“No person is an island,” so goes the line from an old poem, meant to show how we are all interconnected. That line may lean toward the metaphysical, but the wisdom is pretty literal when it comes to the future of banking, playing out in these last months of the 2010s.
Simply put, that means consumers’ retail experiences tend to inform their expectations for financial services, said Jim Johnson, executive vice president of FI payments and wealth for FIS, in a new PYMNTS interview with Karen Webster. That also means the participation of FinTechs in making banking safer, more innovative and more seamless is vital — as are application programming interfaces (APIs).
“It’s been an interesting couple of years,” Johnson said, with some understatement, when surveying the landscape of recent change in the financial services world. He should know. In July, FIS closed its acquisition of global payments firm Worldpay, one of the biggest payments-related deals in recent memory. FIS provides core banking and financial services technology for some 20,000 clients in 130 countries. Worldpay, the world’s largest merchant services player, processes more than 40 billion transactions each year and supports more than 300 payment types in more than 120 currencies.
Like another big recent consolidation — Fiserv and First Data — this deal will combine the issuing and merchant services sides of the payments ecosystem to create new business models and payment flows between those two (once disparate) endpoints. Indeed, those general goals stand as a reflection of consumer expectations for seamless, digitally anchored and holistic payment and commerce experiences — one of the main trends in the world of financial services and retail.
Financial services and commerce, after all, used to function around those plastic payment cards carried by consumers. “That has changed dramatically,” Johnson told Webster. “Payments have to be fast, intuitive, safe and always available.”
In Johnson’s telling, the 2018 holiday shopping season provides evidence of the big driver of this change: mobile. He said some two-thirds of consumers used their mobile devices as part of a retail purchase, with the rate higher among younger consumers. “To serve that customer well, we have to provide an omnichannel experience,” he said. The term “omnichannel” can mean different things to different people, but in this context, it means enabling a customer to start a financial transaction on one channel — likely a digital one — and then move to another channel without hassle or frustration.
It also means being able to bring in a human adviser at some point along that omnichannel journey as needed, an adviser who can easily pick up where the consumer left off without any friction. This part is important because even as financial services and commerce get more digital, the human touch is still desired, even among those mobile-inclined younger consumers. “Many of them still value advisory services,” Johnson said during the PYMNTS discussion with Webster.
Other tools also matter — including artificial intelligence, machine learning and other forms of sophisticated data monitoring and analysis. Such tools not only help provide better defenses against fraud, but also serve to bolster the overall customer experience which includes predictions and personalized offers.
“Empowering that insight just enriches the consumer experience,” Johnson said. “Understanding what (consumers) have done before also improves that experience. That last piece is really evolving as we go forward. It will go as far as privacy government regulations allow us. The sky’s the limit.”
In this evolving world of payments, FinTechs must play a vital role, Johnson noted. “They are making us better. They are pushing us. We have our own kind of incubator where we work with fledgling upstart FinTechs to give them a boost. The ability to work well with them is paramount to us.” As he told it, more such partnerships and relationships will be forged as the future of payments plays out.
APIs, too, will also gain more importance. No single business, after all, can go it alone these days — not with the global nature of payments and commerce, and the technology and innovation powering all of those consumer activities. As Johnson put it, the relatively closed environments that might have worked well 20 years ago are no longer robust enough for the world in late 2019.
“That reality is not practical anymore,” he said. “It sometimes requires working with other financial technology companies.”
Nobody promised that the future of payments would be simple, or that any company could go it alone. The winners over the next few years are very likely to be those businesses that play well — and smartly — with others.