18 May 2020
- The arrival of new players into this market multiplies the opportunities to establish alliances, with the intention of monetising and optimising the customer's experience when making payments.
Over the past two decades, the way payments are made has changed significantly, with an overwhelming influence of e-commerce and electronic transactions. The recent European PSD2 regulations -focused on payments via the Internet- represent a further step in the ongoing transformation that this area is undergoing, as mobile platforms gain ground on traditional online purchasing alternatives and digital purses gradually replace conventional money.
In particular, technology is fundamental in the evolution of payment methods. From having to use cash in any transaction, we have now moved towards cashless societies, where solutions such as mobile phone payments and biometrics are becoming common. In short, the entry of new competitors has shaken a market that until recently was completely dominated by banks. These were the main issues addressed during the event 'The future of payment methods: challenges and opportunities', which EXPANSION organised with the sponsorship of CGI.
The arrival in the payments' market of the technology juggernauts and fintech firms has represented a revolution for the traditional conception of the business. 'Technology has opened up a framework for collaboration: we must work together with the existing players to generate value', stressed David Recio, Head of Amazon Pay España. The online payment system of Jeff Bezos' company arrived in Spain three years ago. Considering that payment is the point in time of the transaction in which the seller and buyer enter into an agreement, Recio emphasised that 'our main objective has always been to make this exchange of value as comfortable as possible for both parties'.
Business opportunity
The arrival of PSD2 means that banks are no longer the sole managers of their customers' data, so that the users themselves now have control over the information and banking institutions are opening up to their customers. In this regard, experts from CGI point out that the implementation of this regulation and the use of new electronic payment methods are pushing towards a transformation of the ecosystem.
In particular, it enables users to make instant online payments, minimising intermediaries and resulting in the emergence of new business roles and opportunities based on the activity that the companies involved in the payment process want to pursue. It increases the security necessary to authorise transactions, improves the experience for end users -who demand more attractive and user-friendly value added services to remain loyal to a company- and allows payment methods in which the seller or buyer acts as the payment initiator.
Regarding the opportunities emerging to collaborate with new players, Julio César Fernández, Cecabank's Business Development Manager, pointed out that 'we were born from the cooperation between institutions, we believe in network effects, and we know that collaboration helps to compete under favourable conditions'. The market will pass judgment on the potential of the different proposals: 'Those who are able to provide a better user experience will survive', said Fernández, who highlighted the advantages of collaborating with fintech to improve the purchasing experience.
In this regard, Itziar Riestra, Director of Insurance Banking, Payment Methods and Contact Center at Evo Banco, further elaborated that 'it is essential to forge alliances with fintech that provide you with products and services that you can offer your customers'. Thus, banks have the responsibility to select the right partners to make life easier for their users.
Specifically, Riestra agreed that it is important for companies to improve their work on customer experience. 'We must search for the right combination so that security does not interfere with the comfort of operations', underlined Evo Banco's representative.
Technology
From biometric solutions to immediate payments, the role of innovation is fundamental in the transformation of this market. 'Technology not only changes user experience, but also our own experience as banks', commented Félix Uriarte, Bankia's Director of Digital Banking. In parallel, the expert added that 'the payment business has gone from being a traditional activity to becoming a business based on technology, data and user experience'. This new conception has opened the door to the technology juggernauts, companies at the global forefront of this field.
'The payment process is a critical moment for customers; our goal is to minimise this pain during the purchasing process, and for users it is more painful to pay with cash or with their credit card, than to pay with their mobile phone', commented Alberto Navarro, Managing Director of Digital Banking at MásMóvil.
Telecommunications operators, who entered this market some time ago, provide solutions such as payment via the mobile phone bill, which has already begun to take off in Spain. Companies within the sector combine information on financial transactions with their own consumption data to anticipate the user's demand: 'We all want to know when a customer will have a financial need, so we can address it', said Navarro.
Regarding the importance of this segment, Carmelo Portero, Head of Payment Methods and PSD2 at Ibercaja, stated that 'the transactionality of payment has become the most important aspect for the user'. Within the value chain, Portero concluded that 'payment is already a fundamental point that marks the differentiation between one proposal and another'.
