“Paytechs are disrupting the future of payments”

The time is ripe for banks to rethink strategies for participating in this complex − but opportunistic − ecosystem, or risk being left behind.

Ernst & Young’s (EY) recent report The rise of PayTech – seven forces shaping the future of payments assesses the level of innovation enabled by PayTechs across the most dynamic areas impacting the sector. These include areas such as open banking, real-time payments, cross-border payments, buy now, pay later (BNPL), digital wallets and super apps, embedded payments and central bank digital currencies (CBDCs), and digital currencies.

Digital currencies are gaining momentum, rising to the top of the agenda for payments providers seeking regulated alternatives as first industry solutions emerge. The ultimate benefits of digital currencies lie in the instant and atomic settlement, increased automation, transparency, and efficiency.

Open banking has allowed consumers to be firmly in control of their data, identity, and payments. The practice of securely sharing financial data by connecting merchants and customers directly has created compelling “open payments” or “pay by bank” options.

Elsewhere, digital wallets and super apps are helping to reduce payment transaction fees whilst offering a single destination for consumers to manage their finances. By leveraging data, they have the potential to fulfil almost any financial, leisure or lifestyle need.

For banks, the shift in payments is both a threat and an opportunity. Banks must continue to embrace digitalisation and transform their current payment models and, by leveraging these forces, they can deliver better, far more efficient and frictionless experiences for their customers.

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