There’s no doubt that payments and financial services have changed significantly in recent years, as a result of digital technology and innovation. Payment technology now offers customers a much more streamlined experience with improved security measures and regulations. Now, the payment process is much more convenient and contributes massively to the customer experience. Technologies such as blockchain and mobile applications have also allowed for new ways of payments to be made. The digital payments space is ever-changing and will only become more innovative as technology advances. Here are the key trends that are shaping the future of payments.

Cashless payments

While consumers have been using cashless payments for centuries in the form of cheques, digital payments and contactless have dominated the market in the last few years. According to research by the Swiss National Bank (SNB), a total of 92% of all respondents to a 2020 survey on payment options, said they hold a contactless payment function. The use of cash has gradually declined over the years with cashless payments becoming more widespread and the worldwide pandemic also had an impact on the demand for alternatives. With the rise of e-commerce and bitcoin, cash could one day become obsolete. In Switzerland, however, cash remains a popular payment method with 97% of survey respondents saying they still keep cash in their wallets. Above all, the increase of alternative payment options gives customers more options, which in turn, creates an enhanced experience.

Open banking

Opening banking is one of the biggest trends in the financial services market and it’s set to have a significant impact on the industry over the long term. Quite simply, open banking gives consumers the ability to share banking data with a third-party financial service, such as a cash flow management tool or budgeting app. With open banking, customers have more freedom to select different service providers to manage their finances and as result, have more control over their accounts. Due to its convenience and flexibility, open banking is redefining the way we budget and pay for goods. Open banking has paved the way for great market opportunities. It gives an additional service to consumers, creates new financial models and makes collaboration between different financial institutions a seamless process.

Mobile wallets

There’s no doubt that payments are becoming much more streamlined. This is largely due to the rise of digital payments such as mobile wallets, which allows customers to pay for goods using a smartphone or smartwatch. For example, Twint is one of the most popular mobile wallets in Switzerland with around 4 million registered users. It’s a platform that became more widely known during the global pandemic, however, it’s used more predominantly by young adults. According to Money Land, 67% of adults between the ages of eighteen and twenty-five have said they find the platform essential. With the success of mobile wallets currently, it’s likely these platforms will continue to grow and evolve, driving the finance industry forward.

Biometrics

Biometric payments are on the rise in some banks across Europe. The first biometric credit card was launched in Switzerland by Corner Bank. Biometric banking systems verify an individual’s identity through fingerprints, facial and vocal recognition, as well as iris scanners. While biometric payments aren’t widespread, they could certainly be used in the distant future as a way to enhance security and convenience. The other key benefit of biometrics payment is that businesses and consumers can protect their identities. Therefore, it serves as a unique way to prevent online fraud.  With constant improvements in technology, banks could start offering biometric purchases to customers, which would no doubt redefine financial services for a new generation.

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