The 2020 experience would accelerate creativity and force businesses to learn from their mistakes and ensure that they do not repeat themselves in 2021.
In parallel to this pandemic year, in which time always appeared to stand still, companies increasingly digitalized and made structural improvements to their payment operating models. Global markets have changed rapidly in ways that stimulated transition, and have a lasting effect on customer behaviour, trends of crime and risk reduction needs.
Consumers have responded to modern shopping behaviours and digital practises since the recession. Looking ahead to next year, we expect that much of the developments in digital payments will take effect. More specifically, this year’s learning will accelerate creativity and force businesses to learn from their mistakes and ensure that they do not repeat themselves in 2021.
Many predictions for the next year include:
Small enterprises to raise investment in cyber security as customers switch to digital security
The flight of new consumers to digital technology was early noticed by companies. According to the Deloitte survey, 48 per cent of customers reported that overall online spending has improved since the Covid-19 outbreak. This user behaviours can be instrumental for small companies to evolve and fulfil the safety expectations of their clients. Merchants’ investments in new on-board consumer campaigns and new ways of payment, both online, in-app and non-contact, can be rewarded by new customer acquisitions, existing customer retention and sales growth.
Just as traders and customers move online, so are cyber criminals. Small companies will need to upgrade their fraud reduction policies to enable omnichannel trading. A sure way forward is for small companies to turn to trustworthy partners who will offer payment protection in accordance with their company priorities and interests.
Combating risk & security of current payment infrastructure
Advances in payment innovation between fintechs and existing financial institutions have contributed to the wide-ranging acceptance of digital payments. Businesses opt out of or modernise legacy payment infrastructure and rapidly accept innovative and quicker ways to transfer money, settle payments and exchange information, also depending on new players including fintechs. Real-time transfers, digital currencies and transparent banking support creativity that meets the aspirations of digitally-savvy companies and can then propel digital trading for decades to come. It is also important for companies to be aware of the safety of consumers and the values of open banking by ethically and properly exchanging data through all their functions.
Fintech and financial institutions need improved methods to track possible and atypical fraud practises. 2021 will be critical for growth in the amount of real-time payments, market discussions on consumer security and data privacy will be at the forefront, and industry stakeholders will work together to resolve new vulnerabilities as found.
Solid customer authentication to be relevant
The digitization of financial transactions continues to accelerate in India. However, critical challenges in alleviating cyber protection threats have also risen, with a rising number of new-to-digital customers. To secure themselves from cyber threats, users are moving away from passwords and following stronger customer authentication standards for all their digital devices when making payments, etc.
According to the Global Risks Study 2020 of the World Economic Forum, data theft is one of the big challenges that companies are likely to face in the long term. Accelerated by Covid-19, demand for solutions to help companies digitally verify customer identity will rise. The analysis and further strengthening of the current regulatory and compliance system by the regulator during these transformative times would become ever more relevant. The idea that digital identity is one of the building blocks needed for an economy to survive in the digital era will gain further traction in 2021.
Increase in the role of artificial intelligence (AI) and machine learning (ML) as new-to-digital users abounds.
Digital experience tends to become mainstream, more so as the pandemic fills the void. The global financial sector is heading closer to a modern, cashless future and, with an increase in online consumption, 2021 will see a boom in the new generation of digital consumers.
Since the 1990s, Visa has been using AI as part of its mission to make payments simpler and faster.
As an effort is made to pay a broker, Visa’s Advanced Authorization uses AI technologies to evaluate more than 500 risk attributes in approximately one millisecond and generate a score that represents how risky the transaction is. The purpose is to help financial institutions decide whether to approve or refuse a transaction and, at the same time, to increase customer trust in digital payments. This use of AI helps businesses around the world enhance user service, fuel business growth and mitigate risks to payment protection.
In order to provide safe payment experience when tracking the exponential increase in transactions, we expect that more and more financial service providers will develop new payment protection solutions using technologies such as AI and ML to automate risk identification. In the recent past, such technologies have been critical to the advancement of payment security solutions such as EMV 3DS, tokenization and implementation of a wide variety of capabilities to strengthen the monitoring of payment fraud in real time. In this period of rising cyber security threats, AI and ML would be instrumental in avoiding payment risks.