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Digital Payments as Big Opportunity for banks

Across the globe, digital payments are one of the top most growth areas while trying to build a successful digital banking business. Not only does the digital channel multiply customer interactions, but mobile and online payments, which together form the bulk of “digital payments”, are the key service from which banks can extend their commercial territory and grow revenue. Through Digital payments platforms banks can achieve following:

Increase fee and interest income

Mobile-payments solutions, including mobile peer-to- peer (P2P) money transfers

International remittances

Small-merchant mobile card readers

Above will not only increase the frequency of consumer interactions but also increase both the number of charged transactions and the cash flowing through bank systems like prepaid, current accounts, consumption-related lending.

On the corporate side, transaction banks that execute well on digital cross-selling stand to increase their market share of corporate deposits and lending. Reach a broader set of customers with more diverse services: By tailoring payments solutions to underserved segments, including small and informal merchants, the youth market, international travelers, migrant workers, and low-income customers, banks can shift a bigger share of payments to bank-owned channels. Banks can develop applications for small payments, unattended vending, and ambulant sales to extend the reach of electronic payments and reduce the costs associated with less efficient payments instruments, such as cash.

Extend the value proposition: Biggest asset any bank possess today is nothing but huge amount of customer behavioral data. Banks own rich reserves of raw behavioral data. The mobile channel enhances this data pool with location and search data, which can provide valuable insights into future customer choices. Banks should leverage their data strengths to create new services along the full span of the consumer decision journey, reaching beyond payments transactions to manage the customer’s entire digital wallet by optimizing loyalty awards and special offers, payments terms, and instruments