Show Me the (Virtual) Money
We might not be living in a truly cashless society yet, but consumers and businesses have set a new standard for virtual payments. The payments landscape is evolving faster than ever before, having a lasting impact on transactions. From buying groceries to paying rent, businesses are forced to offer more flexible options for their customers, suppliers and employees to stay relevant.
Competition in the digital money age is fierce, with companies competing on price, innovation, technology and speed to market. One way businesses can differentiate themselves is by replacing outdated payment methods, like paper checks, with more relevant digital options, like Apple Pay, Zelle and eWallets. Switching to digital payment methods can settle payments electronically and apply payments faster, a much less expensive method that can vastly improve their working capital. Although many companies are already embracing this change, our research found that business leaders still cite checks (95%) as the most common payment type.
To stay ahead of the competition, here are four trends impacting the payments landscape and the four technologies revolutionizing money that companies should be tracking.
Four Payment Trends for Businesses
- Consumers are expecting a seamless experience. Today, the speed and convenience of online shopping has shaped customer expectations in industries way beyond retail. Consumers now compare their experiences across industries, which has brought new and nontraditional competitors into the marketplace. Personalized and seamless customer experiences are no longer demanded, they’re expected, and companies are racing to keep up with consumer needs.
- Mobile technology is disrupting business operations. By 2020, it’s estimated that almost $3 trillion worth of payments will be completed on mobile. There seems to be a mobile app for everything today that offers consumers with a convenient alternative to gaining access to a wide range of services used on a daily basis. Everything can be accessible with the swipe of a finger, whether you’re ordering your favorite food or a ride that arrives within minutes, or you’re purchasing goods online delivered within an hour. The question on many customers’ minds is – why can’t payments be made and settled within an hour, too?
- Gig economy workers want faster payments. The gig economy operates on a global scale, and it’s influencing how employees want to be paid. Gig workers are often hired, managed and paid through mobile apps. Independent contractors and contingent workers who work multiple gigs expect to be paid every week, every day or even after every gig. For employers, offering quick and flexible payment options to employees and contractors is a good differentiation opportunity to compete in today’s on-demand marketplace.
- Global competition is heating up with real-time payments. More than 35 countries have already instituted some form of real-time payments system where payments can be sent 24/7, 365 days a year and settled in seconds vs. days. In the US, the public and private sectors are collaborating to adopt a real-time payment system to stay competitive in the global marketplace. Real-time payments offer the opportunity to dramatically simplify payment processes, from transaction initiation through reconciliation, as well as speed up settlement.
Four Technologies Digitizing the Cash Experience
- Blockchain – Blockchain is used to transfer information between two trusted parties in an efficient and cost-effective manner. Most commonly understood as the technology that underpins cryptocurrencies like Bitcoin, it can also help make advancements in payments. Blockchain can potentially be used in payment processes to improve the transparency, security, speed and cost of payments for businesses. The Interbank Information Network (IINSM) is one example of this technology being used to streamline payments. This live blockchain service offered by J.P. Morgan minimizes friction and reduces delays in the global payments process.
- Internet of Things – The Internet of Things certainly isn’t new but digital commerce has come a long way since the days of the desktop, with new digital devices continuing to enter the marketplace on an ongoing basis. Today, consumers are increasingly connected—from their smartwatch to automated home appliances. Many of these smart devices are payment-enabled, so users can search for an item, get recommendations and make a purchase in one swift and painless experience.
- Artificial Intelligence (AI) and Machine Learning – Most of us are already using AI in our daily lives, whether it’s a chat bot offering customer assistance online or a digital assistant, like Alexa or Siri. This technology is increasingly being used to enhance the customer experience and provide personalized recommendations for consumers. Similarly, machine learning has unique capabilities for a broad range of payment applications. It’s especially effective for analyzing large data sets, finding anomalies in the data and revising algorithms to adapt and learn from the data.
- Application Programming Interfaces (APIs) – When you make an in-app purchase on your phone, the app likely has multiple APIs working together to exchange data on a real-time basis to deliver a consistent experience. APIs allow payments to be made quickly and seamlessly directly from the application you’re using by simply embedding a payment experience into a broader application.
Preparing for the Future of Payments
The payments landscape will continue to evolve, but we expect the pace of change to steadily increase. More businesses will be using digital processes and enhanced workflow capabilities to easily monitor, audit and manage payments real-time. These advancements will create opportunities for faster settlement, a better customer experience and improved cash flow visibility and working capital. Companies looking to stay ahead of the curve should be taking the necessary steps to digitize their payments capabilities, providing convenience, security and meeting real-time needs of their key stakeholders, whether that’s employees, customers or business partners.
Jennifer Barker Bio:
Head of Treasury and Digital Solutions,
Commercial Banking, J.P. Morgan
In her current role as Head of Treasury and Digital Solutions, Jennifer determines and executes the Treasury Services and Digital product strategy for Commercial Banking. This includes bringing product innovations to market through internal build or partnerships, segmenting clients and packaging products according to client need, setting pricing strategy, developing all product collateral and delivering a best in class end-to-end client experience.
Jennifer was previously the Asia Pacific Treasury Services Commercial Banking sales and segment manager, based in Singapore. In this role, she was responsible for developing and executing the regional Asia Pacific inbound cash management strategy for Commercial Banking.
Prior to that, Jennifer led the Asia payables and receivables product management function, the Asia core cash product build out agenda and the ASEAN cash management product portfolio. Before relocating to Singapore, Jennifer was the Corporate Client Banking Treasury Services Regional Sales Manager for the US Midwest and Canada. Jennifer has also held other roles in Sales Management and Product Management.
Before joining J.P. Morgan, Jennifer was a Manager in Accenture’s Strategic Services practice, focusing on solving key marketing, financial and operational issues for Financial Services clients.
Jennifer has a BA from James Madison University and an MBA from The University of Michigan. She and her family reside in Dallas.