29 July 2015
Defending the B2C segment in a virtual world
In my previous blog, I spoke about the opportunities SEPA offers to the traditional payment world by joining forces and staying ahead of new market entrants like non and near banks and social media networks. One example I gave in this respect is real-time payments. Action is needed, especially because the main threat for the traditional payments world lies in the B2C segment. Here we see a fast rise in the use of mobile devices that integrate shopping, loyalty, supply chain and payment functions. Up to now the traditional service providers, the banks, play a relatively modest role in e‑ and m‑payments and expose themselves to the risk of disintermediation.
The virtual PSPs understand very well that, for consumers, payments as such have become a ‘second priority’. The decisive factor for making a payment is not selecting the most secure party, but the most convenient website to shop. Only at the end of the buying process the consumer has to make a payment – which is a potential dissatisfier. Consumers are not willing to pay extra for security and reliability. It’s simply taken for granted that a web portal or payment is secure. However, when the environment turns out to be non-secure, the heat is on. This is the strong starting point of the traditional service providers – banks and payment processors alike – which process billions of transactions in a secure and reliable way.
In order to remain successful as a service provider – which a bank is after all – it is crucial to understand both the obvious and the hidden needs of the new world. The demand for user convenience on the one hand, and a reliable and secure environment on the other, calls for a change to make the cross-over between the traditional and the new virtual world. I am convinced that the most efficient and effective way to do this is to team up with other banks and/or a service provider instead of each individual bank trying to solve each topic themselves.
In my opinion this is an excellent occasion for banks to structurally change their business models. Last year we at Equens fundamentally changed our organisation into a complete consistent functional organisation. This enables us to use our skills and capabilities optimally and to focus on our clients’ future needs, especially in the e- and m-commerce world. A clear example is the routing platform we developed last year. With this platform we are able to facilitate new types of transactions such as e-Identity, e-mandates and e‑payments such as iDEAL and MyBank. The fact that all these different types of transactions can be handled via one and the same platform, makes it an attractive and highly efficient future-proof solution, available to support all banks. Several banks have already contracted Equens as their service provider for e-Mandates, benefiting from the economies of scale from a common facility and without having to worry about keeping a complex system up to date. Another example in this respect are our omni-channel retail payment solutions, which have a modular and white-label set-up and offer our clients the benefits of short time-to-market and economies of scale.
These examples clearly demonstrate that we are ready for the new challenges and enable our clients to tailor their business models to future market needs.