Payments Innovation Starts With Infrastructure and Ends With Personalized Experiences

No one (other than PYMNTS readers) wakes up thinking about payments or money movement.

Rather, it is what’s on the other side of the transaction — typically goods or services — that is top of mind.

And it’s across the infrastructure enabling that transaction and helping the end-user secure their good or service where payments innovation can have the biggest impact, particularly as it relates to payment experience and personalization.

“There are really two categories where we’re seeing big leaps forward. One is around operational improvement, improving payments in the background along the connective tissue of the ecosystem, and the other is consumer-centric around rewards and loyalty personalization,” Brian Gloede, head of strategic partnerships at Banyan, told PYMNTS as part of a discussion for the “What’s Next in Payments” series.

Item-level data infrastructure opens up new avenues for enhancing the payments experience across both these categories.

By connecting payment data with item-level information, consumers can quickly resolve discrepancies, making the entire process more efficient as it relates to chargebacks and friendly fraud, as well as reconciliations.

“If you consider marketplaces, or other places where payments are becoming more and more embedded into an operational flow, they’re automated in a lot of ways. Being able to also reconcile what they’re for is really important,” Gloede said.

Connecting payment data with item-level information also allows for a much more effective and efficient targeting of consumers with better, more relevant rewards and offers by linking incentives to past and projected behavior.

“Rewards and personalization are a huge area,” Gloede said.

Innovating Both Sides of the Transaction

The payments landscape is undergoing a profound transformation, driven by ongoing digitization and shifting behavioral expectations. This modernization is increasingly taking place on both sides of the transaction.

But the sharing of data, both as it relates to the payment itself and to the identity of the payer and payee, needs to be sensitively and securely handled.

“If we’re all looking for the panacea of perfectly customized and personalized experiences when it comes to not just payments, but even FinTech writ large, a lot of information needs to change hands,” Gloede said.

That’s why it is more important than ever to build and architect technology with a trust-first point of view, he noted.

“All of the parties need to understand how their data is being utilized and where it is being transmitted, and have appropriate controls,” he said.

Touching on Banyan’s own approach, Gloede said his firm practices data minimization and leverages privacy-preserving technology that only uses de-identified data relevant for the      purpose, ensuring consumer privacy around personally identifiable information (PII) is maintained.

“That was an important and intentional choice that we made as a new entrant, that we needed to build trust first into our architecture,” he said.

Personalization Powers Payments Innovation

By connecting payments with the items consumers buy, enhancing operational efficiency and prioritizing privacy, the world of payments is set to become more seamless, rewarding, and user centric.

“We believe that personalization is still the future of payments and FinTech writ large, and for a lot of other commercial type transactions across commerce in general. We believe that personalization should exist in the places that have a customer relationship of any kind,” Gloede said.

He explained that infrastructure players are the connective tissue along the payments ecosystem that sits in a unique place to innovate when it comes to personalization, because infrastructure players enjoy direct relationships with merchants and bank card issuers.

“Those are going to be, and continue to be, great places for personalization because they have the trust of the customer and they have increasingly the information and insight into what’s relevant,” he said. “And personalization without relevance is not a very helpful outcome for anybody involved.”

The ability to offer truly customized payment experiences is becoming more feasible with the accessibility of item-level data.

As for what the future holds, Gloede envisions a landscape where personalization becomes an integral part of the payments ecosystem. By drawing from the advertising world’s dynamic targeting models and analytical tools, payments providers can create tailored payment experiences for consumers, he said.

“Things are going to always head in the same direction and that is becoming more seamless, particularly around the immediate applicability of item-level data to personalize payment experiences in wholly owned ecosystems,” he said, “where customer loyalty is moving into the card channel.”