As part of Seamless Europe 2021, Global Processing Services’ (GPS) CEO, Joanne Dewar, sat down with Sarah Francis of Polymath Consulting to discuss the global move towards a cashless society
The impact of Covid-19 accelerated innovation in financial services and disrupted longstanding consumer behaviours around borrowing, saving and spending. The question that remains, however, is how banks, brands and financial services can thrive in this new normal, and ultimately deliver better financial services in a rapidly evolving global market.
Covid-19 – a global unifier for consumer payment behaviour
The pandemic has had a unifying effect on how consumers procure goods and services and has accelerated the global shift towards a cashless society. As a result, we’ve seen wider adoption of digital payment propositions from older, more diverse consumer groups, which is changing people’s relationships with their finances.
As these changes in consumer behaviour were realised, fintechs were on hand to provide tailored support and rapid relief. Last year, for example, GPS supported long-term customer, Starling Bank, to launch its Starling Connected card, a debit card which enables friends and family members to shop on behalf of someone else.
This wider move towards digital is now being encouraged by governments, which are increasingly using digital channels to provide key support and disbursements, such as COVID relief. We’re likely to see this shift consolidated over the coming years, with announcements such as the Bank of England's recent appointment of a Central Bank Digital Currency (CBDC) Taskforce to explore the potential of a UK CBDC, and widespread predictions that Sweden will be fully cashless by 2023.
What we’re also noticing, however, is increased adoption of digitised financial services in developing markets. In Kerala, India, for example, we see that local fisherman are able to check the cost of fish at several markets before deciding which port will offer the best price for their catch.
As new markets embrace digital finance options, it’s important to consider how banks, brands and financial institutions can come together to make sure their needs are met, and understand the opportunities ahead for businesses who are willing to meet the customer on their own terms.
Challenges and opportunities in the new normal
Customers’ financial relationships with brands, banks and financial institutions are changing, and these same businesses need to evolve to keep up.
Consumers increasingly demonstrate an ‘objective focused’ relationship with their finances; a customer might want to save money, manage their spending or require cheaper access to FX. In this new relationship, the customer’s behaviour isn’t to ‘find a bank account’, but rather to achieve a specific goal. The bank account isn’t the end goal, but is perceived as a utility in the same way that gas, electricity or water might be.
So how do banks differentiate themselves when they’re perceived as tools? Largely through cutting-edge payments technology, tailored solutions for specific demographics and a seamless user experience.
The challenge for incumbent banks in this new normal, however, will lie in being agile enough to deliver these innovations while remaining efficient and profitable. Brands, too, will need to overcome challenges if they’re to serve new customers in expanding global markets. Through the development of customer bases to investment into initiatives such as apps and loyalty programmes, long-standing brands already have a well-established foothold in their market.
Embedded finance – the ability for non-financial brands to offer financial services as part of their customer journey – is widely seen as the next logical step in this process, but throws up a number of challenges when it comes to global expansion. Understanding and dealing with the complexities of regulation across borders, where each jurisdiction has its own laws and nuances on financial services, can prove to be very costly in the long term, and ultimately increase time to market.
The power of partnerships will drive the future of payments
So how can brands, banks and financial institutions succeed in a diverse, global landscape? The solution lies in the power of partnerships.
Historically, tier 1 and 2 banks have been unable to respond quickly enough to the rapidly changing needs of customers and have lost out on market share to more agile competitors. By forming partnerships with new innovators, however, and leveraging relationships with fintechs who are able to move and implement new solutions quickly, banks will be able to rapidly develop and deploy tailored products for diverse customer groups.
Ultimately these partnerships will lead to a more seamless, frictionless payment process for both customers and businesses. As a trusted and proven fintech enabler which is already tier 1 bank compliant, GPS is best placed to support these new relationships. In September 2018 we put this experience to use for RBS, allowing them to launch their own challenger bank, RBS Bó, to meet the needs of the changing market.
Moreover, brands stand to benefit from the global shift towards cashless societies if they can embed the appropriate financial services, but to do so will require working with established global entities such as GPS which have proven experience working across borders and navigating international payment challenges. Where a lot of issuer processors focus on a specific region or market, GPS prioritise convenience of service by offering cross border functionality via a single technology integration.
In practice, this means providing access to multiple jurisdictions through one platform. For the brand, this creates efficiencies as all processes are routed through one user experience, allowing them to focus on their ultimate goal – a seamless experience for the customer. GPS is trusted and proven in this space, having helped Razer Fintech expand throughout APAC, supporting the launch of WeLab in Hong Kong and being instrumental in the launch of Paidy in Japan.
Next generation payments in the new normal
If one thing is clear from the past 18 months, it’s that the rate of change is only going to increase. As more consumers adopt digital payment processes, demand for alternative payments such as Buy Now, Pay Later, open banking, crypto and more will continue to grow.
Being at the heart of the payment ecosystem, GPS is best placed to serve brands and banks throughout this transition. As a tried and trusted fintech enabler with proven experience supporting customers to bring new propositions to market, we’re confident in our ability to help businesses conveniently expand into new markets at scale.
Providing this access via a single point of integration means that banks and financial services providers can focus on what matters - delivering better, more seamless payments experiences for the end user as we collectively embrace the digital new normal.