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Partnering to Scale and Succeed



By Matthias Setzer, CCO, PayU


2018 has been a huge year for partnerships across the payments industry. We’ve seen e-commerce giants like Walmart partnering with payments titans like PayPal, and Swedish payments start up Klarna raising $20 million from global fashion retailer H&M. These partnerships have one common goal: to fight for a bigger share of the wallet.


To form the most successful partnerships though, companies must approach with a rational and considered mindset, starting by identifying the key players that they need to collaborate with. The most profitable partnerships will recognise and capitalise on each other’s strengths to deliver industry leading market offerings.


The changing face of e-commerce

E-commerce across sectors is in the midst of a revolution. The widespread global adoption of online devices means that technology is permeating every aspect of any digital shopping or purchasing experience, creating a host of challenges and opportunities for consumers and merchants alike.


Data collected from those online devices is used by merchants to tailor respective shopping experiences, from the very first targeted ad, to the payment transaction and delivery method. When considering that, according to PwC’s 2018 Global Consumer Insights Survey, social networks ranked number one for finding inspiration for purchases, it is fair to say that consumer experience and the projection of a company’s online brand has never been so important. If businesses are to succeed in the digital era, leaders must ensure that their consumer offering is of a consistently high quality, globally competitive and as hassle free as possible. Adobe’s eConsultancy Study shows that merchants recognise this, with 54% considering customer experience to be their most important focus.


The importance of collaborative partnerships for scalability

One fundamental pillar that is integral to positive customer experience, and consequently merchant success, is the payment infrastructure. Consumers have become accustomed to an ‘always-on’ lifestyle where connectivity and convenience are no longer considered luxuries, but essentials. This ‘always-on’ attitude manifests itself through the expectation for instantaneous service and transactions. This is especially prominent in the e-commerce sector where consumers are able to access services at any time on their smartphone, expecting the same quality of service every time they do. They expect the service at any time, and it needs to be seamless, secure and processed with their locally preferred and habituated payment methods.


The e-commerce market is not one that merchants can afford to ignore. Statista’s research shows that in 2017, retail e-commerce sales worldwide amounted to 2.3 trillion US dollars and e-retail revenues are projected to grow to 4.88 trillion US dollars in 2021. Merchants need a payment infrastructure that is capable of scaling in line with this rapid growth and are increasingly turning to more deeply integrated partnerships with payment providers to ensure they deliver the speed that consumers are looking for.


Astute leadership teams will forge partnerships that place technological innovation at the very heart of a combined business model, allowing them to become market leaders through a combination of reputation built on heritage and new business models that fully capitalise on the benefits of technology.


Modern day payments platforms are increasingly designed with the technology, speed and architecture that merchants need to compete. This will be particularly relevant as they open up into new markets which bring with them an increase in user demand and the associated additional complexities. Partnering with payments providers to build these platforms that scale with growth, maintaining speed and functionality, will be critical for any merchants looking to expand across borders and into new markets.


The consumer benefits

Partnerships between merchants and payment service providers can have huge benefits to the end user. Firstly, and perhaps most noticeably, will be an improved user experience. More sophisticated and modern payment infrastructure will contribute to a fast, frictionless transaction experience. Better connectivity will make international payments seamless.


Secondly, as payment service providers are duty bound to adhere to stringent regulation around data safeguarding, a consistently high quality of security is guaranteed. This leaves the consumer safe in the knowledge that their personal payment details are well protected against fraud and breaches. On top of the pure payments data, data can be shared to facilitate a seamless experience or allow for advanced payment methods like credit. A consumer needs to be safe and assured that his or her data is staying safe and will only be used for the purpose at hand.


Lastly, by partnering with a global payment service provider, it is likely that merchants will be able to offer international consumers a payment method tailored to their local market. By offering this level of interoperability between global transactions and local market nuances, merchants will capture the entire market potential. For example, in Brazil as much as 70% of local payments are made by card payments with instalments and almost a quarter of online payments are made with Boleto Bancario, a cash payment method. If they fail to offer local payment processes, merchants could miss out on significant opportunities to increase revenue.


Creating walled gardens

While the impact of these partnerships is predominantly positive for consumers, as with any innovation or large partnerships, we must not overlook potential downsides. Online devices are generating more and more data that retailers can use to hyper-personalise product offering. As retailers and other large platforms expand to offer a huge range of products and services, allowing customers to consume, buy or enjoy almost anything, there is a real danger that we see the creation of a walled garden.


These all-encompassing models only work if they can capture a majority share of the consumer’s time, money and attention. It is easy to predict that partnerships will become more exclusive, providing certain services only to a specific platform or retailer in order to differentiate themselves from the competition. This may ultimately limit consumer choice, compared to a fully open and interoperable internet.


The future

It’s clear to see that partnerships between merchants or platforms and payment service providers will become an increasingly prevalent trend across the payment landscape. In particular, we are likely to see smaller, more technologically innovative players being acquired and used by their partners to get ahead in the increasingly competitive market landscape.


Partnerships can be unpredictable and challenging, but one thing is for certain, they hold unparalleled opportunity for innovation. Even more so than in 2018, we can expect to see partnerships being formed in 2019 that are bigger, more exclusive and of a higher investment value.


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Bank-fintech partnerships can shape the future of cross-border payments




Steve Naudé, Head of Wise Platform


People and businesses are more interconnected than ever. In today’s global economy, international payments have taken on new significance in enabling cross-border travel, trade and investment. Despite this, moving and managing money internationally continues to be expensive and often unpredictable due to the inefficiencies of an opaque and outdated traditional banking system.

As it stands, international payments are neither sustainable nor economical for individual customers or SMBs. High fees and a lack of transparency especially prevents micro, small and medium businesses (SMBs), which already operate on razor thin margins, from tapping into their full growth potential and accessing new markets. A 2021 Wise report found that 56% of SMBs are put off from going international due to the frustrations with existing international banking processes.

It is no wonder that there has been a boom of fintechs and specialised digital providers that offer cheaper and faster payment experiences, and are increasingly becoming the platform of choice.

Yet, banks still capture a lion’s share of cross-border payments. Platform switching can be a chore for many customers, who are familiar with and have deep trust in their bank providers, and often lack resources or knowledge when it comes to trialling new ways of managing money. Despite the plethora of options available to customers today in the form of fintech and specialist providers’ apps, it can be time-consuming and emotionally difficult to redirect money to a new provider.

It’s also not always obvious to customers that they need another provider for international payments, because hidden fees make it difficult to know that you’re getting a bad deal. So, for all of these reasons, the most convenient place for them to manage money internationally is with their existing bank provider.

The industry should be looking not to competition, but to partnerships, to solve the problem of international payments. The benefits of partnerships are compelling. According to Cornerstone Advisors, nine in 10 financial institutions consider fintech partnerships to be important to their business, up from 49% in 2019, and nearly two-thirds of banks and credit unions have entered into at least one fintech partnership over the past three years.

There are significant opportunities to be unlocked from combining the agility and technology of fintechs with the reach and infrastructure of established banks. These partnerships can serve as a catalyst for global growth – with each new integration, more people and businesses get access to faster, better and transparent international payments.

Such integrations are often achieved using cross-border payment APIs (Application Programming Interfaces) which are embedded into a bank’s existing infrastructure. They help businesses, banks, platforms and financial institutions scale their capabilities quicker, streamline their payment processes and ultimately grow revenues  – removing many of the frustrations and costs associated with building out new functionality in-house.

However, as transformative as they are, it’s not always easy for banks to work with API solutions. Historically, banks have been asked to integrate new and advanced technologies into their systems, but are given minimal allowances for what’s different about their core architecture. The reverse should be in fact true; fintechs should focus on offering adaptable solutions that can be layered with the bank’s existing capabilities.

For example, banks rely on compatibility with existing financial architecture, including messaging networks such as Swift. Wise Platform recently unveiled a new Correspondent Services solution that enables banks to route Swift messages directly to Wise. This will enable their customers to benefit from the convenience of Wise and the breadth of Swift without needing to implement any major changes to their systems.

Another key element to the success of bank-fintech partnerships is that both parties have a mutual understanding of goals. Both parties must see eye-to-eye on risk management and commit to a collaborative approach.

With the increasingly fast-paced rate of financial innovation, there has been – rightfully – increased regulatory attention on compliance framework in fintech-banking partnerships, which can make partnerships appear riskier than they are and overshadow benefits. However, this worry can be alleviated if banks choose fintech partners who have demonstrated strong compliance expertise, and have experience managing regulations across different markets.

As the global economy becomes increasingly interconnected, it is clear that fintech companies should no longer be seen as simply disruptors or competitors when it comes to international payments. Rather, they are integral partners who will play a major role in transforming international payments for good. Strategic partnerships between traditional banks and fintech players will redefine cross-border travel, trade, and economy, and provide the foundation upon which people and businesses can take part in a global marketplace.

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Improving CX in digital-first banking




By Nina Mack, CX Director at CTI Digital


The financial industry has undergone a seismic transformation over the past few years, with digital-first banks like Monzo and Starling leading the charge. These banks aren’t just changing the way we spend money; they’re completely reshaping customer experience (CX) within the sector.

But the fact that digital-first banks don’t have high street branches is both a blessing and a curse. The ability to complete their daily banking tasks from home is great for customers, but knowing they won’t be able to speak to someone in person when they have a problem can also be off-putting. That issue of service and confidence poses a significant barrier for digital-first banks looking to expand their customer base and can even cost them customers they already have.

Competition in the market is ramping up, from traditional banks expanding their digital offerings to new brands entering the space. The challenge for digital-first banks is to make sure their CX is unbeatable right from the start. They have to be able to handle all of their customers’ needs through that digital medium; if they fail, there is no plan B.

How do digital-first banks get CX right?

The modern customer has high expectations of their online experiences. They expect seamless, convenient, and personalised interactions as a minimum. For banking platforms which are differentiating on user experience, ease and efficiency, expectations will be especially great.

The usability of the app or online platform is critical, but an effective approach towards CX transcends individual features. You can build the most beautiful, functional, accessible app in the world, but if your customer still has to print out and send off a form to change the name on their account, their experience is going to be remembered as irritating and inconvenient. It’s about transforming the entire banking experience into a frictionless journey.

Leaders in the field, such as Monzo, Starling and Atom, are making great strides towards this by, for example, enabling customers to complete ID checks within their mobile apps. But there are also challenger banks, like Aldermore, which are delivering some impressive digital innovations. The banks which are able to remove the irritation customers face elsewhere are the ones which are growing the most.

Digital-first banks also need to make sure they are constantly communicating trust and reassurance through their CX, as fears around security are often what stops people switching away from traditional banks. Make it quick and easy for customers to speak to your support team when something goes wrong, for example. Make sure the support team is able to understand and resolve their issue immediately.

Consider the holistic customer

But we can go further. Money isn’t just currency; it fuels people’s aspirations and ambitions. Digital-first banks need to take a truly customer-centric approach, looking at how money fits into every aspect of their customers’ lives and how they can support them throughout.

The likes of Monzo have started to think this way, with features which allow customers to categorise their spending and decide how much they want to budget for each category, or to save money in easily accessed saving pots.

There’s more that can be done. The next frontier for digital banking will be integrating all financial activities into a unified digital experience. Imagine a dashboard that enables visibility across all of your bank accounts, consolidating transactions, account management, and even alerts for car lease expirations or subscription renewals.

Digital banks can also create an experience which helps to combat financial illiteracy. These platforms have the potential to educate users, from children to young adults, about managing money, budgeting, and interest. Such initiatives can transform banks from transaction facilitators into essential life assistants, building a deeper bond with customers.

Essentially, the key to enhancing CX in digital-first banks lies in viewing the entire customer journey holistically. They have to understand every financial touchpoint, interaction and customer need and feed that into the roadmap of their app or platform.

With physical branches on the decline, digital banking is poised for exponential growth. As the industry expands, CX will be the true differentiator between the winners and the also-rans.

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