The growth rate of the payments industry has been incredible in the last few years, and 2016 was no exception. Now, with the new year ahead of us, here are the three major trends to look out for in 2017.
Developing economies will drive payment innovation.
Developing economies have been introducing new regulatory initiatives to encourage new payment innovation models. Africa, as a continent, took to mobile money incredibly quickly (15 out of the 20 countries that have implemented and use mobile money are in Africa) and the recent demonetisation in India heralds the country’s intention to implement cashless transactions. Governments in developing economies are eager to meet the need for financial inclusion and reduce reliance on cash, thus driving growth and innovation in the payment space with more to come in 2017.
Real-time payments: the new norm.
2017 will be the year Australia starts implementing its real-time payments system. The NPP (New Payments Platform) is an open access infrastructure for faster, more flexible, data-rich Australian payments. According to the current plans, the NPP is expected to be operational by the second half of 2017. Australia isn’t the only country hoping to make strides in this area. Nearly thirty five countries have either implemented or scheduled hard launch dates for real-time payment systems, and the number is expected to increase in the coming months: Canada, Spain and the US are all on the list for 2017.
More collaboration between banks and fintechs.
In 2014, investment in fintech went up by nearly 201%, and this was the first big indication of the fintech boom that has followed. Banks have been growing their digital offering for some time and they've taken their innovation strategies a step further by partnering with promising fintech companies. According to the UBS bank management survey of 61 banks in 2016, 38% have already established a partnership, and the number is expected to rise in 2017. It stands to good reason that both parties would benefit from creating partnerships; the Santander group in the UK is already collaborating with Ripple and Kabbage, two successful fintech companies, in order to expand on their current services. Banks like JPMorgan and Deutsche have also begun teaming up with fintech companies, with JPMorgan having announced an ‘in-residence’ fintech program in 2016 wherein fintech founders can work at the bank for six months and develop their ideas into products.
What are your thoughts on what 2017 holds for the payments industry?