In the uncertain new era of Covid-19, consumers are changing their habits and are increasingly growing accustomed to purchasing goods and services online.
According to a recent poll conducted by Standard Chartered, 64% of respondents had become positive to online shopping during the pandemic. Before the crisis, two-thirds of survey respondents said they preferred to shop in-person compared to 48% now preferring online payments to in-person card or cash payments. With cashless transactions on the rise, a sizable number (44%) of respondents expect their respective countries to go fully cashless by 2030.
“In a world where people are being more cautious with their spending, being able to keep track of where your money goes has never been so important,” states Aalishaan Zaidi, global head, client experience, channels & digital banking at Standard Chartered. “One way to do that is to keep your payments digital and our own data supports this shift with cash withdrawals from ATMs declining to half the levels they were two years ago as online payments have increased.”
The shift from physical to digital is a reality check for businesses to reexamine their financial processes and look at areas that need to be tweaked or overhauled. According Asset Benchmark Research’s Treasury Review 2020, treasury management professionals including CFOs and treasurers saw payments as the one area that could be disrupted by emerging technologies such as blockchain.
For treasury management professionals, this could mean working with their banking partner to streamline payments processes into a single interface, instead of having to individually connect to every mobile wallet and domestic payment network. With digitalized payments, treasury management professionals can not only improve reconciliation times, but also provide a more targeted and meaningful customer experience via the analysis of payment data for instance.
In Asia, the battle of payments technology has been a major part of the region’s overall financial technology (fintech) innovation drive. According to KPMG’s “Pulse of Fintech” report for the first half of 2020, Southeast Asian unicorns Gojek and Grab both were active in increasing their payments capabilities and were the companies involved in the top fintech deals during the period.
“We will likely see more bundling of the capabilities that are necessary to deliver a seamless experience for digital transactions at the point of sale, online and through mobile,” says Chris Hadorn, global leader, KPMG payments at KPMG International. “We may also see more startups focusing on vertical industries, whether it's healthcare, real estate or others, to provide a highly digital and frictionless customer experience. And there will likely be larger-scale acquisitions in the play as well, as we begin to look beyond domestic payments and begin thinking about cross-border.”
Financial regulators were also active in forwarding the idea of digital payments with Singapore commencing the Payments Services Act earlier this year, providing an up-to-date framework for payment service providers operating in the city-state. Traditional payment companies have likewise enhanced their payment capabilities with Mastercard recently launching a Central Bank Digital Currency testing platform to enable central banks to assess and explore national digital currencies.
In a world that is ever-changing, companies need to be aware of the fast-moving processes around payments as it could spell the difference between surviving and not surviving in these difficult times.