. Financial institutions need not hasten getting into new agreements, especially if existing terms are favorable, but see how things play out in the months following these deals closing.
- Sleepless on the Mobile. As financial institutions continue to struggle with some of the more basic requirements for an acceptable mobile experience – e.g., remote account opening – mobile payments growth is skyrocketing, giving bankers another reason to be sleepless.
Research indicates there has been a significant increase in the number of consumers that prefer their phone or tablet to buy and pay for goods and services. The IMARC Group anticipates that mobile payments will reach an annual total transaction value of $3.081 trillion in 2024 – a figure estimated to be roughly $881 billion this year.
Other research suggests that mobile devices currently influence more than half of every dollar spent as consumers use them to research prior to purchase. While considering consumers’ needs of today is important, entities must also be considering the long-term impact of their payments strategy.
- Staring at the Ceiling Wondering What’s In Your (Digital) Wallet? In addition, it may not be too far down the road that we also see a resurgence of mobile wallets primarily offered by banks, a model that has some considerable flaws. If banks attempt to make a play here, their efforts will not be without some errors or, perhaps, an “Applesque” result.
Voice assistants are also currently on the rise. The bankers that are looking around at their peers and competitors should be concerned enough to spend some nighttime hours staring at the ceiling, while those sleeping soundly in the face of this coming sea change likely are already out of the race.
Mobile voice assistants are predicted to not only revolutionize the UI and UX in delivering digital services, but also help the consumer purchase something or proactively arrange for execution payments once voice authentication is granted. In 2018, the installed base of voice-activated smart devices grew 39.8% with 66.4 million Americans owning one or more. This trend is only expected to continue and if large tech companies are not willing to integrate the virtual assistants created by banks, consumers will be frustrated.
Disruptive payments vendor mergers and growing innovations in voice and mobile are continuing to ensure that those in the financial services industry no longer have a peaceful night of sleep. To get any rest at all, industry leaders are going to have to pay close attention to the market and consider their options for payments growth from a decidedly different angle.
For today’s modern banking executive, understanding industry disruptors is not only the best way to make wise decisions about vendor relationships in the future, it is also a way to get a decent night of sleep.