The payments landscape was undergoing a revolution as the world became increasingly digitized, and then the pandemic hit. While it is too early to fully understand the long-term effects of COVID-19, the entire payment industry must prepare for the impact of the ‘new normal’.
We gathered a group of insights professionals from the financial services industry to discuss what is happening in this rapid-changing payments ecosystem. From this, three important themes emerged:
- The pandemic is turbo-charging a change in payment methods;
- The current fragmentation of payment services will yield to consolidation, quickly;
- Because there are so many unknowns, payment innovation is frozen.
Each of these themes has important implications for all those who touch the payments space.
Together, they point to an urgent need to engage in an ongoing effort to discern where payment products and services are headed post-pandemic. Continuing, iterative investigations of how people feel, behave, and think will yield the vision needed to negotiate the road ahead.
Riding a rocket
With so much of purchasing moving online, whether it be delivery or curbside pick-up, digital and contactless payments have been gobbling up a share of spending at a rate no one was planning for, our discussants explained. With many stores not accepting cash or not being open to foot traffic, there are lots of people who have the same dollar bills in their wallet that they had back in March.
Companies are taking the opportunity to push their apps and to encourage people to embrace mobile payments. These were things they were encouraged pre-pandemic, but the industry players are using the momentum of the switch to digital payments to encourage a more permanent shift in digital behavior.
The burning question for these insights professionals is whether these changes will “stick” once there is a widespread vaccination. In the meantime, the digital payments business is booming.
Digital wallet consolidation is coming
There is currently a great deal of fragmentation in the global payments space, which we’ve been tracking with our MoneyScreen platform. We’ve followed rapidly-growing peer-to-peer payments offers like Venmo, and Zelle, the resurrection of cryptocurrency, and monitored the proliferation of store apps.
One insight leader related how they had been at a coffee shop recently and, to reduce contact with staff, the store required all orders to be placed through their app. Having to take the time to download the app, install it, and link it up to a payment card made the process extremely clunky.
“Why does everyone have to have their own app?” he wondered. “Consumers don’t want that. They want aggregators,” he explained. He contrasted the app experience with a visit to another coffee shop where he was able to use Google Pay to seamlessly tap and go.
These thought leaders expect these partnerships will be driven by consumer demand. Consumers won’t tolerate a fragmented market and will gravitate to whoever can hide the complexity behind a simple user interface. Shopify’s business model was held up as an example of a good player that can handle a great deal of complexity on the back end while still making it easy for both small business owners and consumers.
It is expected that as the payments space become more aggregated some of the partnerships forged will solidify into consolidations, as smaller players get absorbed into larger ones.
But while the pandemic is heating up the market for digitization, it is simultaneously putting a chill on innovation.
It was agreed that, while digitization is surging, companies have little appetite for change and innovation. “Innovation has taken a back seat,” one person explained, “because we don’t want to blow things up.” Another described 2020 as a “frozen” year and suggested that 2021 might be too. They expect their company to stick with the status quo or move ahead in “small increments” unless there is an immediate need. The concern is that any major pivots made now might become missteps in the future “since we aren’t sure where we will land post-COVID.”
Thinking about the world post-pandemic these insights professionals were asking big picture questions like:
- What is the world we are going back to work going to look like?
- What will cities look like?
- Will small biz come back and how long will it take?
- Will the cities be as vibrant?
- Will mistrust grow? What would that mean for payments?
- Will companies that have benefited from the pandemic, like Amazon, become mistrusted because they have become so dominant?
- Will competitors take their “frozen” time to fix their issues?
- Will this provide an opportunity for new fin-tech players to leap-frog ahead?
With so many unknowns, it can be tempting—especially for big companies—to hold their breath and wait. But those who will leap ahead will be those who double down on insight and innovation.
When everyone else is frozen, the leaders of tomorrow will be forging ahead, even if they can’t see exactly where they are going. We may only have glimpses of what the future will look like, but insight and innovation are processes. Truths reveal themselves slowly and gradually—but only if you pursue them.
Insights and innovations come from making new connections between existing information and new facts and feelings that you uncover. It is an iterative process, one that lends itself to a steady investigation.
The relentless pursuit of revelations
In Maru’s new book Eureka! the science and art of insights we dive into the proven process by which insights are generated, and the best practices used by other sense-makers such as scientists, doctors, lawyers, intelligence analysis, and forecasters. What is striking in all these accounts is how iterative revelations are. While they might seem to come in a flash, they instead come from an investment in slow and steady exploration.
This ability to iteratively explore is one of the reasons we developed Panel Communities. Maru/HUB Panel Communities provide exclusive access to an integrated range of qualitative, quantitative, and System 1 tools in one easy-access, standardized environment to unearth deeper, actionable insights from profiled customer respondents. It enables an ongoing dialogue with consumers. In it you can: create and launch projects directly to your tailored Panel Community in less than one hour; uncover richer, actionable insight with integrated System 1 and System 2 question types; and have real-time access to results with Maru/HUB’s integrated Analysis and Reporting tool to capitalize on feedback, fast.
Some of our research solutions on the Maru/HUB platform, like the Instant Qualitative Environment, are perfect for iterative explorations—even in environments when searching for the future is more like groping your way forward in the dark of a cave, rather than gazing across a sunny plain. The Instant Qualitative Environment allows you to engage in dialogue, learn, re-think, and explore further in an environment that respondents find fun and engaging.
Exploring what the ingredients of future innovation could look like is exactly what our Choice Based Ideation is designed for. It brings together behavioral science, the ideation process at scale, and predictive analytical output that is easy to digest.
Unlike more traditional ideation approaches, Choice Based Ideation captures all elements of the decision-making process including which ideas respondents preferred, which they didn’t, and which they disregarded altogether. By capturing all three elements, you can quickly and accurately identify which ideas to invest in and, more importantly, which to leave behind.
From this roundtable discussion of insights professionals from the financial services industry, it is apparent that the payments space is going through rapid and dynamic change. It’s like being tied to a rocket. And while that makes it tempting to just hang on for dear life, there is a great opportunity in peering into the future while it comes rushing toward us. And the key to staying ahead of consumer shifts is understanding how people feel, behave, and think about payments.
Contact our financial services team today to learn more about our research and how it can streamline your innovation process.