2020 has been a remarkable year for the payments industry. Changing consumer habits and trends have forced people to ditch physical cash and opt for alternatives. Globally, financial situations are changing, and the application of new and advanced digital methods have reshaped the previously watertight institution. As part of a push forwards for all kinds of technology, what do emerging digital trends look like around the world?
Digital Banking
Digital banking has grown in popularity, especially among younger demographics such as millennials. The digital-first banking is easy to engage with on smartphones, provides a rundown of finances, and includes data analysis so users can see how much they spend and what they spend it on.
Indeed, in Britain, 23% of people have an account with a digital-only bank. One in 10 now claims to only use a digital-only bank. These figures are likely to continue to grow as physical bank closures and sluggish interest rates help digital disruptors look more appealing.
In the USA, 80% of Americans prefer digital banks to physical ones. But 82% haven’t switched their financial set-up because their current banking institution has a good and reliable digital function. If nothing else, the rise in digital disruptors has shaped the banking scene so that traditional brick and mortar banks have had to upgrade their existing facilities.
The market size for digital banking is expected to hit $10.87 billion by 2027, with a compound annual growth rate of 13.6%. The largest portion of this will be in North America. Greater internet connectivity and a lack of physical banks mean that for many, these digital banking options are not just a more convenient alternative, but sometimes the only one.
Alternative Payment Methods
E-wallets are on the rise. As Asia is often at the forefront of technology, they have already being adopted there. Indeed, as e-wallets have become one of the most popular forms of payments across Asia, this has been reflected by companies and industries that want to appeal to these audiences. 60% of transactions in China are made by e-wallets, for instance. They are used where smaller payments would typically be made – such as for taxi rides, takeout food, purchases from hawker stands, and in food courts.
E-wallets are also important in entertainment, especially where payments are made often for smaller amounts. The gaming industry is prolific for its e-wallets, especially as games developer Tencent is also known for their pioneering of e-wallet and mobile payments. Elsewhere in entertainment, online casino sites have grown to accept e-wallets as they represent the future of technology. Some of the leading casinos and bookmakers offer e-wallets as a payment method, such as Skrill, Neteller, iWallet, EcoPayz, and UnionPay. They offer a safer and more secure way of transferring money, which is something customers are increasingly finding important.
Payments by QR (quick response) code are omnipresent in China, with people opting for Alipay and WeChat for most transactions. The lack of credit card infrastructure at the time meant that China bypassed it and adopted the technology that is growing elsewhere. QR codes were originally slow to take off in the west because of the apps needed to download and read them, but many can be operated through the smartphone’s camera. Some suggest that the QR set-up is easier in bars and restaurants.
Moreover, cross-border transactions were given a boost at the start of the year as Santander officially partnered with cryptocurrency Ripple to deliver more secure and faster services. However, news from August 2020 suggests that Santander is still reluctant to fully adopt Ripple for all international payments. As the bank tests the water, other banks around the world, such as the Bank of England, are considering using their own cryptocurrency and digital alternatives to money.
Financial trends worldwide are moving into a digital space. Whether this is preferred modes of banking or the payment methods that are being used to conduct financial transactions. The growth of these digital trends comes both from companies looking to expand their reach and beat competitors, and from consumers who are preferring to engage within a digital space. From the digital revolution of shopping and smartphones, it was only a matter of time before traditional institutions like finance felt the pulse of what digital technology can do.