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The world of payments is constantly changing and advancing, fueled by ongoing innovation and technology. Payments are more than just a cost; they open up a wealth of greenfield opportunities and revenue potential. To compete in this space, financial organizations need to modernize their payment strategies.

An Ever-Evolving Space

From enabling basic access to open banking, payment technology has undergone several innovation curves that have revolutionized the way we transact. “Payments have always been a hotbed of innovation,” Everest expert Ronak Doshi said. “We’ve gone through different adoption curves—from access to efficiency and now programmability.” 

The first curve was about expanding access to payments, shifting from cash to electronic transactions. Then, the space focused on efficiency, building innovative products such as “buy now, pay later” services and central bank digital currencies. Doshi suggests that we’re now at the brink of the next innovation curve, where programmability will revolutionize payments even further with next-gen technologies.

Today, there is a growing demand for real-time transactions. Everybody wants to get paid faster, be it consumers or businesses. Everybody’s looking for quicker, faster, and more secure payments. Consumers now expect seamless and instant transactions, and different payment rails have emerged to meet this demand.

With these rails accessible to everyone, organizations across industries have a prime opportunity to build ground-breaking products, improve experiences, and drive revenue through value-added services. 

The Key to Differentiation is Experience

Digital payments have transformed the way consumers access their funds. Industry veteran Mike Vizcarrondo refers it to a commodity, emphasizing the fact that account-to-account payments are growing at double—even triple—digits. He also highlights how it can be a key differentiator for organizations, stating, “Consumers really want their money being sent from their wallets digitally. And if their bank doesn’t offer this, they’re going to go find it in fintech.” 

But to truly stand out in the space, customer experience is key. The efficiency, simplicity, and security of the payment experience remain pivotal in attracting and retaining users. In fact, an Orion Innovation poll showed that 65% of participants believe that evolving experiences drive payment modernization in many organizations. Our recent webinar also showed the same thing: 30% of the audience considered improving experience the top priority in revolutionizing payments. 

To build great experiences, the ultimate goal is to remove friction—how do you embed payments as a natural and invisible step in the customer journey?  

Speed, accuracy, and usability are key factors in providing great customer experiences. Delays in transfers, processing errors, and confusing user interfaces do the opposite. Moments within a particular user journey that cause friction and require reconciliation aren’t fun. When a user has to go through several clicks to find the endpoint, it can be frustrating. The product should behave instantly and be a clear path between A and B. 

Incorporating a persona-led approach can also help create unique experiences. Understand who the user is, how to address all their specific needs, and how to build speedy customer service.  

Innovating in the Experience-Driven Payments Era 

When organizations embrace innovation with emerging technologies, it unlocks a multitude of revenue opportunities. Gone are the days when payments were seen merely as a cost center. Infusing AI, data analytics, IoT, and blockchain to enhance experiences has made payments modernization an avenue for growth.  

Vizcarrondo suggests a few ways organizations can innovate, “Think of instant issuance, digital wallets, car controls that you can turn on or off. Think of payment controls – I can only spend this amount, or only in this industry, or only in this country. Think of personal financial management, a summary at the end of the month. These are what people want to see now.” 

Banks and financial institutions are now proactively developing unique payment functionalities and offering them as a service, called payment-as-a-service (PaaS) models. This allow banks to provide infrastructure, technology, and regulatory compliance for businesses to offer customized payment solutions.

This trend is in response to the rise of embedded finance, which integrates financial services into non-financial platforms. PaaS and embedded finance enable businesses to focus on core competencies and empowers consumers with more financial services and payment options. 

There are also innovations in data analytics, which continue to play a crucial role in safeguarding against the rising threat of fraud in the payment ecosystem. Then there are super apps and digital wallets, which empower users to access various functionalities within a single, unified platform.  

Blockchain technology has also made significant inroads into the payments industry, leveraging security, transparency, and decentralization to streamline cross-border transactions. This globalization of payments not only expands revenue opportunities but also fosters economic growth and financial inclusion on a global scale. 

Capitalize on the Growing Demand for Modern Payments

Today’s user expects that any messaging they receive is targeted to their needs. Utilize analytics and include additional quantitative data gathered through research to create user groups for targeted messaging and automation. This will help deliver the right message, at the right time, on multiple channels. 

Orion has been serving the Financial Services industry with business solutions for two decades. Learn more about our expertise here.

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