THE PAYMENT REVOLUTION
Payments are top of mind, as they become critical levers to deliver a smooth user experience, actionable insights, and enable new business models.
Business
As new business models emerge, embedded payments serve as a critical component to deliver a unifying experience.
Technology
With increased digitization and innovations come new fraud and cybersecurity concerns. Technology, Treasury, and Payment teams need to be in sync to keep up withevolving threats.
Finance
With payments as the single link across different businesses and the explosion of IoT, a treasure trove of actionable insights and information (e.g. on consumer behavior) remains untapped.
Marketing
Payments have become a key UX component for customer retention and loyalty. 32% will defect after one bad experience. With the consumerization of B2B industries, B2B and supplier payment experiences can serve as a differentiating factor.1
1PwC 2020
Make Global Feel Local
Payments landscape is diverse and evolving
300+ Major Alternative Methods of Payment (MoPs) in the world, mostly country-specific2
56%+ Online shoppers used a new payment method for the first time after COVID-193
2Forbes 2019
3PaySafe 2020
User Experience as a revenue source
$98B Value of cart abandonment i.e. sales put at risk due to friction at checkout in Q4 20194
89% Share of merchants expecting enhanced user experience when investing in payments capabilities5
4Siegel+Gale 2019
5ACI Worldwide
Preferences are localized
Preferred payment method varies by geography: credit cards (North America), debit cards (UK), digital wallets (Asia Pacific)
20% Share of digital buyers which have cancelled a purchase at checkout due to preferred payment option being unavailable6
6yStats Global eCommerce Intelligence
Businesses are behaving like consumers
80% Business purchasers who want consumer-level customer experience; two-thirds have switched vendors for a better experience7
3/4 B2B procurement officers who have experienced pain points in their eCommerce buying process due to availability of features8
7Lumoa, 2019
8Avionos 2018
SHOW ME THE MONEY
Build visibility over data, not just liquidity
The explosion of data and transactions is waiting to be harvested
Understand the flow of money from customers (consumers and institutions), through your organization, to suppliers
Visibility will inform new business models
As business models evolve, faster and more accurate information will better inform business pivots
Build capabilities today to increase your organizations flexibility and agility to succeed in the future
Monetize the data
Insights can become a source of competitive advantage – amplify loyalty, drive engagement and improve efficiency of operations
Translating the data into actionable insights will influence strategic business decisions; those who can harness the data will win in the new world order
Did you Know
21% - The number of IoT devices installed has grown at a 21% CAGR since 2014 to >30B devices in 20259
9IoT Analytics – State of IoT (2020)
73% - 73% of treasurers indicate technological affinity is a critical skill for tomorrow's treasurers10
10PwC, 2019
INNOVATION STARTS NOW
Innovation does not have to be overwhelming – treasurers can start with any single component
Not a one-size-fits-all mentality; build what is appropriate for your organization's use cases
Solutions fall along the connectivity continuum, from simple Excel plug-ins to embedded APIs depending on use case and available resources
This is not a solo journey - treasury and payments need to partner across the organization for change
Identify champions both inside and outside the firm to enable your success
Challenge your banking partner throughout your journey
End-to-end innovation is a journey with multiple components along the value chain
Technology: digitize and automate current manual processes, and explore emerging technology
Tools: enable self-service and other tools to increase agility and flexibility
Data: capture and analyze information at scale to inform real-time, global decisions
Did you know
70% - ~70% of treasurers we spoke with mention Digital Transformation as a key priority11
11JPM, 2019
72% - 72% treasurers believe the greatest impact from new developments is from the use of APIs12
12AFP 2019
NEW BUSINESS MODELS ARE EMERGING…
…to adjust to changing UX expectations across consumer and wholesale
TREND
Direct-to-Consumer (D2C)
D2C models are accelerating as companies strive to own the consumer experience and reap the benefits of first-hand data. In the age of physical restrictions, D2C has often became a necessity, not a nice-to-have
DID YOU KNOW
From 2016-2019, D2C eCommerce grew at three to six times the rate of overall eCommerce sales13, a pace COVID-19 is expected to help maintain or accelerate
IMPLICATIONS
- Companies need new ways of managing the impacts of high velocity payments
- Payments UX, such as enabling new consumer payment methods, becomes key strategic differentiators
- With more data comes more responsibility - first-hand consumer behavior data can be leveraged to inform business strategy but also increases the need for improved analytics
TREND
Recurring Revenue
Rise of 'As-a-Service' and IoT (e.g. connected cars and homes) are bringing more recurring revenue models to the B2B space. These business models, while more commonplace in the consumer space, are also accelerating
DID YOU KNOW
70% of companies have deployed or are considering deployment of subscription services and by 2023 75% of companies selling D2C will offer subscription services14
IMPLICATIONS
- Enhance the user experience (e.g. integrated payments) to amplify user loyalty and reduce churn
- Recurring flows will require companies to not only enable flexible billing as well as new payment methods, including digital wallets
- Companies need to rethink their approach to cash flow forecasting and budgeting with a shift towards more frequent, lower-value payments
14Gartner Digital Commerce State of the Union
TREND
Ecosystems
Ecosystem business models amplify the loyalty of their users as the single platform provider and can even convert suppliers to customers. Payments are critical as the connecting infrastructure across the ecosystem
DID YOU KNOW
35% of recent ecosystems have ceased to exist, and a further 40% never took off or lost at least half their peak market share15 showing how challenging it is
IMPLICATIONS
- Real-time processing and dynamic liquidity management are critical to manage the new flow of money across the ecosystem
- With payments as the connector across the ecosystem, it's critical to be able to not only capture the flow of data with payments but also for analytics to capture a 360 view of the ecosystem players
- The payments experience becomes a powerful tool with which to lock clients and suppliers into the ecosystem with simplicity and consistency being key
15MIT Sloan Management Review
Sources: Stats Global eCommerce Intelligence, Forbes, SalesForce
Join the payment revolution today. Contact your J.P. Morgan representative.
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