By Petru Metzger, Head of Payments Delivery at Endava
The fintech sector has seen rapid growth and, in particular, we’ve seen the payments and banking sectors seeing intense competition from new disruptors vying against each other and the large incumbents. However, rather than competing with each other to carve out relatively small pieces of the pie, companies that learn to collaborate will find their competitive edge sharpened. The future should be less about one-upmanship between businesses and more of a collaborative environment in which financial institutions and younger companies join forces to deliver the most innovative products and services to their customers. The most successful start-ups – think the likes of Stripe, Revolut, Brex etc. – have behind them a very strong partnership model. This allows them to outcompete anyone else and focus on delivering consistent customer value and enable exponential growth.
Payments are still central to the fintech industry and wider business around the world. Yet, many companies are unwilling or unable to build the payments technology (paytech) required to be competitive in the digital economy of today. Paytech has progressed from a “good to have” to a “must have” business function and those companies that have already realised this are looking for trusted partners to assist them in selecting and integrating 3rd party solutions, which will transform payments into a sector-spanning industry, omnipresent in our lives.
In fact, we’re already seeing this happen in sectors including retail, insurance, travel, and automotive, and it’s especially prominent in tech advances such as in-app invisible payments and other embedded technologies.
The future is horizontal
Fintechs – specifically companies across the payments sector – have risen significantly due to the global demand for payments services accelerated in the last 2 years by Covid-19. This has been as a result of both individual investment as well mergers, acquisitions and IPOs. The fintech ‘bubble’ has produced a complex technology ecosystem where many businesses are working together to accelerate the delivery of ‘super apps’ with a multitude of functionalities, rather than building each service independently. User experience, developer experience, data utilisation, and consumer self-service are all areas where a company can stand out amongst peers.
A digital-first economy has become the standard for many consumers globally, and a growing number of industries have implemented technologies to cater for this. No matter which vertical you look at, businesses are assessing how to integrate the best solutions – not only to service their customer base, but also to edge out the competition in the process.
Payments is an integral part of many businesses. It is also, however, one of the most complex parts of the business processes. If done well, a proper payment solution provides businesses with an enhanced customer experience whilst simultaneously lowering prices, preventing fraud, increasing sales and creating a loyal consumer base, which in turn helps to streamline omnichannel capabilities and provide tailored solution for every consumer. Bringing on board a partner with the correct expertise and track record can be of great benefit to ensure that none of this is done from scratch or incorrectly implemented. A proper partner network allows companies to focus on what they’re good at. By working with someone who can lead on the tactical implementation throughout the paytech portfolio, teams can instead focus on strategic leadership. What’s more, the introduction of partners to undertake this heavy lifting can also be more also cost effective, since it decouples from legacy IT infrastructure monolithic architectures and enables more agile ways of working and adoption of cloud. This can often mean a better fit with business and customer expectations. This strategy, that we term as digital acceleration, is becoming increasingly important in successful partnerships, especially as payments become a more horizontal priority across industries.
Driving digital acceleration
Businesses can focus better on their products and respond more effectively to changes in their operating environment when they have a trusted, expert partner handling aspects of their digital acceleration. At the same time, however, it’s really important that they are able to choose a partner that meets their needs and can provide an agile, iterative approach. A one-size-fits-all approach rarely ends up fitting anyone and is unlikely to address the nuances or more intricate needs of a business.
Every company faces its unique set of obstacles and ways of working, but the ability to review, update, and improve the use of digital technologies to solve problems helps businesses to expand and grow throughout time – digital acceleration – rather than as a one-time event. As such, fintechs and businesses will be able to design new digital processes to launch, expand and mature their digital business lines. To do this, they need to break down digital projects into a number of tiny steps, each with practical deliverables.
Using data to its full potential
Our personal data is more important than ever before, forming a signature which can carry us through numerous apps, websites and other services. This can go from signing into our phones to carrying out purchases on a range of devices. How data is used forms a key part of partnerships, as companies work together to provide the best possible service. That said, there are always concerns around data protection and forming a partnership that uses data in a responsible manner is of the paramount importance. Being able to share the correct data to guide the development and integration of solutions is the key basis of a successful working relationship. Within that, however, knowing where the boundaries lie and being responsible with personal data is a factor that cannot be ignored.
In multiple regions, particularly across the Middle East, Asia Pacific, as well as some European countries, payment data must be processed locally. This requires a special approach to use the same solution in multiple countries, as the majority of fintech do not have a solution that can be deployed in multiple locations.
No matter which sector or industry, technology is advancing and changing the ways we pay for goods and services. Whether it be online, at point of sale, or via a host of different devices, people have become more and more used to an easy, frictionless payment method. Any business that is looking to not only survive, but prosper going forward must find a way to integrate a functioning and seamless payment solution into its digital acceleration. There is no need to do this alone—forming a trusted network of partners to lighten the burden will lead to increased profitability and won’t distract from the ‘day job’.