How user experience drives payment innovation
The payments industry is facing considerable change largely because of factors such as digitalization, the increasing prevalence of omnichannel customer experiences, and the ongoing shift from owning assets to the sharing economy.
A payment revolution is underway, but although it is powered by technology, this isn’t a technology revolution at all. Instead, it is about people and their requirements. Now, more than ever, the success of any new payment innovation depends entirely on the quality of the user experience.
The most prominent example of new ways to pay remains PayPal, arguably one of the first examples of fintech (which has now become an official word in the Oxford English Dictionary). Chip-and-PIN and contactless payments (tap and go) are other ready examples, but there are many more, including Apple, Samsung and Google Pay. Venmo is big in the United States, allowing easy bill splitting, and the rapid exchange of funds between individuals.
Karri, a local application, lets harassed parents make on-the-fly payments for school projects, excursions and the like.
What all these payment innovators have in common is that they solve a well-defined problem for their users in a way that makes financial sense and is, above all, secure, easy and quick to use.
This is the crux of payments innovation. It isn’t about being “smart” or “technologically impressive”, it is about delivering new levels of convenience. A key success factor is ease of use, driven by the increasing consumerisation of technology—hardware and software so intuitive to use that manuals are the exception rather than the rule.
A new generation of customers
There’s another factor behind the rapid rise of fintech innovation in general, and payments in particular: a new generation of customers.
The older generations find it fascinating that one-third of Gen-Z consumers (born in the 1990s to 2000s) want to share their payments on social media. Less surprising then, is that only 3% of Baby Boomers would feel comfortable with what is being called social commerce. In other words, digital natives do things very differently. They expect immediacy, and accept that much of life takes place on digital platforms. Gen-Z consumers demand personalised, highly relevant experiences. For these consumers, online banking and then banking apps are not seen as innovative; they are taken for granted. In addition, they want digital tools that manage payments, bills, expenses and personal finance. The expectation is that banking tools such the wallet is no longer passive: it must do the thinking.Immediacy remains a deal-breaker. Many might remember a time when payments took days or even weeks to clear. That’s out of the question today. Real-time payments, instant settlement and clearing are the name of the game.
And while Boomers and their elders may well regard aspects of this revolution (such as social commerce) with suspicion, they are quick to adopt the aspects they like.That includes great user experiences and, most certainly, immediacy.