The Future of Banking and Payments is Digital.

When was the last time you had an in-person visit to a financial institution? Whether it was to make a deposit, do a withdrawal or pay a bill.

Sadly, just over a month ago, I had to go into a financial institution to open a new account. Sigh! Ohh, I haven’t felt so uneasy and out of place in a long time. I arrived a little past 8:00 am and there was already a queue outside waiting for the bank to open. To this day, I cannot explain why I had to be there for almost 3 hours, just to open a new account.

Despite the digitization of certain processes in traditional banks, I find it ironic that one has to go in-branch to open an account in some territories, and then sign up for electronic banking to be able to access digital banking services. Nonetheless, as our generation likes to say “a win is a win” and the ease and convenience that come with electronic banking cannot be underrated, irrespective of the process to get there.

In this Digital Age, Traditional Banks are Catching Up!

In my last blog post below:

I introduced the idea of the imminence of a cashless society and the growing, ongoing shift away from cash-based transactions towards digital payment technologies. A phenomenon that has gained momentum year on year and is forthcoming globally; despite its lagging deployment in some locales that may lack the requisite enabling infrastructure. Some may attribute the accelerated transformation of banking and payments to the novel COVID-19 pandemic, but truth be told, the landscape has been evolving for quite some time now.

Over the past decade, we can safely say this transformation was quite evident in how we receive payments whether it be from our employers, suppliers or clients; to how we conducted business. How far have we come? Think about sending a text to pay for a bus ticket like in Turkey, using a QR code to pay for groceries in China, and tapping a sales terminal with a mobile phone in the US (PWC, 2021). That is all attributed to the constant evolution of the payments landscape, and its adoption is evident in increasing the cashless transaction volume over time. But what are some of the key trends that will influence the future of payments? According to PWC Analysis, there are six macro trends currently driving the thrust and influence around digital payments; all of significant importance to enabling access to equitable digital financial services. Are there any other trends you deem important that should be recognized in this list?

Payments are Driving Innovation

Traditionally, banks have always been at the heart of commerce, and with the ongoing shift in payment methods and increased value of the payments business, banks are adapting and evolving to claim, maintain, and unlock their share of the payment services network. With the increasing threats from neobanks offering full online services and the rising role of large tech giants in integrating payment solutions in their offerings, traditional banks have been automating some of their processes, reducing cash-based transactions in-branch and exploring ways to offer a seamless digital experience for its clients. We’ve all witnessed news cycles around the closure of branches of some of the most notable banks in the US (Chase, Bank of America, Wells Fargo), the EU (Lloyds Banking Group, Barclays Bank, Danske Bank), and across markets in the Middle East, Asia-pacific and African countries; and a whole thrust towards revamping their customer engagement strategies and developing a digital ecosystem to meet the needs of clients and serving clients from anywhere.

In most economies, cash and paper-based payment systems are still dominant but there has been a gradual shift to electronic payment models. One can agree that the rising adoption of mobile devices has been a significant enabler of the digital payment market and with that, customers are influencing the rules of the payments game, as they start to dictate to their banks how and where they want to be able to access their money.

In the CIDM course, we were tasked with researching payment patterns, preferences, and attitudes of small businesses in our respective countries and highlighting one digital payment system or mechanism. I’d like to share the results of our use case analysis between Jamaica and Nigeria where we explored and highlighted digital payment systems from both countries; and showcased the similarities around the perception and attitude towards digital payment systems in both territories.

Feel free to add your comments and observations from the use cases shared or tell us below in the comments about a digital payment system that exists within your country or that you/your company is developing.

Until next time, thanks for reading.