In a world filled with the latest technologies and the constant buzz of innovation, it’s easy to get caught up in the race for the next big thing. Payments were no exception. The age of innovation has created customer expectations for personalization and ease of their purchasing journeys, right down to that final key moment of checkout.
Successful payments innovation should mean different things depending on different scenarios. In hospitality, consumers may be open to “just stepping out of the technology” and feeling like they are one step away from a physical transaction, and in gaming, payments via a VR headset are well received.
It’s not the same when it comes to payments in financial services. When purchasing an insurance policy or transferring money internationally to a loved one, for example, it is careful innovation that enables the simplicity, reliability and security that provides a powerful payment experience.
Financial services companies need to remember that as payment innovation continues to increase, they may not need the latest features to achieve customer satisfaction. Success in this section lies in adapting payment technology to suit the nature of the transaction.
The top four reasons for abandoning financial services transactions revolve around a lack of simplicity and accessibility: multiple transaction attempts (56%), requiring too much information (52%), too many steps (48%), or redirection to a different site. (45%). This is completely understandable – when a consumer is navigating through a complex insurance policy purchasing process, for example, last-minute friction can cause them to abandon the purchase. Clearly, ease of use isn’t just a nice thing; It is non-negotiable.
This is where financial services companies need to ensure they use technology to position themselves for simplicity. For example, one-click payments are one way to ensure ease of use and a seamless end to the transaction – 84% of financial services consumers believe it is important to be able to pay this way. Another quick win is ensuring payment details can be saved to enable faster future processing, described as important to 82% of consumers.
Incremental changes like these can remove significant hurdles and move toward a smoother checkout experience.
Just because financial services payments may not happen via VR headsets and smartwatches, doesn’t mean it’s a one-size-fits-all approach.
Globally, more than 65% of consumers prefer to conduct financial services transactions online through apps or websites, but in Spain and France, third-party providers remain very popular. It’s the same when it comes to payment methods as well. While credit and debit cards are a popular payment choice for 41% of respondents combined, there is a significant portion of the market open to using alternative payment options, which is most notable in markets like China, where card preferences fall below 13%.
Takeaway for financial service providers? A single channel or method approach is not sufficient if financial services are looking to meet the needs of global markets. To effectively engage with customers and meet them where they are and how they want to pay, financial services providers need to focus innovation investments in developing a consistent, high-quality experience across all touchpoints and across all methods.
Finally, the foundation of any excellent financial services payment system is security. It is the silent guardian of consumer confidence in this sector. Facilitating secure transactions is not about a single solution, but rather an ongoing commitment to protecting against fraud and abuse, while ensuring compliance with regulations. It’s no surprise then that nearly two-thirds (63%) of consumers say the most satisfying aspect of their current service provider’s payment experience is feeling confident that their data is secure, giving an indication of the importance placed on ensuring security.
In their attempts to protect consumers, companies may tend to maximize the security of payments, but building walls too high can sometimes have a negative impact. A high-guarded approach may lead to false positive declines and increased abandonment because the experience is too complex. Implementing an effective, non-evasive fraud prevention strategy to help mitigate this is a key factor to success.
Financial services companies should therefore look to innovations that can be incorporated into their security strategies. For example, tokenization can help businesses securely store customer card details and protect account information. Elsewhere, fraud solutions that leverage transaction data, comprehensive biometrics, and scalable machine learning capabilities can further help them make intelligent, real-time decisions to manage risk more effectively.
Just because payment innovation may not look the same in financial services as it does in other sectors, that doesn’t mean companies are lagging behind. Organizations in this industry that focus on micro-optimization are not depriving customers of choices here, they are focusing on giving them the right choices. Payments in financial services should not compete with bells and whistles, but rather leverage technologies that enable them to create better experiences that embody simplicity, convenience and, above all, security.
Silvia Meinsdorf-Boele is Head of Business Development EMEA at Worldpay
“Don’t Reinvent the Wheel: Why Less is Sometimes More When It Comes to Payments for Financial Services” was originally created and published by International Electronic Paymentswhich is a trademark of GlobalData.
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