The latest edition of Oaklen Consulting's Industry Watch highlights several studies on the evolution of payment usage.
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The latest edition of Oaklen Consulting's Industry Watch highlights several studies on the evolution of payment usage.
As a counterpoint to the explosion of contactless payment usage during the COVID pandemic, the European Central Bank (ECB) points out that, although the use of cash to settle transactions has been steadily decreasing (6% over the last 3 years), the demand for euro banknotes has been very strong. This translates into a volume of euros in circulation at the end of 2020 that is 11% higher than at the end of 2019. The ECB explains this essentially by the need to build up "reserves", mainly from countries outside the euro zone, but also from individuals.
McKinsey looks at the resilience of digital usage growth following the first wave of containment (January/June 2020) and finds that overall usage is slowing down post-containment (November 2020/April 2021) without erasing the initial increase. The study notes that people who are abandoning digital uses explain a preference for human contact and the possibility of choice in store. In addition, 44% of respondents indicate that they do not fully trust digital services.
Other effects of the confinements, the French Banking Federation notes that the rate of household equipment in consumer loans has reached a 20-year low (24.9% in 2020 compared to 35.4% in 2001), down 1.6% compared to 2019. Even if the outstanding amounts are not at all in the same orders of magnitude, we understand to what extent there is a space "to occupy" for the BNPL (Buy Now Pay Later);
To shed light on the future evolution of fintechs and their role, Money20/20 makes a few predictions about structural changes in financial services in the next five years: the advent of central bank digital currencies in five of the world's largest economies, the shift to cloud and open source banking technology infrastructures, the advent of "Good Data " to enable consumers to benefit from personalized services while controlling the use of their data. As a result, fintechs in particular need to improve their operational efficiency through partnerships to process their large-scale operations in compliance with regulatory obligations.
The image of the French towards their bank has clearly improved in 2020 (+10% since the previous survey in 2018) and they recognize the availability of their advisor (remotely or in branch) during confinements. A point of attention, the image of the French for their bank is clearly better than that of banks in general (61% against 89%), which reflects a strong attachment to their advisor. For their personal data, they have much more confidence in their bank than in GAFA. Finally, the French want to have the choice between a branch or a digital service in their relationship with their bank, depending on the situation.
In the UK, the Financial and Conduct Authority (FCA) sets out guidance for financial institutions to ensure fair treatment of their vulnerable customers. Although this is primarily thought to apply to the marketing of credit and savings products, its potential application to BNPL-type services that are not otherwise governed by credit regulations should not be overlooked.
In the case of BNPL, the recommendation to take into account the customer's vulnerability when designing the product seems particularly complex considering that the service is not necessarily distributed directly by the banking institution.
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