The Fintech Times is asking industry leaders for their ‘View from the Top’ to gain an insight into the decisions behind the last 12 months. Below, D. Keith Sides provides his perspective on Payments in 2021, plus a look ahead to 2022.
The introduction of more and more fintech companies and the omnipresent shift to digital has spurred major disruption in the payments space causing legacy institutions to consider how they are going to keep up with the near-constant innovation that users demand.
With the widespread adoption of mobile payments and the jump in eCommerce during the pandemic, most consumers are ready to fully embrace real-time payments. Much of the last year has been about modernization, preparing for instantaneous transactions and appealing to the consumer demand for immediate payment settlement.
Peer-to-peer transactions are a dominant force in the payments space, particularly in the youngest generation of users, and are likely to continue to grow. We have seen increased attention on data and analytics and financial institutions are beginning to explore how artificial intelligence and machine learning will lead to more personalized banking experiences. As long as customers continue to be allured by the promise of easier, cheaper, and faster transactions, the payments ecosystem will continue driving forward well beyond 2022.”
The focus of 2022 will be the continued modernization, implementation, widespread adoption, and optimization of real-time payment rails. The launch of the Federal Reserve’s FedNow program, predicted to arrive by 2023, will fundamentally change the way the average consumer thinks about banking. Customers will be able to have their transactions processed and settled at any time of the day, any day of the year. In a decade, the idea of writing a handwritten check will be as foreign as trying to explain a VCR to anyone born after 2010.
“With real-time payments, the need for real-time fraud detection and security become increasingly important—especially in the consumer space. Users will want to be assured that faster transactions don’t mean diminished security. We can also expect to see continued migration from distributed systems to cloud-based infrastructure for those organizations that have yet to adopt.
In the meantime, banks should continue to focus on modernizing their payments ecosystem by adding faster payment methods and investing in the most cost-efficient payment rail possible. Improving user experience should be a top priority in one’s digital modernization strategy to avoid being made obsolete by fintech’s offering better, faster, more personalized service.
Content originally featured by The Fintech Times on December 23, 2021.