Money20/20 Europe: What was the industry talking about?
Money 20/20 Europe took place June 3-6, with many of the foremost payments companies in Europe in attendance. Here are the major takeaways from the show.
Digital, not digitised payments
Providing online services has been a critical business priority for banks and payment services providers for years, but there is still a sense that incumbents haven’t embraced the transition to fully digital services.
Sure, they’ve moved services online. But they are still offering similar services through online and mobile channels that they always have; innovative digital products are severely lacking. Now is the time to take the leap and migrate from digitised financial services to digital.
The metaphor explaining the difference that is cited most regularly is the music industry. The early incarnations of the iTunes store offered music for sale on a digital platform, but the product consumers could purchase (albums and singles) was essentially the same. The industry only really went ‘digital’ with the advent of music streaming services, that reinvented how to access and pay for music in a completely new way that could only be offered on a digital platform.
Even superficial upgrades to legacy products and services will not suffice; only fundamental changes in approach and product will enable incumbents to transition. As stated by Stanford professor Andrew Ng: “A brick and mortar company with a website is not an internet company, and an internet company with a neural network is not an AI company.”
Financial services have now reached that fork in the road. Agile disruptors that offer truly digital products will come to the fore; incumbents that continue to lean on digitised versions of non-digital products and services will quickly become obsolete and may fade away altogether.
Open Banking and SCA remain priorities
The compliance deadline for Strong Customer Authentication (SCA) in Europe is fast approaching (September 14 2019) and the general sense is the state of industry readiness overall is concerning. The intention of the new regulation is to have a positive impression on merchants, but initially the implementation of 3DS 2.0 may have a negative impact on cart abandonment as consumers and businesses struggle to adjust to the new standards for card-not-present payment authentication. Payments companies and the regulator need to take a stronger lead in this area, and provide greater clarity for businesses.
Open Banking also remains high on the agenda. The general consensus is that banks in particular remain focused on relying on strictly complying with regulation, rather than the intended end goal of providing better, more competitive financial services for consumers, and that this is preventing PSD2 and Open Banking from achieving any meaningful momentum. Banks must be incentivised to provide the appropriate APIs to enable Open Banking to flourish in a way that isn’t reliant on strict compliance.
Collaboration is key
The payments ecosystem has always been a collaborative one, but in the most part this has been at the fringes of a payments services provider’s business strategy rather than being integral to its core business.
That strategy has changed; payments businesses are now looking to partner with competitors in key strategic areas of their business to provide more compelling online payments offerings to businesses and consumers.
As one leading payments company CEO explained when quizzed on the increased level of industry collaboration: “Currently only 5% of payments that happen globally are completed online. The objective for digital payments companies should be to increase that percentage and grow the pie for everyone, not to compete for that 5%.”
Even the world’s largest companies have embraced the concept of strategic partnerships over a go-it-alone strategy, in the main because the pace of change and go-to-market imperatives required to be successful favour this approach. At Paysafe, we’re fully committed to this way of thinking.
One example of this is Paysafe’s partnership with Worldpay to provide an industry-leading payments solution to the U.S. iGaming and new online sports betting markets.
Through this partnership, Worldpay and Paysafe champion the needs of U.S. iGaming operators and their players by providing a secure, cost-effective and highly configurable payments platform that delivers an unparalleled player experience and solution for operators.
Natural, contextual, but above all trusted
The desire to deliver a more seamless checkout experience continues to be front and centre in the minds of eCommerce businesses, and that means integrating payments into the everyday lives of consumers in a secure manner.
This topic was discussed in detail on the main stage by Patrick Gauthier, VP of Amazon Pay. Patrick presented statistics from Amazon’s latest research into consumer appetite for voice-activated payments and explained how this technology is the new frontier for eCommerce.
23% of consumers ranked the ability to make a payment in the moment as one of the top five reasons to make a payment through a voice recognition system i.e. a contextual checkout experience that cannot be replicated using other less immediate payment channels.
But trust remains key when it comes to consumer appetite for new payment methods. Amazon’s research suggested that two thirds (67%) of EU consumers would do more business with a merchant that they trust to manage their financial data, and that four-in-five (80%) will switch away from a merchant that they don’t trust.
These results echo Paysafe’s latest research report Lost in Transaction: The end of risk? 53% of consumers told us that they believe voice-activated payments are quicker and more convenient than traditional eCommerce, but only 37% feel that their financial details remain secure when making a payment using voice-activated technology. Payments companies need to redress this imbalance in consumer perception of convenience and security before voice-activated payment gain greater traction.
The age of the consumer
Where it may not have been true in the past, the needs and expectations consumers are now firmly at the forefront of product development and innovation. As the relationship between businesses and consumers continues to evolve, financial services and payments processors are striving to earn customer loyalty in a new way; solving their needs, in the most efficient and stress-free manner.
For example, Open Banking initiatives have the aim of delivering more competition, and therefore choice and better-quality products for consumers.
Consumers are also demanding a solution to deliver more convenient payments in a secure manner, and this is the driver for many payments technology initiatives such as invisible payments, biometric payment authentication, and AI.
The major frontiers in payments innovation have customer needs at their core, payments services providers that don’t follow this philosophy will quickly find themselves developing products that receive extremely limited traction.