disruptive forces in digital payments
TRANSCRIPT
Disruptive forces in digital paymentsHow can payment organizations be future-ready?
The need for change
With the mass adoption of ubiquitous connected devices, customers have become increasingly reliant on digital services
Mobile and digital payments have become the core innovation strategy of any payments organization
Payments providers are aware that digital is a must-have, but they are unsure of how to address the transformation challenge
Customers have progressed from using cash and physical cards to making transactions over digital platforms
m-commerce has risen to power: Customers research digital channels and shop online instead of visiting a physical store
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Key trends in digital payments3
P2P and B2B payments going digitalThe war against paper (cash and check) is on. In the P2P space, paym, venmo etc. are gaining traction, while in the B2B space, procure-to-pay electrification is garnering support
Tokenization StandardsAll card networks have agreed to use uniform tokenization standards
Smart POS
Smart POS recognizes your online searches and suggests purchases with instant offers
Passive PaymentsPayments that happen instantly and
invisibly. The checkout process is becoming fast and frictionless,
reducing shopping cart abandonment
Crypto currencies now mainstreamAustralian Commonwealth Bank is experimenting with Ripple. A lot of bitcoin remittance and blockchain service companies are coming up
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Digital touchpoints – journey of a digital consumer
Remote store
Near store
Near PoS
• Passive payments – In-app / traditional e-commerce quick checkouts
• Social-analytics-led recommendations• Personalized loyalty-based offers• Advertising networks and targeted
offers • Gamification
• Location-based offers – Geo-fencing, Beacons, check-ins
• Order ahead (Pick up in-store / drive-through)
• Smart PoS – instant offers based on profile targeting
• In-aisle self-service, checkout- scan and pay
• Wearable and mobile
Purchase intent
Purchase
trigger
Purchase
closure
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Going digital – SWOT for FIs and payments companies
•Partnership with technology startups
•API-fication of services
•Pricing transparency by startups
•Low margins by new players
•Legacy architecture – tight coupling makes change complicated
•High cost overhead compared to startups
•Regulations compliance takes huge budget
•Established customer trust
•Customer data for analytics
STRENGTH WEAKNESS
OPPORTUNITYTHREAT
Customer expectations are different
Cost of production and time to market has reduced
Facing newfound competition from
technology startups
Before you begin: Pre-requisites
Initiate user-oriented innovation processes
Choose the target market – Red ocean vs. blue ocean strategy
Build an adaptive architecture
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Chalk out a roadmap
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The starting point should be to shortlist the most critical user journeys. The payments provider needs to identify the critical line of business – the one that defines the product
Design the development and implementation in a micro-managed phase-wise manner. Adoption of methodologies like Agile would be a good fit
The analysis should move from user journey to products. Need to revisit users’ journeys and apply digital improvements wherever possible
Step 1: User journey to product
Step 2: Micro managed and flexible
Step 3: Identify critical LOB
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Address change at all levels
Organisation
Technology
Market
• Clear and well-communicated change mandate
• Involve all CXO offices so that leadership and sponsorship are aligned
• Buy-and-build over buy-or-build: Buy the market leading solutions and then customize
• Open APIs to third parties – allow greater integration with retail apps and open new customer end-points
• Mass adoption: Focus on simple, high-volume processes first to promote mass adoption
• Be prepared for cannibalization: New digital services will shrink existing revenue from legacy offerings
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Final thoughts
Digital is a culture change
Iterate and improve
Look outside and learn
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