Jesse Sandoval, SVP & Director of Global Payments, East West Bank
We began this decade with a high deal noise on how payments would be changing and disrupting how business manage their cash flows.
“Predictions were made around how millennials would be killing the check industry, ACH would be replaced with faster/ real-time payments, and Fintech’s would rule the payment landscape.”
Fast forward to the tail end of this decade paper checks are still a key player, more so in B2B payments, banks are cautiously and slowly adopting Real-Time Payments, and banks are looking to Fintech’s as partners.
As we wrap up this decade, we are now hearing that real-time payments will reach ubiquity by 2020 and that Gen Z promises to do what millennials did not do this past decade.
"Change is coming, and there are lots of signs to prove it is coming"
The reality is that we do not do well with change; we will need more than just a new generation to change the U.S. payment landscape truly. Change is coming, and there are lots of signs to prove it is coming, but it is fueled by the success we see in China with their Digital Platforms dominated by two key players, WeChat (Tencent) and Alipay and by changes in demographics and social economics.
Both WeChat and Alipay have deals with payment processors to bring their payment technology to the U.S. We are seeing some merchants on both the West and East Coasts offer this payment option to customers. So far, it is being sold as a tool to help Chinese tourists, but it has the ability to expand to more.
Key factors that will drive change this next decade
Consumerization is real – the line between consumer and business is becoming grayer, making the “user experience” a critical success factor.
Replicating the success of Alipay and WeChat in America – The battle for dominance among U.S. digital platforms will intensify. Big players like Amazon, Google, and Apple, are a promising deep-rooted consumer and merchant solutions. China payment providers will continue to be an influence and will look to tap into the U.S. consumer market.
Mobile and more Mobile – With more than half of the world’s population owning a mobile devise technology around e-wallets will be vital to meeting consumer demands.
Millennials and Gen Z are very comfortable using mobile technology for their day-to-day needs and look to their phones as mobile wallets
Credit Cards – CC will continue to be a key payment rail, but the form in which that credit card is used will continue to evolve.
Out with the Old – We will begin to see banks replacing/ upgrading their legacy payment systems. Many of these systems were built 25+ years ago and use old technology, making it challenging to work with today’s technology
It will be critical for Banks and Fintechs to better collaborate to help power the future of payments. Banks have brand recognition, expertise, and a loyal customer base while Fintech’s bring innovative technologies and flexibility to help bring products to market much quicker.