The future of financial services is all about digitalization. This much is well known. What is less well known is that this is also the reason why banking transactions might be driven by non-bank disruptors in the coming years. How well will future innovations such as e-currencies be integrated into the banking industry? Will cash become obsolete? Jeffrey Bahar, Deputy Chief Executive Officer of Spire Research and Consulting, reflects on the drastic changes happening in financial transactions today.
The combination of digital cash and virtual currencies has inevitably curbed the usage of cash in developed markets and across many Asia-Pacific countries. Cash as we know it might lose its status as the dominant form of payment by volume in the coming years – unless banks create innovative new modes of payments to counter the trend.
Bahar opined that mobile penetration would continue to rise in the developing Asia-Pacific markets. Unbanked and under-banked market segments would increasingly experience banking services for the first time via their mobile devices. Indonesia, for example, was a leader in micro-payments to previously untapped customers in the underbanked market.
At the same time, more and more non-traditional players, including Google, Amazon and Apple, were set to enter the market and provide mobile wallets to the growing customer base. For instance, Singapore’s DBS Bank combined Near Field Communication (NFC) Technology with its mobile wallet, One Tap, to enable customers to make payments just by tapping their devices. Needless to say, more than 140 million people across the globe would continue to place their trust in one well-established form of digital wallet – PayPal transactions.
Bahar highlighted that banks should be wary of competitors like Google wallet, as these could potentially make bank transfers obsolete in the future. There was a need for banks to adopt digital solutions provided by such technology firms, so as to design efficient products for digital and non-digital shopping.
Digital payments will face hurdles in the form of both privacy and security related issues. Nonetheless, digital transactions were sending a loud and clear message that personal technology will play a pivotal role in the future of retail financial services.
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