PYMNTS asked executives across the payments and digital commerce industry for their views on the pivotal changes, technology advances, and strategies that will shape business in 2023. Mike Walters, his CEO at Form3, says financial institutions need to integrate technology as the payments landscape continues to evolve. Innovate while focusing on security and customer experience.
2023 was a melting pot of change for the payments and digital commerce space.
In the face of economic instability and changing consumer behavior, industry leaders have had to take advantage of technological advances to recalibrate their strategies and stay ahead. In 2024, it’s important to examine the key trends that have emerged and how they are shaping the future trajectory of your business.
One of the most important trends of 2023 was the rapid advancement of technology transformation within the banking sector. With consumer expectations at an all-time high, banks were faced with the challenge of updating and replacing their existing technology stacks. This process was critical to maintaining competitiveness and customer satisfaction, and required a delicate balance of integrating new technology while ensuring uninterrupted service. The adoption of cloud-based platforms emerged as key. These platforms not only provided the necessary flexibility and scalability, but also ensured increased resilience, a factor emphasized by regulators in the US, UK, and Europe.
In the payments space, 2023 saw a continued drive for innovation. Banks have realized that to retain and grow their customer base, the payment experience needs to be seamless and run in real-time, both domestically and across borders. This required significant upgrades not only to the banks’ internal functions, but also within their payment chain networks. The anticipated acceleration of instant payments in the United States with the integration of FedNow® Service is evidence of this trend. Banks are recognizing the potential in shaping the future of payments and are starting to plan this functionality for their customers.
We have also seen a strategic shift in adopting a multi-cloud approach to payments. As the volume of digital payments explodes, the need for scalable and flexible infrastructure has become paramount. Multi-cloud models have inherent contingency capabilities to ensure uninterrupted service regardless of individual cloud performance. This not only strengthened operational resiliency but also met regulatory expectations.
However, the year was not without its challenges. APP fraud continues to be a formidable problem. Banks had to deal with a complex landscape of social engineering and sophisticated fraud, requiring them to re-evaluate their security measures. Combating these scams required more than technology. Clear customer communication and education was needed, along with collaboration with Big Tech.
Looking ahead to 2024, these trends highlight the strategic shifts needed to overcome the challenges ahead. As the payments landscape continues to evolve, financial institutions must integrate and adapt with technological innovations, with a strong focus on security and customer experience. Digital transformation efforts are not just about staying competitive. It’s about reimagining how companies interact with customers in an increasingly digital world.
2023 set the stage for a transformative 2024. The observed trends have not only shaped business strategies but also paved the way for a more resilient, efficient and customer-centric payments ecosystem. These trend lines will undoubtedly be at the top of every industry executive’s watch list this year, guiding their approach to meeting the challenges and opportunities ahead.