Cloud technology pushes FIs to innovate in payments
In A decade of digital transformation in 12 months, 46 C-suite executives spoke to PYMNTS for their Q2 eBook on What The World Will Look Like As The Recovery Continues And The Next Iteration Of Normal Deployment. In this excerpt, Mark Smith, Payments Manager for AWS, explains how cloud technology has accelerated the commercialization of new payment acceptance platforms and made the notion of “invisible payments” possible in e-commerce.
Read the entire eBook here.
Consumer demand for a smooth and secure customer experience from their financial institution is increasing, leading some to pursue closer integration and collaboration with non-financial brands. For example, context-based commerce companies that offer buy-now, pay-later (BNPL) options at the point of sale, the push-to-debit that allows companies in the gig economy to send real-time payments to their drivers; and peer-to-peer (P2P) providers adding cryptocurrency offerings. Higher consumer and regulatory expectations will further drive financial institutions to innovate in areas such as one-touch and cashless options, emerging payment options (voice, QR code, contactless) and instant settlement.
This dynamic is made possible by the continued adoption of the cloud. Cloud technology has accelerated the commercialization of new payment acceptance platforms and made the concept of “invisible payments” possible within e-commerce. New modes of access, omnichannel distribution (including mobile payments) and the provision of “card-file” accounts offer consumers easier means of payment.
For example, BBVA began investing in its journey to become a digital data-driven bank in 2007. Continuing on this path, the company acquired 33% of new [retail] customers through digital channels in 2020, and in the first quarter of 2021, that number increased to 56% from the previous year. BBVA also announced in November new cloud-based technology for the equity markets area of its corporate and investment banking unit.
Sustainable post-pandemic change
Data has been used for acquisition and engagement for years, but in payments, data analysis focuses on two key use cases: fraud prevention and credit granting.
When it comes to fraud prevention, financial institutions are using the cloud to help protect financial services customers by detecting suspicious transactions while minimizing the number of customers whose transactions are declined when they shouldn’t be. ‘to be. Tools and services managed by artificial intelligence / machine learning help identify anomalies in data and reduce the number of false positive alerts. For example, Fraud.net, the world’s leading crowdsourced fraud prevention platform, uses the cloud to aggregate and analyze large amounts of fraud data from thousands of online merchants in real time, protecting over 2 % of all ecommerce transactions in the United States.
When it comes to extending credit, India’s FinTech KreditBee aims to increase loan eligibility for students, independent users, and newly banked people who are not integrated into the formal banking system due to lack of proper documentation. The company enables financial inclusion by extending consumer credit to its four million users. KreditBee’s goal is to offer different types of microloans, worth up to around $ 2,500, to pay for medical or tuition fees for its target segment. Customers can complete the entire lending process – from initial request to disbursement of funds to their bank accounts – in less than 15 minutes, compared to several weeks.
As open APIs and microservices continue to grow, leading to greater payment collaboration between financial and non-financial providers, we are seeing more and more third parties using APIs and microservices to transact with / through financial services companies. This means that while payment transactions may become more of a commodity, the data itself captured in the process can result in radically different business models and is essential in creating new and personalized experiences for customers.