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Digital payment methods are the need of time, but are you ready yet?

Fintech Business Analyst

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Fintech Business Analyst

Fintech Business Analyst

During the last couple of months, COVID-19 has drastically changed the human behavior in almost every aspect of life. One thing is now clear, along with the severe impact on the health the economic impact of this virus is also very significant. These effects will last in the post COVID-19 period, maybe for half a decade at least.

In the first place, coronavirus is radically changing how the consumers shop. They are becoming more careful about shopping in public places, people are preferring e-stores, or the “online shopping” stores. More and more consumers are likely to turn to online shopping to buy the products they need, and more consumers will shop online for the first time in new categories, particularly groceries and household essentials.

The digital revolution does not stop there. Since many people are working from home, it is transforming how they shop and how they make payments. Cashless payment is the perfect example which includes QR payments, NFC payments, Virtual Debit Cards and other such quick and contactless methodologies.

It is now evident that coronavirus can latch onto currency the same way it is able to survive on other surfaces such as human hands, face, doorknobs and handrails etc. The currency notes are considered to be the major contributor to spread the pandemic in many countries. Both the factors of “avoiding currency notes” as well as “quarantine restrictions” are now compelling the consumer to prefer the remote services with e-payment methods.

EMIs and Payment processors have already seen a surge in online grocery shopping as consumers stock up on food and other essentials. Because of the lifestyle changes of the consumers, Mobile Financial Services sector would experience a long-term boost if they tried to infer the consumer behavior timely and come up with better solutions to increase their sale and improve the user experience.   

I personally think that this is the right time for the companies and startups that are thinking to jump into the MFS business, to fill the gap in the market and support consumers in enhancing their experience. There are a lot of initiatives globally to launch the massive and widespread rapid assistance program to distribute the funds amongst the masses. One example of such a program is called “Ehsas Emergency Cash Program” which was started by the government of Pakistan to help the underprivileged who are more affected by the epidemic by disbursing quick cash to support and run the household.

Such massive assistance programs can only be supported by MFS, EMI and Fintech business as they can quickly onboard the consumers with minimal legal procedures. The issue with traditional banks is that they lack the ability to quickly adapt to new technologies and roll out new products and services which address the customer issues. On the other hand, EMI and MFS companies can quickly onboard the consumers and disburse the funds more quickly and securely.

People in the fintech industry are talking about the “Transformation of Mobile Network Operator into a Mobile Bank”. However, if you think that providing financial services to the consumers is what banks are supposed to do, then you are wrong. The main difference between conventional banking and fintech businesses is their purpose.

Fintech products are created by recognizing a gap in the marketplace whereas traditional banks focus on risk management. Fintech institutions are more agile and tend to bend quickly to the market needs. The business model of such companies is basically built upon user experience. On the other hand, commercial banks are more process driven.

The traditional commercial banks in our regions (Asia and Africa) are now facing quite a big challenge to compete with the new fintech organizations. Most of the fintech companies have a strong and widespread agent network throughout the country which can be used to serve without any boundaries of time and location.

Commercial banks, on the other hand, fall way behind when it comes to accessibility to normal consumers. The reason behind this is that they still rely on the branched network and follow a very old method of customer onboarding. Many commercial banks are trying to create their own sort of digital wallets to compete the other players, some are acquiring the other small EMI startups just to make their presence in the industry.

Larger financial institutions have been slow to adopt new technologies due to the monolithic nature of their aging IT infrastructure and services. Rather than developing new technologies internally, larger enterprises often acquire smaller startups and attempt to integrate their systems. Often, the integration fails due to the incompatibility of this mixed pot of hardware/software as well as the legacy mindset of the workforce, resulting in workarounds which have financial implications and compromise the IT performance and security.

For larger enterprises, this indicates the need for a new IT foundation with modern technologies, if they want to compete with new startups. Today’s consumers are expanding their horizons by trusting less established brands while reaping the rewards in the form of better digital experiences. Meanwhile, the FinTech startups do have a technological advantage, but they will need to keep an eye on their capital reserves to make it through COVID-19.

Ericsson has developed an excellent digital payment platform, namely “Ericsson Wallet Platform” under the portfolio of Ericsson M-commerce which has the capability to accurately fit itself into the legacy telco and IT environment, as well as the latest cloud native platforms. It is a highly scalable, instantly integrate-able, and robust platform which is built on one of the latest cloud native technologies.

The platform supports all kind of payments including physical and virtual debit cards. It provides a fully PA-DSS/PCI-DSS compliant eco-system without having into troubles when applying for these certifications.

 Below are some of the highlights of this platform.

  • Telco and Financial system: Combining high performance telco-grade and high secure financial-grade capabilities into one platform. Can be integrated very easily into the telco or financial platform with the legacy protocols like USSD-SMPP, XML, ISO 8583
  • Latest Fintech: Can be instantly integrated with any of the existing platform having latest technologies (JSON/XML APIs, SOAP, Rest APIs and many more)
  • Open platform: An open architecture providing wide range of APIs enabling customers to build an eco-system together with their partners (agents, merchants, bill payment aggregators, financial service providers, utility providers, etc.)
  • Enhanced user experience: Enables users to access the system through multiple channels which can lead to more active wallets (Mobile Application like IOS and Android, Web Portals, USSD, SMS, IVR, AI virtual Assistance like Alexa and many more)
  • Easy integration:Provides integration with multiple front-end channels as well as back-end systems like Banks, Bill aggregators, Loan providers, Insurance providers, payment and booking platforms, online shops and marketplaces.
  • Complete security:Provides multiple levels of security enabling a secure connection to the ecosystem around you. Follows strong and industry`s best practices in terms of security (PA-DSS and PCI-DSS are one example)
  • Regulatory Support: Built-in compliance and framework to adhere to the Anti-money laundry rules and regulations. Ericsson already supported some of the toughest countries in terms of compliance, regulations and sanctions.
  • Tight integration with Ericsson Charging: Enables unique opportunities for providing a set of cross domain use cases. Nearly a plug and play integration if a client already has Ericsson`s charging system to offer countless offers and campaigns.

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