Why Payments Make The Perfect Catalyst For Digital Transformation

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Payments organizations, whether part of a larger financial institution or through payments companies within the financial services ecosystem, can be the digital transformation heroes.

We live in a digital age where technology rules and customers have come to expect best-of-breed, technology-driven solutions to all of their everyday problems. Customers have a much lower tolerance for mistakes, delays, and any other impediment to the perfect experience. This is especially true in the best online payment gateway industry, where customers have grown accustomed to one-click payments on mobile devices.

Payments firms are well suited to this era of digital disruption and transformation. Furthermore, as a result of the pandemic, the payments industry's digitization has been accelerated by two to three years. Customers are relying less and less on physical cards and more on services such as digital wallets and peer-to-peer (P2P) payments to transact. Payments companies that can meet these more sophisticated preferences are well-positioned to build long-term customer loyalty. Even better, providing these personalized services ...
... allows for the collection of rich customer data that can be used to further personalize experiences and optimize various touchpoints.

Payments Can Pack a Punch
While payments within financial institutions (FIs) are at the forefront of financial services, payments companies are also on the front lines as PayTechs flood the market with digital solutions aimed at luring away existing customers. This reality supports the case for digital transformation. It is not the only factor influencing change.

Data abounds in the payments industry. Payments organizations have massive amounts of historical transaction data, in addition to the data that is collected in real-time with each new transaction. This data is reliable enough to create detailed customer profiles, and the frequency with which new data is collected makes it simple to validate (or invalidate) recent campaigns.

Payments digital transformation has a trickle-down effect. Whether it is other lines of business within a financial institution or other offers, products, or services within a payments company, digital transformation or payments will improve the customer experience in every way.

Focusing on Digital Transformation Efforts
Digital transformation is always perceived as a large project that will require a complete overhaul of all systems and could take years to complete. While this is generally true, emerging technologies make it much easier to embark on the digital transformation journey in ways that are both significant and less intimidating. Using AI and machine learning tools can help to accelerate the digital transformation of payment systems.

To better assemble customer data, payment organizations can begin by organizing data and breaking down silos. This avoids costly legacy system upgrades in favor of more adaptable data assembly solutions that can begin collecting and integrating contextual data from customers' mobile devices to build out customer profiles.

As this data is gathered and customers are better defined, hyper-personalized trigger campaigns based on transaction and contextual data can be launched. Data-defined trigger campaigns ensure that each campaign's message, intended target, and timing are all in sync. These campaigns can be repeated indefinitely, with data-driven tweaks and optimizations taking place after each iteration. Context-based marketing can also encourage data sharing between online payment gateway companies and their partners, allowing both filling gaps and personalizing offerings by leveraging each other's data.

Digital Transformation Wildfire
A successful digital transformation initiative in payments, no matter how small, bodes well for the rest of the organization. Measuring and displaying the impact is frequently sufficient to serve as a catalyst for promoting digital transformation throughout an organization. The payments industry is not the only one being targeted by Big Tech. FIs are under pressure to compete with digital giants from all sides, including alternative lenders, neobanks, and other FinTechs. Using payments digital transformation as a case study can inspire change throughout an organization.

The effects of digital transformation can spread to other lines of business within a FI, and the effects are not limited to the groups from which they originate. In other words, a digitally transformed payments group can be used to upsell and cross-sell products and services by other lines of business. Data from customers can be aggregated, shared, and mapped across various groups, products, and services. The end result is a better understanding of customers and an improved ability to serve them.

Conclusion
Although digital transformation is critical, payments organizations can take smaller steps toward more impactful initiatives. Contextual campaigns, and the positive outcomes they produce, can serve as a foundation for promoting larger digital transformation initiatives. Concentrating on customer-facing communications that occur through payments can produce positive results in months rather than years. Payments organizations can begin to build modernized, personalized payments experiences that compete with FinTechs, Big Techs, and other competitors by collaborating with the right partner and leveraging AI and machine learning solutions.