7 Factors That Will Influence Future Payment System Changes
Financial services institutions are constantly introducing new technologies for the convenience of customers. However, the fastest-growing change is the payment system. Consumers' spending habits are changing due to increased use of technology in transactions between sellers and buyers. As a result, over time, financial institutions are trying to leverage existing technologies in various ways. At the same time, they are also undertaking new initiatives to make life easier for customers through technology.
7factors in particular will have a major impact on future changes to payment systems.
1. The money will no longer be visible in the case of payment
Consumers now want to avoid hassle as much as possible in shopping or any kind of purchase. From queuing to vandalism issues, customers are not satisfied with many things. Moreover, while making payment anywhere, much time is spent on data entry including product price.
Future payment systems will aim to eliminate such problems for customers. They don't have to wait to select the product while shopping and pay the price. Due to the development of a completely digital payment system, the money will not be visible to anyone other than the buyer.
Such payment systems are now being piloted in the developed world. Recently Master Card, IBM and General Motors jointly launched a technology called 'in-car payment system'. Through this technology, customers can make payments through voice assistant sitting in their car. Thus, the payment system will continue to improve through many other technologies in the future.
2. The role of AI (Artificial Intelligent) and Machine Learning technologies will increase
US state agency IDC published a report last year on AI technology in the banking sector. According to that report, 40% of the country's digital transactions in 2019 were done with the help of AI. Again, the country's banking sector invested $5.6 billion in AI technology last year alone.
The introduction of AI and machine learning technology in the banking sector will reduce fraud in many cases. At the same time banking activities will also speed up. 5 areas in particular that will be impacted by AI technology are:
AI will influence the decision making of various business organizations. Especially in marketing. Through AI and machine learning technologies, businesses can better understand where their customers need. As a result, they will have a better idea about which type of product will sell more if brought to the market.
Customer experience will change. Customers can discuss their preferences and budget with the AI program before making a purchase. Customers can also make payments instantly through advanced technologies such as voice payments.
With AI, banking institutions will be able to create offers based on the type and volume of transactions for each of their customers. For this they will exchange information with vendor organizations.
The use of process analytics in the banking sector will increase. Process analytics is a type of technology through which the activities of any organization are firstly analyzed. Then according to that analysis, what decision should be taken by the organization is suggested. As the use of process analytics increases, banks will be able to resolve transactional issues more quickly.
Customers will transact through organizations that can keep customer transaction information the most secure. Moreover, it will become very difficult to forge data in the future through machine learning. As a result, information security will also be ensured.
3. Expectations of corporate customers will increase
The process of managing the day-to-day operations of any business is called 'Enterprise Resource Planning'. Everything from day-to-day accounting, transactions, project management, risk management or contracts with other organizations to supply chain management is controlled through this process.
In the future, banks will be able to develop convenient payment systems according to the 'enterprise resource planning' of their corporate customers. This will create different types of payment systems based on the business of banks and customer organizations. Banks that come up with the most convenient payment system for their customers will gain popularity among corporate customers.
4. Open banking will also allow competitors to work together
Every country follows certain guidelines to verify the authenticity of information and the amount of risk involved in transactions with respect to any customer of the bank. This guideline is called KYC (Know your customer) guideline. KYC guidelines of different countries have different instructions according to the laws of those countries.
If banks work together, it will be possible to verify the authenticity of customers as per KYC guidelines in case of large payments. Also, other financial institutions can develop convenient payment systems for their customers by contracting with the bank. Recently, some such initiatives have been taken in various countries of the developed world. For example, Bank of America customers can easily link their credit or debit card to their PayPal account due to their agreement with PayPal, an online payment service provider. By doing this, both the bank and PayPal are benefiting.
5. A relationship of trust will be created through digital ID
The more digital payments are made, the greater the cyber security risk. However, new innovations in technology will continue to make it easier to deal with these risks. In the case of payment, if the identity of the customer or buyer can be identified by biometric method, the risk of cyber security will be reduced a lot.
If every customer's ID is verified by biometric method, customer suffering will also be reduced. Payments will then be made instantly by simply recognizing customers' faces, voices or fingerprints.
6. All types of payments will be made instantly
Currently, there are more than 40 'Real Time Payment' (RTP) or instant payment methods in operation in the world. These methods are used to pay salaries to employees of various organizations starting from large transactions. The number of such payment methods will increase in the future. And according to the convenience of the customers, different types of methods will be popular in different fields. However, the implementation of this system requires the goodwill of banking institutions as well as business institutions.
7. Payments can be made instantly from one country to another
As global e-commerce trade expands, it will become easier to buy from various establishments outside the country. In future, it will be possible to buy products of any country from other countries through online. And customers do not have to face any kind of hurdles in payment after purchase.
In order to implement such services, coordination will be brought between the governments and financial institutions of different countries. As a result, as customers will benefit, traders will also be able to present their products in the international market more easily.
The future payment system will change mainly according to the needs of the customers. So be a smart customer and use technology for payments from now on. The next generation payment system will be developed based on your needs and demands.