Payment Innovation Happens Outside the Vacuum

There’s a common concern with innovation in any industry: you want to lead, but you don’t want to be so far out front that no one follows.

This principle is very relevant to the current state of the payments space: everyone wants to innovate, but no one can afford to do it in a vacuum. You want to bring consumers along with you, and doing that requires true insight into consumer behavior, experiences and unmet needs. Innovation in the payments space is now reaching a critical inflection point, where access to mobile, comfort with online transactions, and the emergence of disruptive technologies are starting to change consumer habits and expectations.  But it’s still not clear what those new behaviors and patterns will look like.  Way too many innovations fall flat, failing to catch on with consumers.

The truth is that even as the technology changes, a lot of the issues driving adoption have remained stubbornly unsolved.  For example, our research has shown that even with (or maybe because of) all the new technologies, form factors, and conveniences, security continues to be one of the most salient concerns among consumers.  In an evaluation of over 50 payment products by 10,000 US consumers, a fraud prevention credit card concept garnered high adoption intent and the highest anticipated monthly spend of all evaluated products. Concerns around security apply to digital wallets and, now on the horizon, the connected car as well.

Ironically, new technologies and processes are generally more secure than those they replace.  So it’s not the technology that’s the issue, it’s something more fundamental to consumer behavior.  There are, roughly speaking, two critical thresholds that have to be crossed for adoption to take off.  First, creating a product that’s not just innovative and interesting, but that has intuitive value to the consumer and that is convenient to use.  Additional value may come in the form of rewards, or cost savings or status within a group, but convenience is key.  And whatever the offer is, the value has to be understood without a complex explanation. Again, human nature.

Second, communicating to consumers that whatever form the product takes, it effectively addresses their concerns about security.  At the moment, the reality of enhanced security runs well ahead of how that security is perceived by consumers.  The challenge for practitioners is defining the ideal strategy for educating consumers about key security and fraud protection benefits. In the age of personalized communication, one-size-fits-all doesn’t work; you have to have the right message for the right customer at the right time.

Regardless of where you are in your innovation cycle, true success is only attainable through robust and iterative consumer engagement. Whether you are identifying an unmet need, or designing the optimal features and benefits that will drive adoption and profitability, or if you are simply struggling to define the most effective communication strategy that will help your product come alive for the consumer, you require ongoing access to consumers who are profiled on every aspect of their payment and life habits.

To be effective you also require a social contract with these consumers that allows for empathetic and open dialogue so that you can delve deep for directional insight and go broad for substantiated quantitative support that can help guide important decisions and avoid costly mistakes.

With good customer intelligence, being a leader doesn’t have to mean being alone.


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