7 global payment and banking trends in 2024

Incumbent banks deserve their reputation for solidity. They also have reach and huge customer bases, built painstakingly over the years. However, as financial ecosystems pivot to increasingly digital offerings, customers have come to expect seamless payment journeys. They also want security, but not at the expense of convenience. Think of it as a need for “effortless security,” smiled Akshay Warikoo, Global Lead, Product Marketing, Digital Solutions, G+D. 

Today’s customers want insight, security, and control. These are non-negotiables. But the services they look for are suited – and indeed personalized – to their own lifestyles and choices. These range from being eco-conscious, to an interest in crypto as an investment class, and much more. 

Hitting the sweet spot between security and a fulfilling user experience is a challenge for banks and fintechs on the issuing side, and for acquiring parties as well, including merchants and payment service providers (PSPs).  But every challenge is an opportunity as well.

Let’s look at a few global payment trends that illustrate where the opportunities – and challenges – lie.

Trend 1: Mobile experiences that match lifestyles

 “Can a bank provide me with the visibility and control I want? The rise in digital payments means I am visiting – and storing my payment card details with – more and more retailers, eventually losing track of who has the details, and why. Could a bank provide this particular service in their app itself?” asked Akshay.

Customers increasingly want a much more personalized experience, where their needs are addressed literally at their fingertips. Incumbent banks can adapt to these changes by going beyond basic transactions and integrating serious value-additions into their suites of services.

According to Akshay, the benefits are obvious. A customer would want to go into their app, enhancing engagement and bolstering trust in the digital experience offered by their bank. Issuers have an opportunity to really enhance their mobile wallets with easy-to-use tools that enable users to manage their payment credentials, which gives them a good chance at reaching "top-of-wallet" status. 

As Akshay put it, “How do you engage the customer? What additional services are you putting into that banking app?” The aim should be to appear essential to the customer’s life, a part of what makes their daily existence more fulfilling and satisfying.

Relatedly, an intriguing path to explore is the global trend toward what we may term “conscious consumerism,” where individuals try to control the social and environmental impacts of their lifestyle and consumption. Eco-sustainability is one oft-voiced demand. Financial solutions will increasingly have to answer questions of sustainability and social responsibility. Responses could include a feature that maps out the CO2 implications of their spends.

Such a tool would empower customers, and indeed inspire their eco-conscious actions, while driving further engagement, loyalty to the brand, and reinforcing the bank’s commitment to sustainability.

A further positive to be derived from this is the unique insights banks would gain into customer behavior, as each transaction tells a story that encourages customers to embrace a more sustainable way of living.

Trend 2: Journeys without boundaries

Interoperability across platforms and boundaries is part and parcel of what users expect from their financial solutions. People move often in this modern age, and in areas like the European Union, they switch effortlessly between nations. Their payment journeys should be similarly seamless. 

Given that most forecasters see a proliferation in the number of digital wallets, a number of such solutions issued by different providers seems inevitable, all fighting for space on the same user’s mobile device. But these wallets will have to be interoperable with each other, as no user wants to manage all of them individually. 

One approach could be managing access to all the wallets a user may have through one higher-level wallet – perhaps a digital identity wallet issued by a government or similar body. Think if it as a “wallet of wallets.” “You could use your digital ID wallet to gain access to your financial services wallet, through which you run your money, pensions, and investments,” said Akshay. “You could also use it to manage your public transport wallet.” A word of caution: he didn’t foresee these digital ID wallets functioning like “superapps” in areas like Europe, for cultural reasons. Such apps already enjoy huge popularity in Asia however – think WeChat in China, or Grab in Southeast Asia – so that continent may well see a different trajectory. 

The wallet ecosystem will be complex. And it will be highly regulated. Banks know how to navigate both those parameters, and should thus enjoy a profitable role in the digital wallet space. 

Trend 3: Authenticating beyond passwords

The banking industry has long been aware of the vulnerabilities associated with certain multi-factor authentication (MFA) methods, particularly one-time passwords (OTPs). While OTPs are popular due to their simplicity and ease of implementation, they carry significant risks. These include susceptibility to phishing, SIM swapping, and message interception. Indeed, banks often have limited control over OTP delivery, as that is typically managed by mobile network operators (MNOs).

The exploitation of OTPs in fraud schemes is well-documented. Repercussions from these attacks extend beyond just financial loss. A bank’s reputation can take a hit, with an erosion of customer trust. Efforts to mitigate these risks often burden users and negatively impact their experience.

Passkeys offer a more secure and user-friendly alternative. They are resistant to phishing and other common fraud vectors, and provide enhanced protection without sacrificing user convenience. They offer a route to truly passwordless authentication.

As Akshay pointed out, “Fraudsters always leave traces.” This idea underscores the value of banks adopting AI-powered solutions to detect subtle behaviors and proactively mitigate fraud risks. Behavioral biometrics is one such approach. Banks can enhance security through mapping the unique digital signatures created by users’ interactions, such as clicks, swipes, and taps. Behavioral biometrics takes recognition technology and marries it to cutting-edge developments in AI, where even the way you normally use your phone – portrait or landscape? right- or left-handed? – enables learnings that can protect you from fraud, for instance when someone else accesses your phone. 

Step-up authentication provides a route toward satisfying customer demand for increasingly stringent security, especially when it comes to larger transactions that require more robust measures. One way is to allow customers to authorize large payments in their banking app; once the high-value transaction is triggered within the app, the customer approves it by tapping their physical card against their phone.  This enhances security without entirely slowing down the transaction process. The payment card is used as proof of possession – a hardware authenticator – and can thus be used in other use cases for step-up authentication as well, including activation of new cards, app onboarding, and the like. 

Trend 4: Enabling sharing through PETs

“Fraudsters collaborate seamlessly within syndicates, while banks’ and payment providers’ efforts to tackle fraud and share data are often fragmented,” noted Akshay. The good news is, this is changing, through innovative partnerships that use privacy-enhancing technologies (PETs).  

While it may seem obvious that banks and other financial institutions should share data about bad actors and their attacks to maximize security throughout the payments ecosystem, the reality is that much of this sharing would involve customer data, which is protected under the most stringent privacy laws. 

It is vital that financial institutions do all they can to protect the data given to them by their customers. This data protection is obviously a good thing, as it protects a user’s data from breaches, or even the sort of sharing they haven’t expressly signed up for. Even once that data is shareable, it needs to be processed, which again requires compliance with security and confidentiality requirements. 

Emerging technologies make it possible to answer these questions. These technologies can be grouped together as PETs. These help address issues relating both to legitimate uses of customer data and to the security of its processing. A recent example of banks collaborating through the use of such PETs is Rabobank and ABN AMRO analyzing transaction data to detect anomalies indicating some measure of fraudulent activity.¹ They shared encrypted data and looked at it together, without exposing any sensitive information to each other. Working together enabled them to throw their nets wider. In effect, they each had more data to work with, which enhanced the scope and indeed accuracy of their fraud detection.

Trend 5: Seamless and secure e-commerce

Everyone knows that customers want – indeed, require – a safe and seamless e-commerce experience. Yet hitting both those marks is easier said than done. A study conducted last year found 7 in 10 consumers preferred going through the checkout procedure as “guests” rather than signing in.² Clearly data privacy is top of mind for a majority of customers, along with a distaste for the cumbersome nature of signing up for every single outlet you shop at. At the other end, merchants don’t want to be exposed to the liability of compromised customer credentials, including the spoofing of payment card details. Security – even if it is time-consuming – is crucial. 

Network tokenization can help all participants in the e-commerce ecosystem get to that place where seamless user experiences and security for everyone happily coexist. A leading market intelligence outfit predicted 85% of all e-commerce transactions worldwide could be using network tokenization by 2028.³
“Think of it as something that a user will never know exists, but is quietly and securely working in the background to keep everyone protected – a wall of invisible security,” said Akshay. It functions by replacing key data, such as card numbers and expiration dates, with unique tokens. A customer links their payment card to their wallet; once linked, the wallet requests a token from the issuing bank that is unique to the card. This token’s unique identification number is matched by the card network with the actual card data and the user’s unique device. The primary account number (PAN) remains invisible at every stage.

Here are two of the many outstanding benefits to such an approach:

1. A stolen token is meaningless to a hacker.
2. Card information is automatically updated within the token. In case of expiry and re-issue, for instance, there is no burden on the customer to input the new information. This dramatically reduces rejections due to outdated card details at checkout, leading to fewer abandoned orders.

This suits both customer and merchant, as both security and the user experience work seamlessly, hand-in-hand. 

One way in which tokenized technology has been brought to market is the Click to Pay initiative, a unified digital checkout solution that offers a frictionless and consistent payment journey, while maintaining security.⁴ Its USP is the single-click checkout, which eliminates endless form-filling and the even-more-tedious entering of card details, thus greatly reducing the number of times a customer abandons their cart out of sheer frustration. This is highly attractive for merchants as well, who are finding their way through the maze of e-commerce payment solutions. 

Solutions like Click to Pay safeguard payment data, reduce friction, and serve the interests of customers, merchants, and banks alike, and are well placed to show the way forward in the fast-growing e-commerce space.

Trend 6: Secure digital asset custody

There has been increased interest   in digital assets in recent times, a wealth class that includes non-fungible tokens (NFT), crypto assets, and others. This has been driven in part by consumer demand, and partly by an evolution in regulation. As more banks roll out increasingly sophisticated wallets, they should be looking into expanding into the digital assets space as well. The benefits include the strengthening of existing relationships, and also opening up previously untapped revenue streams. 

Potential retail investors in digital assets face a significant barrier in having to navigate blockchain technology and also traditional key recovery mechanisms. But a bank could offer this and more through their mobile apps, including storing digital asset keys securely on a smart card. Even if such a card were to be misplaced, a new one could be ordered and authenticated, all through the mobile app. The customer would have ownership and access to their digital assets again. 

Incumbent banks have long prized – and traded on – their reputations for probity and solidity. Why wouldn’t their customers trust them with their digital assets as well, if such an option were available? Akshay noted, “Banks have the advantage of being trusted by investment customers  . That trust , along with the visibility and control provided to customers through seamless recovery mechanisms – so they feel secure in the ownership of their assets – will facilitate mass adoption of digital asset investment diversification.” 

Of course, the solution offered must be rock-solid, and also leverage the familiarity customers already have with their cards and mobile banking apps. 

Trend 7: Accessible by design

Customers increasingly want more-accessible payments and management of their payment credentials.  In fact, it could be argued that making payments accessible to impaired and/or disabled populations is no longer optional – it is a fundamental right. 

Making the payment journey more accessible starts with making bank branches more convenient for disabled customers to visit, including ramps for wheelchairs. Similarly, payment cards can be made more readable for vision-impaired users through notches, larger print, high color contrast, and tactile elements that extend to being embossed in Braille. Additionally, biometrics can be embedded in the cards, making the payment journey easier for users with impairments. 

G+D’s More Accessible Payments Initiative is dedicated to providing a barrier-free payment experience to all. Digital solutions to the issue of accessibility can include remote onboarding solutions for customers who are unable to visit a branch. These can feature QR-enabled content and guided card-activation processes. Additionally, certain demographics like the elderly and other non-digitally-native populations require customized solutions that bring them to the digital ecosystem and its advantages. Making payment journeys more accessible to everyone will be front-of-mind for all stakeholders.

Published: 05/11/2024