Mobile payments have revolutionized what banks can achieve
The payments industry has gone through some drastic changes, not least the methods with which individuals complete financial transactions. From gold, to cash, to phones, methods of paying for goods have come a long way in a short space of time thanks to the digitization of society.
Today, transactions are processed in the comfort of home or on the move thanks to the evolution of mobile technology. Apple has revolutionized this new development with Apple Pay, a digital payment platform that offers a cheaper, faster alternative to old-school financial payment processes such as Swift. Competitors have already sprung up, most notably Android Pay, developed by Google to offer its users an alternative to Apple Pay, which isn’t available to Android users.
The move to mobile, contactless payments has many benefits for banks too, particularly the customer data that’s created and collected every second of every day when consumers use their devices to pay for goods. The data collected is often stored in separate silos within the bank’s IT infrastructure, where, consequently, applications in the middle layer pool the data together in a coherent form. By analyzing this data, banks can build a portfolio of new products that suits the needs of an individual. The opportunity is also there for banks to start offering deals based on frequent purchases.
Mobile payments at the forefront of innovation
While it’s essential to have a responsive middle layer to pool and analyze the data, having a robust and speedy mid-office system is imperative to seamlessly implement what has been gleaned from the information.
The progression of the Internet of Things within the banking and payments industry cannot be underestimated. With machine-to-machine communication and tracking capabilities, banks can determine location and offer deals in accordance with partners nearby.
This is also relevant for other industries who can make use of machine-to-machine communications, for instance the insurance industry. Connected cars can send information to insurance companies in the event of an accident and by doing so the opportunity to cross- sell other services and loans – to fix the car for instance – can manifest itself. This will improve customer experience thanks to the incentives, and will provide more data that can then be used to improve customer service.
The introduction of Apple Pay has exacerbated the need for banks to improve their current technology architecture. Mobile payment platforms such as Android and Apple Pay are born from technology companies at the forefront of innovation. In order to stay relevant, the banks will have to follow suit and innovate, and thanks to their standing in society, they have all the collateral needed to make a success of such an endeavour.
Individuals are migrating to using mobile payments services because of the convenience it affords them. This is similar to the progression in contactless payments, which has improved the convenience of paying for goods, omitting the need for chip and pin.
Security will always be a concern for users of such services, as early adopters are stepping into the unknown. However, thanks to the trust that banks have and the standing of the companies providing the technology, taking advantage of these won’t fill users with dread.
While it’s obvious technology businesses have disrupted the banking sector with their offerings in the realm of payments and money transfers, they still have some way to go to supplant the established giants, who have centuries’ worth of experience.
Society is ready for a digital revolution in banking, particularly payments, and by banks innovating and partnering with technology providers such as Apple and Android Pay, they can be sure to always be one step ahead of those that are trying to step on their turf.
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