Credit, Debit, or Tap-to-Pay: The Digitalization of Currency and the Effect on CX

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Estimated reading time: 5 minutes

Most young adults associate the first of the month with three things: Pay day, bills, and rent (as many of us can’t afford to buy a home).

I pay my bills through Venmo. I haven’t stepped foot in a physical bank in three years and I've never owned a checkbook. The moral of the story is: We've stumbled onto a new era of peer-to-peer payments, virtual credit cards, and branchless banks, with no signs of turning back.

As the eCommerce and payments universes continue to expand, customer experience has become the competitive differentiator. Financial services (FinServ) companies across the board must be able to adapt in a constantly evolving market.

Here are three different ways FinServ companies can innovate and compete in the industry.

1. Catering to The New Customer Base – Meet Gen Z

Look out world, Gen Z (humans born after 1996) is here to share the spotlight. According to Bloomberg, Gen Z is the newest emerging consumer group, making up 32% of the population this year and by 2020, they’ll make up 40% of all U.S. consumers.

(Oh, crap, we’re getting old).

Gen Zers are digital masterminds, as they’ve never lived without Google, Apple, Facebook, or Amazon. Their incredibly short attention spans and “see now, buy now” mentalities make them crave immediacy and demand a highly personalized CX.

As they enter the workforce, Gen Zers will likely be the first generation to completely trade in physical wallets for digital ones. Both Millennials and Gen Z are driving digital banking, with 69% of Gen Zers using banking apps weekly, and even daily.

Financial services companies must up their app game, as a positive UX is crucial for customer acquisition and retention. An easy way for companies to keep tabs on CX among mobile apps is through analyzing customer feedback, something Stratifyd specializes in.

A Fortune 50 Financial Services company used our AI-powered platform to analyze omni-channel customer feedback pertaining to CX to identify pain points and fuel competitor analysis efforts. After analyzing contact center transcripts, the company discovered a bug within its mobile app that caused problems with the fingerprint login feature. It was able to quickly fix the issue and keep CSAT scores from dipping.

2. The Advancement of Mobile Payments

Consumer payment habits are in the middle of a digital revolution. Research found that 90% of consumers switch between screens when making purchases, and 46% of smartphone users make peer-to-peer payments regularly (See? I'm not the only one). How FinServ companies react to consumer trends will directly influence their short- and long-term CX and revenue.

Venmo, a peer-to-peer (P2P) payment app owned by PayPal, became a household name in 2012 after millennials began Venmo-ing each other for sushi, rounds of drinks, or divvying up the costs for weekend trips to the beach or their alma mater for the homecoming football game.

Consumers love P2P payments because of its convenience and simplicity. It doesn’t matter if you forgot your wallet at home, or don’t have any cash, you can quickly and safely send money no matter where you are.

Within the last few years, Google Pay, Apple Pay, Square, Zelle, and others have joined the latest FinTech phenomenon. Payment companies must continue to find innovative ways to create a convenient, seamless CX in a fast-paced purchasing world to remain competitive in the industry.

With the rapid evolution of payment technology, it can be difficult to keep up. But, by analyzing current and future tech trends, credit card companies can gain valuable insight on how to stay ahead of the curve in the future of eCommerce and payments.

Companies should take note of how Mastercard is using innovation to further expand its relevancy in an increasingly digital space. Its research team is focusing on natural language processing, voice interfaces, augmented reality, and virtual reality to understand what future consumers (like Gen Z) will want and need.

3. Upping the Ante With Security

With each security advancement in the financial services space comes more criminals getting creative in attempts to commit credit card fraud. Even with the wide adoption of EMV (the tiny chip reader on your credit and debit cards), it’s still not enough to stop fraud. Security frameworks must constantly evolve and advance to ward off security threats.

Apple recently announced the Apple Card with plans of launching this summer. One of its most interesting features is a wide focus on privacy and security. Unlike most cards, this one has no card number, CVV code, expiration date, or signature, making it the most secure physical credit card to date (according to Apple). The card also incorporates a one-time use authentication code that is protected by biometric security (think: Touch ID or Face ID) through the iPhone.

These aren’t the only features of the card. Apple is using machine learning and Apple Maps to change the cryptic names of stores you see on your transactions. This, combined with the ability to text questions directly to Apple customer support, will help keep the number of customer service interactions down, lowering costs and reducing customer pain points along the way.

The Future of Payments

With companies like Amazon, Square, and PayPal supplementing their digital services with physical credit cards, the FinServ industry sees no end to expansion in sight. With so many options to choose from, companies need to put time and effort into maintaining a seamless CX.

We put together a demo video to show how our platform can help FinServ companies (Zelle, in this instance) increase customer acquisition and retention, improve mobile experiences, and increase revenue.