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Three Trends Shaping the Payment Tech Landscape

The payment industry is changing rapidly. It is being driven by an accelerated shift in consumer behavior and tech advancement—every digital platform has become a commerce platform. Every moment is an opportunity to convert a transaction into a payment. Digital platforms and social platforms are receiving the credit for this shift, and payment tech becomes invisible behind the scenes.

Global cashless payment volumes are expected to increase by more than 80 percent from 2020 to 2025, with the U.S. market expected to accelerate 43 percent by 2025, according to research by PwC and Strategy&. In the research survey, 86 percent of respondents agreed that traditional payments providers will collaborate with technology providers as one of their main sources of innovation. It is clear that for payment tech companies, there is a huge opportunity for profit and growth in the payment industry space.

Payment tech companies must position themselves ahead of the curve to maximize the potential of future shifts in the payments industry. Here are three major trends that will impact the payment tech landscape.

  • #1

Generative AI will advance customer-business interactions

Businesses must embrace inventive solutions to keep pace with the potential use cases of generative AI within digital customer service. According to research by Gartner, 80 percent of customer service and support organizations will be applying generative AI technology by 2025. This means that customers making payment transactions increasingly expect to be able to interact with the payment tech they use in a natural way.

Digital customer service offerings include frictionless payment experiences, which focus on seamless conversations and payment transactions across digital channels. This will transform customer experience outcomes by reducing friction and eliminating unnecessary customer effort.

The emerging B2B platform AvidXchange, for instance, employs generative AI to automate invoice processing and facilitate seamless payment for businesses. With generative AI redefining interactions within payment systems, the landscape promises a future that blends customer-centricity with enhanced security and operational efficiency. Savings from operational efficiency can be invested in innovation and CX.

  • #2

Super apps will transform the digital customer experience

With their convenience, user engagement potential, monetization opportunities and ability to enhance financial inclusion, super apps have become a significant trend in the mobile technology landscape.

It’s easy to see why the convenience and simplicity of super apps is attractive for people. These all-in-one platforms have many functions, such as messaging (WeChat), shopping, transportation (Uber and Lyft), food delivery and bill payment. Traditional payment companies have an opportunity to bundle those services to add value beyond the transaction. The banking app of the future will be a lifestyle platform. Super apps will focus on personalization and customer-centricity.

Super apps drive innovation by pushing boundaries and exploring new possibilities, often collaborating with third-party developers and service providers and fostering a vibrant ecosystem of innovation. It is crucial for financial institutions to anticipate and leverage future advancements like AI to meet customer expectations. 

  • #3

Embedded finance will reshape the financial services landscape

Integrating financial services into nonfinancial platforms and experiences is redefining how people interact with money, payments, insurance and banking. This is embedded finance–bringing banking and financial services to where customers already are.

The increasing digitization of various industries, such as e-commerce, ride-sharing, food delivery and others, has created opportunities for embedding financial services. Embedded finance simplifies financial transactions by eliminating the need for users to switch between different apps or platforms. Many nonfinancial companies, such as retailers, marketplaces and technology firms, have a large customer base and deep insights into consumer behavior. By integrating finance use cases through software, they can leverage this customer base and extend their reach into new segments.

Traditional banks have started launching individual embedded finance initiatives in select markets and products, while simultaneously exploring partnerships. It’s a way for traditional banks to quickly modernize and accelerate vertical integration to own the next steps and move ahead of competitors. The full potential of embedded finance is yet to be realized but the competition is heating up. Companies that are early to market stand a better chance of succeeding.

Seize the moment to own the market.

The potential for the future of payments is exciting. From AI-powered payment platforms to super apps and embedded finance, businesses that embrace innovation are positioning themselves ahead of the curve. Through adept payment technology consulting services and strategic AI integration, the industry is on the brink of an exciting paradigm shift, fundamentally reshaping digital transactions and payments across the board. Those who take the first step will have the biggest share in the profit.

Dave Theran
Dave Theran
Client Partner, North America Payments Tech Lead

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