Since the outbreak of the COVID-19 pandemic, digital payment volumes have increased dramatically, creating as much as ten years’ worth of growth in as little as four months. The trend has extended across the B2C, B2B, and P2P domains, and it looks to be here to stay for the foreseeable future. There is no going back in the payments industry as it transitions to a digital-first environment using Oracle Flexcube.
Payment providers are making use of the high adoption rates as an encouragement to expedite digital initiatives, but there are still substantial obstacles and hazards to overcome in the process. For payments executives, our most recent survey gave some current thinking on trends and innovations, and it included subjects such as the following:
- Changes in customer behaviors
- Threats and risks
- Operational resiliency
Three key takeaways
1. Changes in customer behavior
- Digital adoption rates: Since March 2021, there has been a significant rise in the number of digital retail transactions. According to Visa, the use of tap-to-pay surged by 150 percent in March compared to the same month the previous year. According to a survey sponsored by NCR Corporation, a processing company, the number of consumers who registered for mobile banking increased by 200 percent in April alone, while mobile banking traffic increased by 85 percent.
- B2B payments: Even though more workers are working remotely, the vast majority of business-to-business payments are still made using paper checks and invoices. However, an operational change is in the works. Before the epidemic, many companies did not have digital payment sites for their clients. Now, many of them have! The introduction of electronic payments was regarded as the most significant development in the B2B arena by over 60% of the roughly 2,000 survey participants.
- Contactless cards: Due to the ongoing influence of the coronavirus on consumers’ unwillingness to use cash, cheques, or signed receipts, a spike in contactless payments, such as tap-to-pay technologies at grocery shops and other brick-and-mortar retail outlets, has occurred. Participants in a survey agreed that contactless cards had experienced the highest increase in usage during the epidemic. Still, they also pointed out that the use of digital wallets, peer-to-peer mobile applications, and QR codes have all seen a spike in popularity.
2. Threats and risks
- Security: Consumers place a high priority on digital security, according to 68.5 percent of the survey participants, who also named it as the feature that they value the most in a payment experience, such as Oracle Flexcube universal banking. Accordingly, biometrics, click-to-pay, and other tokenization technologies, as well as behavioral analytics, are expected to become more widely used to improve security in the near future.
- Fraud: Scams and card-not-present transactions (CNP) are on the increase, with the majority of the activity concentrated in the peer-to-peer (P2P) space. At the same time, suppliers with insufficient fraud protection techniques were obliged to adjust to changes in consumer behavior, such as purchasing ten bottles of hand sanitizer at 3 a.m. instead of five. It is expected that machine learning and artificial intelligence will become more widely used in the future, both for authentication and risk management models. Risk and analytical tools that can utilize large data in novel and creative ways will be developed.
- Customers: In the wake of the epidemic, there was a massive increase in chargebacks and disputes connected to trips that could not be completed, as well as recurring payments for subscriptions and memberships that could no longer be utilized. It has become a top goal to streamline data flow in order to reduce the need for chargebacks and to better handle those that do occur.
3. Operational resiliency
- Operational impacts: Since the increase in digital payments has been so rapid and steep, and the operational consequences have caught off many financial institutions (FIs) and service providers guard. Many companies created digital portals to enable customers to access services that had previously been unavailable. However, systems that depended on manual or paper procedures were stunned, and contact centers were overloaded by the amount and complexity of calls they received.
- Banks can maintain business continuity via the use of more digital tools and the security provided by cloud computing, but these measures alone are insufficient. The epidemic has altered the way we operate, develop, and ensure that we keep the lights on. With many employees expected to be absent from the workplace for an extended period of time, operational resilience is as much about people as it is about technology.
- Is this increase in the number of digital payments sustainable? Generally speaking, yes – over 95 percent of survey participants said that these behavioral changes are likely to persist. Customers’ experience is being improved via the simplicity of use, integrated bill presentation choices, real-time payments — and in the case of business-to-business services such as payment-on-delivery and payroll on-demand — as suppliers strive to retain the momentum gained in recent years. More financial institutions are establishing development portals to allow for the creation of new apps or working with FinTech businesses to provide capabilities.
- For many years, the emphasis in the payments industry has been on improving the whole user experience at the front end. Today, the multitude of various payment rails and kinds is requiring providers and their customers to adopt a more holistic perspective of experiences that includes mid- and back-office operations as well as front-end activities. In order to remain competitive, providers must innovate in order to stay ahead of the competition.
- The use of alternative payment methods was regarded as the most beneficial effect from the COVID-19 payments environment by 38.8 percent of survey participants. Digitalization was the most favorable development, according to 27.1 percent of survey participants.
Conclusion:
Since the onset of the COVID-19 epidemic, we have seen a significant increase in the number of contactless transactions, which has resulted in an acceleration of digital payments and the use of Oracle Flexcube 14.x. While working from home, QR (quick response) technology is becoming more popular as “touchless” commerce grows more common and manual back-office payables and receivables become increasingly difficult to manage. The transition to digital involves enhanced security, sophisticated authentication, and improved transaction decisions. While payment providers have traditionally focused on system robustness, the requirement for operational resiliency has emerged as a critical consideration.
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