Top five takeaways: in-conversation with banking and payment leaders 

Over the last month, more than forty industry insiders gave their opinion on the current hot topics and major challenges for the banking and payments industry. The research covered themes ranging from crypto currencies and digital wallets to financial crime and Consumer Duty. Here are the top five trends that are dominating strategic agendas right now and how we can expect them to impact the market. 

1. The cost-of-living crisis 

It’s no surprise that the cost-of-living crisis was high on the agenda for many; whether it’s your personal or work life, it’s hard to miss. Mortgages are first up with interest rates sky-high and mortgage products being pulled left right and centre – the pressure is on for product innovation teams and regulators to deliver innovative solutions, particularly for first-time buyers. Suggestions include flexible mortgage repayments or BNPL systems for rent, where a buyer could gradually own more and more of a property. Meanwhile a renewed emphasis on financial health means Personal Finance Managers (PFMs) are growing in popularity, prompting a revived interest in open finance initiatives. Many suggested that this demand for finance management tools, budgeting aids and bill trackers would become a catalyst for the development of open finance. There was also an expectation that the cost-of-living crisis will offer and necessitate more cross-industry collaboration, where banks should be working together, along with other financial institutions, for the best interests of the customer. 

2. Consumer Duty 

On the other hand, Consumer Duty was recognised as not simply another standard with which to comply, but as invoking an entire cultural shift in the banking industry, whereby the customer is in all ways, the primary concern. Many were extremely positive about the importance that Consumer Duty gives to fair pricing, product governance, communication with customers, and caring for vulnerable customers. So, your key takeaway for this discussion point should definitely be the emphasis on moving away from regulation and compliance and seeing the principle in its transformative value. Will this play out as the industry hopes? 

3. Digital inclusion 

With increased adoption of digital channels, as well as the uncertain economic landscape, digital inclusion has never been more important, particularly when it comes to vulnerable customers. As we all know, high street banking has considerably diminished since the pandemic. As a result, adoption of online banking is no longer the most pressing issue, with attention turning to how platforms can sufficiently replace and digitise the element of human empathy that we have lost through closing branches. Moreover, with the current cost-of-living crisis, the links between financial literacy and digital literacy are going to be even more pronounced. In response, banks are looking to have increased presence in spaces like food and clothes banks to target those affected by rising prices.

The most common question now is how the cost-of-living crisis, and digitisation are going to expand the demographic of vulnerable customers. Which areas of society are going to be needing more (and perhaps unexpected) support in the coming months?  

4. BigTech and ecommerce

If we’re talking about the risks of exclusion, we should also be talking about the technology that is demanding digital inclusion in the first place. Many contributors spoke on the gradual infiltration of BigTech and ecommerce companies like Amazon, Apple and Google into the financial industry – where will they invest first? Does their comparatively low regulation make them a threat to banks, as well as a danger to customers’ financial well-being? The crux of BigTech’s involvement in the industry, however, is their role in the next phase of embedded finance. Uber’s well-known and successful use of embedded payments is now the norm for many platform giants, but what’s next beyond embedded payments? With players such as Revolut embracing the Super-app model, will the lines between embedded finance and Super-apps overlap further? Whatever term you prefer to use, the end goal remains the same: to enable convenience, ease and speed at the customers’ fingertips.  

5. Instant, flexible, affordable payments for all

New technologies, regulatory standards, open APIs and digital currency pilots are making payments faster, cheaper, and more flexible than ever before. Open banking payments, for example, are seeing more take-up in ecommerce transactions because they remove card processing costs while reducing fraud risks, making this an attractive option for merchants. There is still work to be done, however. More must be done by financial institutions to help shift customer attitudes and build consumer confidence in open banking payments. Then there is the potential of Variable Recurring Payments (VRPs), specifically Sweeping VRPs, set to give customers more flexibility. This is sure to shake up current payment methods such as direct debits, and impact ecommerce and subscription payments moving forward.  On the note of competition, ‘Tap to pay’ by Apple has launched in the US, further disrupting the existing payments value chain – we’re keeping an eye on how this plays out.     

More must be done by financial institutions to help shift customer attitudes and build consumer confidence in open banking payments.

Let us know what you think on LinkedIn or via email – do the five takeaways align with your priorities? Did we miss something crucial? How do you think the industry should respond to the current challenges? At MoneyLIVE we’re always keen to discuss your opinion on the hot topics of the industry at the moment, so don’t hesitate to reach out to me on LinkedIn for a discussion.