Your Friday fix for global fintech and payments news
In the week that concludes with what tends to be the largest spend of the year, we are taking a look at what banks should now be offering digitally, consumer habits around the holiday period with Discover’s Holiday Shopping survey, and lastly, how banks are being challenged by fintechs and other up and coming tech companies.
Our weekly round-up brings you a dose of some of the biggest news announcements from the past seven days so you can keep an eye on all that’s shaping our world this week.
- Banks must get digital offering right, says HSBC
- One-in-3 consumers to spend less during this holiday
- Banks face major challenges maintaining revenues from payments
Banks have no choice but to ‘get it right’ when it comes to digital offerings, according to HSBC Kinetics Head of Risk. Consumers are now more expectant than ever when it comes to digital banking services and that is mirrored by the amount of bank customers who are now comfortable using digital services where they may previously have been hesitant.
The focus of implementing digital services should be on customer experience, not just getting into the digital space for the sake of it. It is imperative to find the right product and channel, otherwise the bank risks getting lost among the competition.
Vinita Ramtri, Head of Risk at HSBC Kinetic UK, said: “You need to be clear on what you want to get out of it. Rather than saying I’m going to automate 20 per cent of the business, it’s better to have a target relevant to a problem, scaling it right back to think of the right strategy.”
Discover’s annual Holiday Shopping survey turned out some interesting consumer shifts for 2020. Respondents who said that they will be doing their shopping in-store this holiday season, said that they are more likely to use contactless technology to make their payments (68%), and 66% said their cash use will be less. It was noted that respondents of every generation are favouring contactless for their in-store payments.
35% of respondents claimed that they will show more restraint when making purchases this year, a huge increase from the 18% of 2019. Interestingly, 37% of these respondents claimed that the pandemic is the reason for pulling back on spending. Consumers are also changing where they will be doing their spending. Gen Z and millennials are turning to small businesses with 77% and 70% respectively shopping in independent stores, but over all generations, most (74%) said that they will be shopping online and 61% said that they will be taking advantage of the holiday deals.
Traditional banks have huge strengths in payments because of their large customer base and control of current accounts and customer data, but it was noted by interviewees of the McKinsey report that banks’ should take the opportunity to improve their offerings in digital paymens, APIs, and offer PaaS.
Research from McKinsey shows that the traditional bank may be facing challenges from fintech, as well as technology companies. The latter seemingly provides more flexibility for the consumer and meets rising consumer expectations, whereas the traditional bank is restricted by the ability of the system they work on. Compass Plus recently looked in to payments platforms of the past and how to future proof your payments platform.
The challenges seen by banks is supported by the fact that over the past 6 years, banks’ payments revenues have grown steadily at about 3% per year. On the contrary, double digit growth has been seen by some specialist payments providers, processors, acquirers, schemes, and others, over the same period.