In a world teeming with cutting-edge technology and the constant buzz of innovation, it is easy to get caught up in the race for the next big thing. Payments have been no exception. An era of innovation has created customer expectations of personalisation and ease of their buying journeys, right down to that last key moment of the payment.
Successful payments innovation has to mean different things depending on the different scenarios. In hospitality, consumers might be open to ‘just walk out technology’ and feeling one-step removed from a physical transaction, and in gaming, payments via a VR headset are well received.
It’s not the same when it comes to payments in financial services. When buying an insurance policy or transferring money internationally to a loved one, for example, it’s the subtle innovation that enables simplicity, reliability and security that makes for a strong payment experience.
Financial services firms need to remember that as payment innovation continues to gain pace, they might not require all the latest bells and whistles to achieve customer satisfaction. Success in this department lies in tailoring the payment technology to the transaction’s nature.
The top four reasons for financial services transaction abandonment all centre around a lack of simplicity and accessibility: multiple transaction attempts (56%), requiring too much information (52%), too many steps (48%) or being redirected to a different site (45%). This is completely understandable – when a consumer is navigating through the process of purchasing a complex insurance policy, for example, friction at the last moment can lead to them abandoning the purchase. Clearly, ease of use is not only a nice to have; it is a non-negotiable.
This is where financial services firms need to ensure they are using technology to set themselves up for simplicity. One-click payments, as an example, are one way to ensure ease of use and a smooth end to the transaction – 84% of financial services consumers believe it’s important to be able to pay in this manner. Another quick win is in making sure payment details can be saved to enable faster future processing, which is called out as being important to 82% of consumers.
Incremental changes like these can remove considerable obstacles and edge towards a more seamless payment experience.
Just because financial services payments might not be taking place via VR headsets and smart watches, that doesn’t mean it’s a one-size-fits-all approach.
Globally, more than 65% of consumers prefer to make financial services transactions online through apps or websites, but in Spain and France, third-party providers remain popular. It’s the same when it comes to payments methods too. While credit and debit cards are a popular choice for payments for 41% of respondents combined, there is a significant portion of the market open to using alternative payment options, which is well noted as being more pronounced in markets like China, where card preference dips to as low as 13%.
The takeaway for financial services providers? A single-channel or method approach isn’t sufficient if financial services are looking to cater to global markets. To effectively engage with customers and meet them where they are, and how they’d like to pay, financial services providers need to focus innovation investments in developing a consistent and high-quality experience across all touch points, and across all methods.
Finally, the bedrock of any excellent financial services payment system is security. It is the silent guardian of consumer trust in this sector. Facilitating secure transactions is not about a single solution, but an ongoing commitment to safeguarding against fraud and breaches, while ensuring compliance with regulations. It’s no surprise, then, that nearly two thirds (63%) of consumers say that the most satisfying aspect of their current provider’s payment experience is feeling confident that their data is safe, which gives an indication of the premium placed on security assurance.
In attempts to protect consumers, companies may be tempted to maximise payments security, but building the walls too high can sometimes have a negative knock-on effect. An overly guarded approach may lead to false positive declines and increase abandonment because the experience is to complex. Implementing an effective, non-evasive fraud prevention strategy to help mitigate this is a key factor for sucess.
Financial services firms should therefore be looking to innovations that can be built into their security strategies. For example, tokenisation can help firms to securely store customer card details and safeguard account information. Elsewhere, fraud solutions that leverage extensive transaction and biometric data and scalable machine learning capabilities can further help them to make intelligent decisions in real-time to manage risk more effectively.
Just because payment innovation may not look the same in financial services as it does in other sectors, that doesn’t mean firms are falling behind. Organisations in this industry that focus on subtle enhancements are not robbing customers of choices here – they are focusing on giving them the right ones. Payments in financial services should not compete with bells and whistles but should leverage technologies that enable them to consistently create better experiences embodying, simplicity, convenience and, above all, security.
Silvia Mensdorff-Pouilly is Head of Business Development EMEA Enterprise at Worldpay
“Don’t reinvent the wheel: why less is sometimes more when it comes to payments for financial services” was originally created and published by Electronic Payments International, a GlobalData owned brand.
The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Kaitlin Rogers is a writer, editor, and news junkie. She has been working in the media industry for over five years, and her work has appeared in dozens of publications.
Kaitlin graduated from Michigan State University with a bachelor's degree in journalism and political science.
