World Payments Report 2022
Winning with SMBs: Optimizing Technology and Data to Drive Deep Engagement.
Traditional banks and payment service providers are struggling to provide innovative solutions to small and medium businesses (SMBs) ─ a segment worth nearly USD850 billion worldwide. As a result, nearly 90% of SMBs say they are reconsidering their relationships with their incumbent providers, leaving open space for FinTechs and others to gain competitive advantage.
- Bank and payments service providers must realign priorities to meet changing SMB market dynamics to build increased relevance and growth.
- These players must assemble a composable payments platform powered by harmonized data to enhance SMB customer journeys and boost engagement.
- Firms must also explore opportunities to augment existing payments capabilities via DLT and other solutions.
- An increasingly mature digital payments infrastructure has fueled non-cash transaction growth
COVID-19 encouraged customers and businesses to incorporate digital technology into their everyday lives and increased the adoption of non-cash payment methods. The volume of instant payments and e-money transactions in total non-cash transactions is forecasted to increase from 17% in 2021 to 28% in 2026.
- Regulatory and industry initiatives have been numerous and far-reaching during the current period
In 2021-22, authorities emphasised risk reduction, standardisation, and innovation. Regulators consistently introduced new initiatives aimed at achieving the overall objective of creating equilibrium in the payments ecosystem.
- SMBs’ expectations of their banks and other payment service providers are rising
The negative impact of the pandemic on small and medium businesses (SMBs) has been aggravated by global inflationary pressure and ongoing geopolitical tensions. SMBs want payment systems that are convenient, cost-effective, and digital; they are also seeking products and services that can be more highly customised to their specific requirements.
- Payments services provider executives admit that SMBs face unresolved process and technology issues
61% of SMBs have a relationship with two to five traditional banks, and nearly a quarter said they worked with six to 10 service providers; unfavorable financial product terms compel SMBs to maintain multiple banking relationships. Despite numerous different affiliations, SMBs face challenges across the payment value chain.
- Composable architecture enables payment firms to configure services, capabilities, and features on the go
Composability requires payment firms to select and assemble building blocks in various combinations to satisfy customer requirements. A modern, composable payments hub can be built on top of legacy systems, can leverage existing and/or newly developed in-house features, or use plug-and-play third-party services via composable architecture.
- Central banks are collaborating to explore DLT use cases with other financial service providers
Several central banks have already collaborated with commercial, private, and retail banks to discover industry-wide distributed ledger technology (DLT) use cases. Financial services organisations are collaborating themselves, too, and building consortia with technology players and FinTechs to investigate DLT commercial use cases.