How will the COVID-19 virus force us to completely reinvent banking, commerce and payments?

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Brian Adam
Professional Blogger, V logger, traveler and explorer of new horizons.

The most obvious effect for the banking industry is the need to rethink the branch model.

As the world enters the unknown territory of fewer and fewer face-to-face human interactions and becomes increasingly dependent on technology to function, innovation will gain ground to reconnect the economic, financial, and social fabric of the entire planet. Just as the brain repairs neurological connections when they are damaged, the entire planet is now rebuilding traditional connections and generating new ones so that they can continue to function and remain viable.

Relatively new business models like Netflix, Instacart, Postmates, Rappi, Glovo, GoJek, and others suddenly appear to be fulfilling a prophecy of a world forced to operate remotely and avoid human interaction. These new applications are here to stay and — regardless of the short or long-term effects of COVID-19 — will become the prevailing operating model for virtually all industries.

The most obvious effect for the banking industry is the need to rethink the branch model and accelerate the evolution of omnichannel platforms, which can help consumers operate without friction and without the intervention of natural persons who have to approve and decline procedures.

To create more resilient digital channels, banks may have to design “virtual” first and rethink technology as a pervasive platform connected to a central banking system that can interact with multiple technology aggregators. To offer this core connection, banks will need, among other things: a clear API strategy, a cloud-based operating model, AI-powered processes, an efficient middleware layer capable of quickly integrating multiple value-added services partners and a resounding focus on simplified interfaces for users.

Banks that only operate digitally have a momentary competitive advantage – their models are not armoured, nor are they difficult to replicate with surprisingly simple technological resources. The turning point is having simple consumer-centric solutions that streamline adoption and use. Banks will have to disaggregate and disassemble their own value proposition and consider all products as part of an open technology platform that serves to accelerate integration with third-party technology solutions.

A mainly “virtual” bank will trigger innovation efforts that must be solved by a highly limited business reality: the necessary bank has no branches, it is not a monolithic technological nucleus but an open technology architecture, the service model is 100% virtual, user interfaces are simple, life cycle management and product management is 100% digital from initial issuance to account closure, all processes are independent of human judgment – from approval to the collection – and the Customer service is based on a self-service engine that no longer depends on the traditional call centre to now rely on user experiences that work with Machine Learning algorithms.

And as such these same limitations will apply to retail, the new store will operate 100% in the cloud and be designed first for the remote consumer. In reality, the “Amazonization” of everything that has to do with trade was already taking place (regardless of the long-term effects of the pandemic). In this sense, retail and services will adapt to this new reality to offer more of these experiences on a smaller scale. The store in your neighbourhood or community will have to operate as a Mini-Amazon, opening up a huge remote commerce opportunity for them to Acquirers and Fintech companies collaborate.

Digital payments will continue to support the evolution of commerce, banking and interoperable technologies. Banks, issuers, fintech and acquirers will benefit by accelerating the adoption of basic technologies that make remote commerce possible: tokenization to increase authorization rates and depreciate credentials in remote authorization flows; Push Payments to develop new use cases around payments, disbursements, P2P payments and other money movement capabilities; API interfaces to improve the usefulness of digital credentials; contactless payment options for cards
and mobile devices can interact with the point of sale in Tap to Pay environments, particularly in urban transport, and other technologies to accelerate the acceptance of payments made without the use of terminals: SoftPos, QR codes and other entry points.

COVID-19 will accelerate migration to a functioning payment ecosystem: cardless, terminals, it operates in a retail space that has less human interaction and is increasingly driven by automated machine-to-machine transactions. (Also read the blog 4 megatrends)

We hope that the world will return to “normality” soon and with a minimal impact on human lives, but the pandemic will continue to influence the creation of new technologies that overcome new limitations and redefine the way we work, live, buy and entertain ourselves. from home. Almost all other industries – from agriculture to space travel – will have to reinvent themselves, and digital payments will play a crucial role in connecting consumers and providers.

Hopefully, the pandemic will also trigger the reinvention of human beings, governments, social interaction, sustainability and the way we live on this planet, but this would be the topic for another blog.

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