Card Forum: Contactless is keenly focused on the opportunities that come with the adoption of digital and contactless payments. Senior industry leaders will examine the huge shift in consumer behavior that has increased demand and explore how banks and credit unions can stay at the forefront of innovation.
Register today and join hundreds of leaders in the payments community on March 16th!
Some momentum is building for cryptocurrencies as an alternative payment method. Although lauded by their advocates for their efficiency and low cost, crypto has for many years been something of a fringe curiosity with a hardcore fanbase.
As the underlying technology matures, however, cryptocurrencies are increasingly crossing over into the mainstream with support from global banking and payments giants.
It is central bank digital currencies (CBDCs), however, that stand to present the most wide-ranging strategic implications for commercial banks. Central banks that find themselves compelled to mitigate the decline of cash, modernize payment systems, support economic recovery and promote financial inclusion are looking to expand their fiscal armor, and this has renewed focus on the potential of digital currencies.
And with private initiatives such as Diem – rebranded from Libra and poised to launch this year – we can expect increased urgency from central banks to explore and leverage CBDCs.
With digital transactions and interactions rising, there is a corresponding and increasingly urgent need for a trusted, convenient and scalable digital identity system to promote financial inclusion, reduce fraud and improve the customer experience.
Yet it is fair to say a widely used solution to the digital identity challenge in the private sector has so far proven elusive, and the concept has not yet reached critical mass. Revisions to regulatory directives such as eIDAS, the coming age of CBDCs and emerging concepts such as Self-Sovereign Identity (SSI) – plus a whole raft of other national, bloc and international policies on "digital" – are pointing toward a fully digital world built on a cornerstone of trust.
Banks’ trusted position and regulatory know-how gives them a head start, and we saw growing momentum for bank-led digital identity activity in 2020. Expect this theme to continue in 2021, creating opportunities for new disruptors to emerge and the old guard to build on their transformation journeys.
Given the scale and pace of change, transforming expensive, inflexible and unreliable technology estates is no longer optional and must now be a key priority for many banks. Reducing total cost of ownership (TCO) is a critical consideration for any transformation project, but the required investment is about more than cost savings from IT simplification. Dramatically lowering cost requires re-architecting to offer the fastest route to staying competitive in a rapidly changing landscape.
This reflects a big challenge for banks, in that many are not sure how to identify the long-term revenue opportunities and quickly build the capabilities needed to realize them. Indeed,
It is crucial, therefore, that transformation projects are underpinned by a clear business case that reflects the importance and role of payments data as an enabler across the organisation. Perhaps the key underlying trend we can expect to see in 2021, therefore, is banks increasingly considering the strategic role that payments can play, but most need to cut costs by factors, not percentages.
