Following up on yesterday’s article about how consumer payment trends are changing and continuing to push more toward digital channels and away from checks and cash is another study that reveals that three-quarters of consumer payments will be handled by non-traditional financial services institutions by the end of this decade, up from 60% just two years ago.
This data point is going to put pressure on anyone that accepts payments from consumers, including companies in the accounts receivable management industry.
Non-traditional financial services institutions include fintech disrupters like Buy Now, Pay Later services, non-financial brands, and decentralized finance companies, according to the report. The growth of mobile wallets and digital payments will also drive this trend of consumers pushing away from traditional financial services. Among the trends driving this adoption are:
- Real-time payments driving payments experience innovation
- Growing multitude of payment asset classes
- Increased competition and margin pressure from new entrants
- Technology advancements creating new roles in the payments industry
- Regulatory moves shaking up incumbents
- Push for integration and interoperability
“The world of consumer payments is rapidly evolving; from the way we make them to the companies that handle them,” said Michael Yeo, Associate Research Director at IDC Financial Insights, in a published report. “What this change presents is both a challenge and opportunity for incumbent [financial institutions]. Despite the trends which are unfolding, [financial institutions] can fight their displacement from consumer payments by reshaping the role that they fulfill in the payments landscape of tomorrow. To achieve this, their focus and spending must be on future ready paytech solutions – otherwise they risk continuously playing catch up with digitally native non-[financial institutions].”
The key is for everyone to be open to how consumer preferences are changing and the new offerings that are hitting the market. Companies in the ARM industry joke about accepting payments via cryptocurrencies like Bitcoin, but is that really such a pipe dream? Can anyone see a future where this doesn’t happen? And if it is the future, why wait until it’s too late to do something about it?
