As 2022 comes to a close, it’s time to reflect on the payments trends we’ve seen erupt this year and discuss what may be coming in the new year. We spoke with Hal Ramakers, SVP of Brightwell to learn more.
What do you think we can expect to change in the near future for financial institutions (FIs)?
Soon, I believe that enterprise brick-and-mortar banks will likely continue to dominate the more prominent global business/government channels. I also believe that there will still be a push towards digital banking options and partner/buy disruptive technologies services to compete in the SME/Consumer space. They will likely need to expand their partnerships and work to build faster payment rails to control more of the real-time payments space – domestically and globally.
As far as community banks and credit unions, they will likely continue to consolidate as they try to maintain relevance with their “local” user bases. As they look for alternative ways to “reinvent themselves”, they are also looking for better technical solutions to replace the existing core platforms that are holding them back. This is a huge challenge and not an easy task but will be critical to their survival since new disruptive core platforms and front-end technologies are emerging every day. They will need to partner with other FI’s or regulated entities, such as Brightwell, to bring additional services that they aren’t able to support from a compliance, lending and remittance perspective to their users.
Some of these community banks are transforming themselves to become sponsor banks for Fintech programs – their bank charters can help power the Fintech evolution. Through the transformation, they will become part of the BaaS eco-system sponsoring specific regulated services behind the disrupting tech companies/program managers (eg. Think Synapse, BrightFi). This will embed them into the user experience flows where users want their financial options. Those that don’t adopt will likely cease to exist.
What will FI’s look like in 2030?
With the FI’s evolving and becoming more of the ‘powered by” regulated enablers behind the BaaS service providers and Neo/Challenger banks, the Neo/Challenger bank will evolve rapidly. The push to date for Neo banks has been to push the digital banking advantages of easier, cheaper and more tailored user experiences to a broader group of users. For instance, Neobanks focus on specific domestic targeted groups such as Millennials, Gen Z, and high-worth individuals (eg. Chime, SoFi).
These Neobanks will get pressure from new Neobanks and from embedded financial services embedded in the user flows by BaaS providers via telecoms, Apple, etc. that are closer to the use cases of the Neobank users.
What does Gen Z want from FI’s?
Embedded, embedded, embedded! Gen Z is looking for accessible, no-friction services that can follow them where they need to. Crypto will also likely become more important to Gen Z, mainly as the Web3 world develops.
Are there any new trends on the horizon that you think will reshape FIs?
We are seeing a new trend of Neobank solutions that are focusing on very targeted international use cases. They are focusing on the cultural aspects of users’ finances that are different for different users worldwide. They build solutions that cater to the beliefs, values and experiences that users from other regions want due to their specific cultural or economic situation. With so many users working cross-border digitally, we see an increase in the demand for US and European-held bank accounts for these workers who want to hold their funds outside of their home country to protect against deflation and to have more stability. We also see experiences like Shared family financial services that are more common in other parts of the world- think extended family savings – another example would be. With these types of use cases, cross-border payment capabilities will be critical to help users move and manage their finances across borders.