The shift to digital payments has accelerated dramatically as the COVID-19 pandemic has driven consumer awareness of the need for contactless transactions to protect their health and safety. In fact, a Paysafe report shows that 65% of U.S. consumers have tried a new payment approach since the outbreak.
According to a 2020 FIS Performance Against Customer Expectations (PACE) study, 18% of all banked respondents have recently made the switch to online or mobile banking to conduct financial transactions that they used to make at the branch. Gen Z 16%; Millennials: 19%; Gen X: 20%; Baby Boomers: 18%.
We’ve known for some time that cardholders’ digital experiences are key to maintaining a strong brand presence, increased adoption and portfolio growth. Now, as digital payments surge in response to the coronavirus, it is more important than ever for today’s financial institutions to provide the safety, speed and frictionless experience that digital transactions offer.
CONTACTLESS EXPERIENCES ARE HERE TO STAY. Even late adopters of technologies are turning to digital channels more often to comply with social distancing requirements. As individuals become more habituated to digital communications, online shopping, and contactless payments, these new behaviors will persist and permanently change the way consumers bank and pay*. *PACE Study
The shift in consumer payments to digital, contactless experiences is very likely here to stay. A recent study of consumers* showed: will continue to use a drive-thru at their branch 33% will continue to use more online and mobile banking; 25% will continue to use a call center or chat service; 31% will continue to use contactless or digital payments instead of checks or cash.
Financial institutions must prepare now for these new and lasting shifts in how their cardholders choose to make payments. From enabling mobile wallets, to the digital issuance of debit and credit cards, to providing contactless transactions, financial institutions can be the impetus that moves the payments industry forward.
THE PATH TO MODERNIZATION. While the need to provide digital, contactless payment options to consumers is clear, the path forward isn’t always easy. The need to update and maintain legacy banking products can be overwhelming for a financial institution, and few have mobile phone expertise in-house. Add to that the complicated infrastructure within most financial institutions, involving disparate internal departments and third-party vendors, and the evolution to digital can be a real challenge. So how can a financial institution keep pace with consumer expectations for modern, frictionless, payment experiences? They can focus on three key steps: tokenization, digital issuance, and contactless cards.
THE FIRST STEP TOKENIZATION. Tokenization enables merchants to keep your card on file for subscription billing and recurring payments without compromising the security of the cardholder’s private financial data. This allows for faster, easier, frictionless payments for consumers at checkout.
THE SECOND STEP: DIGITAL ISSUANCE. The second step on the path to modern payments is digital issuance. When a cardholder orders a new credit or debit card or needs to replace a card that has been lost, stolen or compromised, digital issuance allows the card issuer to respond immediately, delivering new card credentials to a secure mobile or user interface (UI) application.
THE THIRD STEP: CONTACTLESS PAYMENTS. Contactless payment options that enable consumers to complete transactions without ever touching the POS terminal or checkout counter are in high demand. In addition to health and safety concerns, consumers are also quickly adopting contactless payments because they offer fast, convenient, and secure transactions.
A TRUSTED PARTNER FOR YOUR DIGITAL JOURNEY. The path to digital payments may seem complex, but tokenization, digital issuance and contactless payments are possible with the help of a trusted partner.
FIS provides best-in-class solutions and services for merchants, banks, credit unions and capital markets across the globe, serving 90% of the top 50 largest global banks and thousands of local and regional banks and credit unions. We are at the heart of commerce and the financial transactions that power the world’s economy, using our scale to develop solutions that enable our clients to grow and reach new markets confidently. Are you ready to start your digital transformation?
Contact Dan Collins @ dcollins@nebrcu.org to discuss your needs today.
