A major development over the course of 2020 that might have gotten lost in the shuffle of the pandemic is the emergence of a global transactional ecosystem to govern digital payments and transactions moving forward. While this has long been in the making, 2020 gave special impetus to get this process completed and for more than a few reasons.
Regulation Coming Due to Explosive Growth
For one, the growth in digital payments and banking services necessitates a regulatory view on the growth of this robust area of fintech. But, beyond that, the collapse of some major payments providers in 2020, and due to seemingly lax or nonexistent oversight of its core businesses, has prompted a period of reflection and progress in developing an efficient global transactional ecosystem.
Head of Global Banking and Capital Markets for Capgemini Anirban Bose said of the emergence of a digital payments system on a global scale, “Within this new and dynamic ecosystem, payments industry participants must strategically reassess their roles. Banks must embrace this opportunity to enhance their offerings in collaboration with FinTechs and third-party developers. Breakthrough technologies and significant industry advances, such as Open APIs, instant payments, blockchain, and regulatory standardization, will encourage collaboration.”
Bespoke Offerings and Scaling to Meet Client Needs
Scaling these systems and payment infrastructures to meet the needs of companies is just one area of concern. Another is bringing these services to consumers in the marketplace in a firm shape and format. One particularly tough cohort that is getting special attention from digital payments providers moving forward is the vast majority of low-value transactions that occur as a cash payment.
Enabling these cash payments to be captured through a digital payments process is not only a growth opportunity for fintech and banks moving forward but also necessary for the transformation of local markets into global players. Because of the scale of involvement in this ecosystem, from major corporations to regular consumers, different apps and services created to meet often niche and limited-appeal needs are quickly displacing the traditional solutions offered by big finance.
The New Economy
The economic crisis of 2020 and the ensuing new realities imposed by the pandemic sped up the adoption (and urgent need) of more sophisticated and accessible digital payment solutions for a range of services but further integrating these into society is not only a task of innovation but also one of developing the necessary infrastructure to support it.
As discussed above, cash payments are still widely applied in many markets, but non-cash payments are growing at an exponential rate (for more than a decade now) thus paving the way for a new future in which currency and locality play less of an important role in commerce and e-commerce.
What this means for businesses is that financial firms will be more incentivized than ever before to meet them where they do business as well as cater to their business needs. Thanks to the ability of new technologies and business solutions to scale as needed, financial firms should be able to meet business and consumers where they are needed but the ability to do so and to pivot on a dime will become the hallmarks of the top players moving forward.
What does this mean for my business?
The topic covered above is of key interest to our team as well thus we closely follow all the industry trends, news, and market updates with a professional eye set on those so that you can have access to prime information and a blend of analysis on the subject.
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