In a Global Economy, It’s Time to Bring Home Local Payment Options
There’s no stopping the global economy. In today’s tech-driven age, borders are almost non-existent when it comes to online ordering and building international loyalty.
Maybe it’s because our current pandemic has forced us to seek alternatives to secure the goods we need. Or maybe it’s a combination of AI, industry initiatives, tech giants like Facebook and Google, or even Donald Trump himself — no matter who or what takes the credit, digital transformation in banking and transactions has arrived.
Now, it’s time for merchants to embrace local payment options and cater to their growing global audiences.
Legacy Banking is Showing Its Age
The banking industry hasn’t always been one to watch when it comes to technological disruption. That’s because its customer base is one that’s prone to inertia. It’s not easy to change banks because doing so means changing all of your banking services, so most customers stick with their familiar institution. (This is especially hard on merchants who use their traditional bank for payment processing, lines of credit, business loans, and the myriad of other financial services a business needs.) Likewise, institutions tend to stick with tried-and-true services and processes so as not to disrupt the apple cart with their loyal customers.
Historically, this has been a win/win for banks and customers alike. But fintech is changing faster than legacy banks can adapt. We can blame the 2008 financial crisis on eroding consumer trust, along with banks’ general resistance to do things differently.
To be fair, legacy banks have never been known for convenience. For example, consider the events of the pandemic lockdown: banks closed because their customers were no longer coming into the branches. What’s more, many banks have temporarily ceased doing business with customers in person, citing health and safety reasons. In reality, what they’ve done is forced themselves to adapt to a largely online operation — something that digital banks have been doing (and thriving at) for years.
Many banks have been investing large sums of money in shifting to digital formats via apps, chat bots, and APIs. On the surface, it looks like legacy banks are finally listening to what their customers have been asking for all along. But below the surface, these efforts are too little, too late. They’re simply adapting the model of consumption they’ve always relied on instead of pivoting to cater to today’s customers’ needs, especially when it comes to their business customers.
We’ve reached the point where it’s simply not enough to embrace digital technologies in banking. Rather, banks as a whole need to completely rethink their culture and approach to customer service for the digital era. It’s time to design banking in a way that caters to convenience, rapid service, and business across borders for a fluid, frictionless experience.
How Banking is Changing Online Retail — For Better or Worse (but Mostly Better)
We’re teetering on the brink of a banking industry disruption, and for businesses and consumers alike, this is largely a good thing. Because so many businesses are now going remote and need to quickly adapt to a digital environment, they’re also reconsidering the way they bank.
This idea is expanded by the massive gains being made in fintech. For example, financial companies like Macropay are doubling down on retail services that offer real-time transaction processing and local payment options without clunky payment gateways. Macropay’s gateway allows retailers to offer a more attractive payment mix that further stimulates the global market — a highly desirable option to those that have historically been shunned or undersupported by bigger legacy banks.
The fintech evolution isn’t all good news, however. For example, there’s the Wirecard scandal. Wirecard was once a promising digital financial provider but was later found to have committed accountancy fraud. Situations like this can ward off would-be neobank customers and force them to feel like they’re stuck with the same tired banking solutions of decades past. But consumers are starting to see that companies like Wirecard are the exception and not the rule when it comes to new ways of banking.
Finding Favor with Alternative Payment Processing Options
Digital-only banking formats are called “challenger banks” for a reason: they’re giving legacy institutions a fair run for their money (pun intended), and in many cases, they are winning. And this is in spite of the odds against them.
For starters, challenger banks (or neobanks, depending on where you’re from) must consider how customer acquisition determines their success or failure. These banks are building this most valuable asset from the ground up, whereas big banks already have a fairly sizable audience. For digital banks, getting customers in a cost-effective way can make or break their strategy, which is why they prioritize a better service offering and fair rates to win market share.
Their biggest “secret” weapon in doing this correctly and to great success isn’t really a secret at all: it’s simply a matter of earning consumer trust and showing them there’s a better way to offer local payment options in today’s digital-driven society. Legacy banks have failed them and aren’t designed to give them the convenience, service, and flexibility at scale that digital banks provide. This alone is enough to make them, at the very least, a contender in the modern banking arena.
Investing in the Best Path Forward
The biggest question in today’s banking wars is this: What does a viable banking model look like?
McKinsey research notes that the best path forward is likely one where fintech finds ways to engage with the existing banking ecosystem in a way that puts the customer experience first.
Macropay is an excellent example of this with their local payment options without a complicated gateway that puts international transactions within more merchants’ reach. Other banks like JP Morgan Chase are buying up startups in fintech to pave the way forward in digital transformation. In doing so, banks can expand their network of third-party customers that have used its products in non-banking channels, then start fostering familiarity and loyalty.
The most important lesson here is that it’s no longer just a matter of accepting new currencies or providing faster payment methods. Customer experience is everything in banking, and as it becomes easier for customers to transition to new solutions, banks must work harder than ever to keep the trust of their most loyal customers.
While you may be filling the gaps left behind by legacy banks, customer experience should continue to guide your strategy. Only then will digital transformation set you up for sustainable success.
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