Sustainable spending, a credit shake-up, and till-less retail
Marqeta, the global modern card issuing platform, today released its predictions for 2022, offering insights for the financial services industry. Ian Johnson, SVP and managing director for Europe, comments: “In the next year, we expect that we will continue to see great innovation in the payment sector – from AI-driven smart wallets to the growing adoption of till-less stores, highly-personalised services and more. This will set a new bar in terms of consumer expectations, while adding to the complexity of delivering payments services. Rising expectations will mean traditional financial services providers and fintechs will need to deliver a payment experience that is faster, more seamless, integrated and personalised than ever before. This pressure on speed and integration can present challenges for those relying solely on legacy systems, driving a need for more flexible, modern platforms.”
Johnson highlighted five core trends that he sees having a major impact in the year ahead:
Till-less stores signal a new era in payments
“In 2022, till-less stores – such as those recently trialled by Tesco and Amazon – could start to become more common. In fact, 30% of consumers surveyed recently have already used one. We could see other verticals adopting this model, helping to make the payments function increasingly invisible. For instance, restaurants and bars could use this method to help reduce queues and staffing issues, allowing them to just focus on service. To support this new wave of innovation, financial services firms should make sure their payments infrastructure is flexible enough to support new technologies as demand increases.”
2022 will be the year of banking innovation
“In 2022 we could witness a burst of innovation that sees mainstream banks begin to catch up with more nimble challenger banks, taking on the disruptors at their own game. In recent years, larger retail banks have been working through several layers of governance, risk, data and technology challenges. Yet a lot of that hard work is done. We may soon see the fruits of their investments in a new wave of cutting-edge solutions. Next year, banks may start to look at the possibility of launching their own Buy Now, Pay Later (BNPL) solutions, and look at new products like flexible credit offerings, and more personalised services that will make payments easier, faster, and more personalised. When you consider the economies of scale that banks of this size can work to, this could be a real boost for digital payment innovation – so watch this space.”
Credit industry may undergo a makeover offering more choice to consumers
“Buy Now, Pay Later has caused consumer expectations to skyrocket, offering low interest, instantly-awarded credit options. In 2022, I believe we’ll see a new wave of flexible and personalised credit offerings that will let users choose how they repay credit depending on what suits them.
Beyond 2022, smart credit options may even be able to use AI to decide the most affordable way for users to pay, whether it’s a loan, monthly instalments or paying off immediately via debit. We anticipate that this could drive change in how people use their revolving credit cards. In response, credit firms should re-evaluate their offerings and make sure they are launching modern, digital credit solutions that will help them to meet customer demand.”
Government and consumers alike will continue their call for sustainable spending
“We expect that consumer pressure to act sustainably will continue to increase in the year ahead. Deloitte found three-in-five UK banking customers wanted their provider to ‘do more to create a positive social and environmental impact’. Pushing this agenda further, the UK government will require financial firms to publish their net zero plans from 2023. As a result, banks and fintechs will be pushed to take more solid steps – taking stock of their products and services to assess their environmental impact and ensure that offerings are as green as possible.
Beyond this, smart wallets and recycled card programmes could help consumers to make more sustainable payment decisions. In the near future, we may even see smart wallets start to make green decisions on our behalf at the point of purchase. This type of service could be vital for attracting younger generations. Our recent study into the future of European payments found 31% of 18–24-year-olds surveyed would be comfortable with AI making automated decisions on their behalf to choose the most ethical way to pay.”
Open banking set to disrupt the market with payment initiation
“As payments become more personalised and data-driven, open banking has a great opportunity to deliver new opportunities through payment initiation. This technology allows customers to connect to their bank directly and authorise transfers from their account, all without leaving their mobile or web environment they are buying from. Open Banking will be vital in this process, connecting customer data from multiple solutions to give users a highly integrated and customised payments experience.
Open banking can also boost visibility into customer purchasing data to improve the speed and accuracy of decision-making in credit. This can give customers a fairer assessment based on spend and lenders reduced risk of delinquency when lines of credit are approved.”