Harnessing fintech innovation in 2017
Fintech has been gaining momentum across the globe due to the ability of disruptive technology to empower people to avoid being overcharged and underserviced when it comes to handling their money. As the sector moves away from a fad and into a more mature industry that is now seriously impacting the financial world, it is an exciting time for all parties involved.
Digital wallets will be owned by merchants
The future of fintech is inclusion across all sides of the spectrum. Standalone offerings from device manufacturers and banks will take a back seat.
The future driver for digital payment adoption will be owned by merchants themselves. Unlike device manufacturers or banking wallet providers, such as Apple Pay and Google Wallet, merchant-owned digital payment experiences are almost fully-owned by the merchant. The key value proposition is the data gathering and ability to quickly pivot without worrying about multiple stakeholder approvals.
A great example of this is Starbucks. They have created their own ordering app and loyalty programme that has been engaging their user base in Europe and North America for years. Customers have the ability to pre-order their favourite beverage and simply grab and go, skipping the queues and earning points in the process.
When it comes to paying for these items, Starbucks has opted for a less conventional method of topping up with pre-assigned denominations, something customers are not used to. And yet, at any given time, they hold around US$2bn in Starbucks credit in the app. Customers are happy to go out of their way if the driver is worth it, and only merchants have the ability to provide value that induces behavioural shifts from customers.
Smarter avenues for older players
Banks and financial institutions are currently in limbo when it comes to participating in the fintech space. Across the globe we are seeing more creative adaptations of legacy banking products being packaged differently by banks and processors. The one clear issue here is that banks have never been good with customer engagement. In fact, one of the biggest reasons fintech, as an industry, has grown so big is because of how hard it is for banks to engage with their customers in a unique and meaningful way.
We will start seeing more start-ups addressing this issue. The place of banks in fintech is clear, however, it will be more of a back office role. They do one thing really well, and that is handling money. Emerging start-ups will begin empowering banks to become smarter avenues, giving them a competitive edge on how easily they can integrate and accept new payment and checkout experiences. The name of the game at the end of the day is volume for banks, and start-ups will help drive that with smarter and more secure methods of integration.
Making cash smarter
Cash works. No one can argue with how successful it is and how hard it is to beat. The world over from Germany to Bangladesh, cash is the primary source of payment and it is not going anywhere anytime soon. We have seen a huge surge of fintech start-ups that have tried to replace cash and have failed miserably.
The next trend to come will no longer be about replacing cash, but taking it to hyper drive. Fintech will start looking at how they can make people’s relationship with cash easier and smarter.
There are already small examples of this popping up in Asia with cash delivery services or mobile ATMs, as well as digitisers, that come to your door, take your cash, and convert it to a digital denomination. These experiences can increase an economy’s awareness of cash circulation, spending power, and who is spending cash where.
Bridging the divide between online and offline
The biggest retailors and sellers across the globe owe their success to brick and mortar locations. Nothing has been able to replace the in-store purchasing experience, however, they are now trying to figure out how to compete with e-commerce.
Start-ups will begin offering out of the box services to build a more competitive landscape around giving the end customer the best experience possible without compromising the best of both worlds. SAAS as a product will be a clear winner in this regard.
As physical retailers begin to increase their footprint online by acquiring start-ups and online businesses, they will also be looking for more affordable ways of engaging an online audience without the need to acquire competition, by offering them unique software solutions that enable them to build their own experiences and engage with their audiences online and as a complimentary offering to their retail environments.