The world of payments, no longer exclusively in the domain of banks, is an ever-expanding universe driven by new decentralised payment networks, by the dashing growth of e-commerce and by the digitalisation of goods and services (i.e. streaming).
The eurozone is increasingly cashless, not only because of the rapid adoption of electronic payment instruments, but also for the need for instantaneity that is pervading all different segments of society. This phenomenon of "urgency" suggests that over the next 5 years we will assist to a gradual shift in payment behaviour in the retail segment to the new payment methods along two tracks:
- Cash to card: aimed at educating those customer segments that for cultural and social reasons remain suspicious about e-money.
- Cash to wallet: addressed to that “digital” audience that will progressively shift to the use of "mobile" payment, giving lifeblood to the expansion of e-wallets and IBAN-based driven services (Request to Pay service).
It is therefore reasonable to predict a gradual decline in the use of cash and even of physical payment cards used by most cardholders today.
In a similar manner electronic payments services for Corporate are in a transformation phase aimed to extend the domestic “modus operandi” (e.g. SEPA) to the cross-border environment (ref. IXB project) introducing the need for immediacy and traceability of the transaction in order to develop new Reporting and Cash forecasting services for Corporates.
However, the time to market of this transformation is not "in the hands" of the banks alone, but especially of Fintech’s wider galaxy with which banks are in the initial phase of a new collaboration model.
Therefore, also given the use of the new ISO20022 standard, the coming years will witness the development and “openness” of the banking payment backbones (payments rails) for the “journey” of information and VAS related to Cash & Liquidity management and SCF services (e.g. the growing attention in Commercial Bank Money Token).
If the adoption of instant schemes will not only be a “buzzword“ for the coming years, a growth of fraudulent phenomena can also be foreseen, which cannot be counteracted by the current applications, often too slow in reacting to the mechanisms put in place by criminal organisations (the realtime settlement could reduce the capacity of current systems).
It’s therefore reasonable to assume that the next few years will see significant investments by FI's for the development of anti-fraud systems with a massive trust of predictive techniques based on behavioural systems where ML/AI will represent the leading technologies.
But competition over payments will be to maintain and retain customers to get their payments, which means that loyalty becomes a key axis in the development of new business models.
Lastly, we would like to mention that the payments industry will also be affected by the ESG wave, but by its nature, this wave will mainly focus on interventions aimed at reducing the payment transaction energy consumption or building advantageous and differentiated pricing based on the rating of counter-parties.