Even in the absence of regulatory mandates like the European Union’s revised Payment Services Directive (PSD2), traditional financial institutions will need to improve the way they partner with each other and with fintechs in order to be successful.
BOSTON (PRWEB) January 25, 2018
After years of development, four key technologies are maturing and reaching convergence — mobile platforms, open application development interfaces (APIs), machine learning, and faster payments systems — but all require an unprecedented level of cooperation between payments industry participants. Technology-oriented financial firms, or “fintechs,” are driving many of these changes, and traditional financial services providers are challenged to find ways to collaborate with these disrupters in order to obtain the benefits of new technology without being left behind.
“Fintechs should still be considered disrupters, but it has become clear that fintechs still need traditional financial institutions in order to reach scale. Even in the absence of regulatory mandates like the European Union’s revised Payment Services Directive (PSD2), traditional financial institutions will need to improve the way they partner with each other and with fintechs in order to be successful,” commented Aaron McPherson, Mercator Advisory Group’s VP of Research Operations and author of this overview Outlook for 2018.
The 2018 Outlook: Payments summarizes the major findings from Mercator’s 2018 outlooks, including:
- Challenging business fundamentals in credit card issuing despite a favorable economic environment
- Greater pressure on debit card issuers as the market has reached saturation and merchants grow more sophisticated at routing transactions over lower-cost networks
- Inflection point in faster payments in the U.S., with several good options from which to choose, the key issue being financial institutions’ willingness and ability to market these services and enroll customers
- Regulatory uncertainty for prepaid cards with turnover at the Consumer Financial Protection Bureau (CFPB) and continued delay of important prepaid rules
- Increasing collaboration between financial institutions and fintechs, facilitated by open APIs
- Growing use of tokenization, particularly to payment-enable the internet of things (IOT)
- Increased use of biometrics to secure payments on the front end, coupled with more robust back-end fraud detection processes based on machine learning
- Greater investments in automation of commercial payments, leveraging key technologies like open APIs and faster payments
- Mobile platforms becoming more important to retailers, both on the front end with technologies like mobile order-and-pay, and on the back end with Internet-connected terminals
- Consolidation in the merchant services market
The free 2018 Outlook: Payments LINKis the last in a series of eight 2018 Outlook reports by Mercator Advisory Group that provide insights into trends and new themes on the horizon that will have a significant impact on the payments and banking industry, consumers, and the ways companies do business in 2018 and beyond. The subjects of these Outlooks set the foundation for Mercator Advisory Group’s research agenda for the coming year and provide a framework for key points of engagement that Mercator Advisory Group will have with its clients in 2018.
The Outlooks for 2018 are presented by each of Mercator Advisory Group’s advisory services—Credit (including Merchant Services), Debit and Alternative Products, Prepaid, Customer Interaction, Commercial and Enterprise Payments, and Emerging Technologies—and can be downloaded without charge.
Companies mentioned in this document include: Acculynk, Amazon, ANZ, Apple, BBVA, BluePay, Capital One, CardConnect, Cayan, Citi, The Clearing House, Evernym, First Data, Google, Hyperledger, Mastercard, Microsoft, PayPal, PNC, Sovrin, TSYS, USAA, Vantiv, Venmo, Visa, Wells Fargo, Worldpay, and Zelle.
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About Mercator Advisory Group
Mercator Advisory Group is the leading independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com.