2017 was one of the most dynamic years yet for the payments industry. With fintech innovation carving the way for new discoveries, the payments industry has developed exponentially through continued scale and disruption.
So, what can we expect in 2018? Trends across the payments and fintech space will centre around a strong focus on collaboration and partnerships, state-of- the-art technology and an increased awareness and understanding of local preferences.
As a global payment and fintech provider, we are already realising the benefits of artificial intelligence and machine learning, both of which will continue to move the payments industry on leaps and bounds throughout 2018. For example, the changing digital landscape has had a huge impact on the way that merchants and consumers connect, with innovative technology providing access to credit for millions of underserved populations. And when it comes to access to credit we will continue to see the deployment of both AI and machine learning.
Arguably, both AI and machine learning are only at the start of their potential trajectory; and with machine learning’s ability to data crunch at such an impressive scale, we’ll see this at the core of most payments advancements.
Consumer adoption of innovative technology will also necessitate solutions that can be accessed through modern technology. Take India for example. More than 40% of the population has a smartphone, and this number is expected to reach 70% by 2020. Such a prolific jump in user adoption is very important intelligence for companies looking to provide access to credit. In 2018, we will continue to see companies moving away from traditional credit scores in high growth markets, based on a person’s historical financial and repayment data, instead focusing on innovative methods of data collection, such as through social media channels.
Regulating the financial markets is a global trend and will continue to change the payments landscape. And while all eyes will be on PSD2 going live in Europe in 2018, it can be said that this is ‘child’s play’ in comparison to some of the regulatory initiatives being rolled out in emerging markets where growth and scale are key. For example, Argentina will lead the way with its upcoming Data Protection changes; the first Latin American country to be recognised as an adequate country by the European Commission.
With such large regulatory changes taking place, it’s likely we will see companies coming together to develop strong partnerships that help shield them against changes that they know could impact their businesses. And for companies like PayU, there will be an increased responsibility to ensure international merchants are compliant.
On top of regulatory changes, countries such as India, Brazil and Argentina will continue to lead the way, developing and incentivising the adoption of electronic and digital banking, including platforms for mobile and online payments, electronic wallets, digital procedures, and simplified tokenisations for transfers, to name a few. Digital economies and regulatory changes represent the ‘currency of the future’, which will bring both a number of exciting opportunities and challenges, specifically around credit and cross border payments. Companies looking to expand internationally should keep a close eye on these changes and look to work with partners who can help them navigate this often complex landscape.
Although collaboration and consolidation are by no means a new trend, the way companies work together and how they co-exist is what we’ll really see evolving in 2018. For example, we will see companies better recognising the benefits that each can bring to a partnership model; for example, one owning the customer experience part and the other developing products.
2018 will be about companies recognising and playing to their strengths. Strategic partnerships will also be a must in light of changing consumer behaviours and an increased focused on convenience. For these reasons, we’ll see companies seeking out different types of partnerships, centred around commerce and risk, to name a few.
In high growth markets, there are still a number of complex challenges and legacy structures to overcome. And with fintech innovation continuing to have greater ramifications, strategic partnerships will enable these communities’ a better chance of participating in the market economy, improving financial access through technology, global reach and expertise in local payments. While globalisation will remain a key trend in 2018, companies looking to expand need to not only keep an eye on payments trends at a global scale but also focus on local preferences and behaviours.
In a sector that will continue to be governed and motivated by innovation, partnerships and collaboration is where we will see real success in 2018.
Laurent le Moal, CEO, PayU