Over the past two years, consumers around the world have been quick to adopt digital payment options. But as boundaries blur between digital and physical realities, there is a gap in the market where payment experiences are transforming from single interaction points to be more complex.
During the panel discussion on The Digital Payment Landscape, executives from Accenture, Plaid, STC Pay, Vodacom and Citibank and more shared why mobile has a special part to play in the next generation of digital payments, specifically sharing how open banking and super apps will shape the world.
THE RISE OF OPEN BANKING
While COVID drove quicker adoption of digital payments in general, it also cast light onto the need for open banking. Per the speakers, open banking is the idea that you can access your bank account as a consumer or small business using an API instead of through direct communications with your bank. This then lets you move your financial data or money wherever it’s needed through those APIs based on consent-based access granted to the bank account.
With open banking, companies can overlay new services on top of financial services applications. While adoption of open banking is occurring at different speeds in different places, from the United States to Brazil to Australia, it has global scale.
“This is going to become a global phenomenon in the same way digital privacy has become one…as more and more people have phones in their pockets and banking apps on those phones,” said Keith Grose, Head of International at Plaid.
The fact that mobile phones are so widespread presents huge opportunities for telcos and other businesses to build additional revenue if they can safely identify the person and connect with their bank. If open banking proves to be secure and flexible as advocates claim, then it will lead to what many members of the panel referred to as “super apps.”
POWERING UP SUPER APPS FOR THE DIGITAL FUTURE
There is a drive across all industries towards a seamless customer experience, but delivering on the promise of great CX remains difficult. The panel suggested that to meet this need, super apps would emerge.
But what is a super app? It’s an app that unifies the realms of commerce with banking and even social media. With growing access to smartphones and telecommunications spreading around the world, these smart apps may well be the future of global digital payment. In regions like sub-Saharan Africa, super apps could represent a way for consumers and small businesses to thrive where traditional banking and financial services have fallen short.
“One of the benefits of operating across the African continent is needing to solve real problems for real people,” said Mariam Cassim, CEO of Financial Services at Vodacom Group.
TELCOS HAVE PAVED THE WAY FOR MOBILE BANKING
Underlying the development of mobile banking and digital payments, telcos have built infrastructure and connected the world. With the advent of 5G and growing need to monetize mobile experiences, brands and telcos themselves will look for possibilities to develop their mobile payment capabilities. Even if these capabilities are not part of a super app, by operating on the 5G network, telcos ensure security, speed and connectivity across the board.
Beyond infrastructure, telcos have also been continuing to innovate in terms of product offering. Mariam Cassim shared one example in which Vodaphone offered unsecured microfinance lending as an advance on their minutes. Despite the risks, they saw less than 0.5% of bad debt on those micro advances because they invested in building customer relationships.
One other challenge that telcos have found unique solutions to is the question of credit. Financial services often have highly regimented or lengthy processes to confirm risk and creditworthiness. But telco data could supplement that, per Sulabh Agarwal of Accenture, and help influence digital payments in the future.
And Agarwal wasn’t the only one to see mobile and digital playing a large role in global commerce and finance.
“The future of finance is fast, borderless and mobile-first,” said Plaid’s Grose. “The payment methods that were built for the physical world are having to change for the digital world… We’re at the beginning of a big era of transformation globally.”