Friday, February 22nd, 2019
It has begun. The disruption of the payments business industry has arrived. For a very long time now major banks, credit card companies and financial giants have controlled payments, but their dominance appears to be coming to a close.
Since 2014, investors have dumped $130 billion into groundbreaking technologies, like Blockchain. Understandably, fears about customer data and privacy and regulatory changes have increased. (Consider the number of data breaches that have taken place over just the past couple of years.) These fears are now driving changes that may begin to impact the industry in unprecedented ways.
The next generation of payment methods have changed the game, bypassing bank and credit cards. This has even increased economic activity among the unbanked and the underbanked. So much so that industry leaders feel that we are witnessing a once-in-a-generation shift in the financial services industry.
More than anything else, the fintech revolution is changing the way banks and payments companies have won and retain customers. In the past, having one institution was enough to meet all of your needs. In the future, the expectation is that business and consumers will need to interact with multiple companies to take advantage of a more technology-driven system.
Unsure what fintech means for major financial institutions? Consider the following 3 ways fintech will disrupt the old business model and create a new one in the very near future.
1. Massive market opportunities
There is much at stake right now in the payments industry – meaning massive market opportunities. Startups are busy developing Blockchain, which will quickly redefine relationships between customers, suppliers and vendors. Big financial companies like JP Morgan Chase are making moves to provide low-cost funds and facilitate retail and cross border payments. In addition, MasterCard and Visa are pushing hard to preserve their dominant market share in credit cards.
2. Blockchain is taking over
Blockchain is expected to reshape many industries. It has already begun to transform the banking industry in ways not seen since the ATM came on the scene. The biggest reason Blockchain is so disruptive is that it can bypass financial institutions altogether and allow for direct payments between parties. Less middle men, less paperwork. Transactions could be completed in minutes, rather than days or weeks.
3. Banks’ monopoly is over
The most valuable asset a bank has, besides deposits, is its customer data and direct-to-consumer relationships. However, the recent European Union PSD2 directive weakens banks’ monopoly on consumer data, opening the door for more opportunities and an improved consumer experience. As long as they have permission, merchants or processing companies can directly access customer account information, which means the payments process just got faster and more efficient.
Keeping up with the latest changes in the financial services industry is a big task, especially as a busy business owner. If you need to keep up with the latest industry news or compare payment processing providers, consider the many reviews Best Payment Providers has to offer. Find everything you need to keep your business up-to-date and choose the best provider for your business and customer needs.
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