How bill payments have transformed since the pandemic
COVID-19 became a watershed moment in the bill payments industry, more by happenstance than design. In this article, we consider how the knock-on effects of a global pandemic on the bill payments industry are still echoing now.
Behaviours and habits are the hardest things to change
Something weird happened when the world went home and started living a surreal existence, spending their work day and personal time occupying the same room. Unsurprisingly, more people started shopping online. They spent less time commuting, instead, they found themselves spending more quality time with their computers and phones.
When it comes to bill payments, more people got into the habit of making payments digitally. Cash became a thing of the past. People were increasingly required to pay at the tills and on websites using digital means. And, as patterns of behaviour changed, these happenstance arrangements started to become habits and social norms.
The pandemic caused new habits to be hard-coded into social behaviours, and bill payments was no exception
Product managers know that the best way to sell a product or a service is to turn its use into a norm of behaviour. The global pandemic prompted people to develop new habits which, in turn, have been forged into behaviours.
Evidence of bill payments behavioural change since the pandemic (Source: UK Finance )
“Direct debit payment volumes tend to be linked to some extent to the economic cycle and consumer confidence.”
“In 2020, the number of people using online banking (via a computer) or mobile banking (via an app on their smartphone or tablet) continued to grow. Well over two-thirds of UK adults (72%) used online banking and over half (54%) used mobile banking. All age groups had high levels of remote banking use, ranging from 93% of those aged 25-34 to 84% for those aged over 65.”
As we debate the Future of Payments at FinTech North’s event this week, what can we envision for the near future?
I think, most business people have been surprised about how deeply ingrained these newly forged habits have become. People aren’t going back to the high street on the same terms, they’re not volunteering to trek to the office every day, and they’re not inclined to go back to using cash.
During the pandemic period, we have also seen a seismic rise in online fraud. This too, has led to more consumers taking measures to protect their online data.
What this means to the payments industry is that we now have to live in the new reality and embrace it.
Making Request to Pay some or part of your commercial answer
One of the ways to embrace the changes happening in the bill payments industry, quite simply, is to adopt Request to Pay in your finance, banking and/or bill payment app.
Request to Pay is a protocol and standard for enabling smart digital bill payments from mobile devices. Essentially, it’s an instructional set of interoperability and messaging rules that allow participants in the UK banking sector to create secure communications between bill senders and receivers via their banking apps.
This means that bill payers are able to manage all their bills at a glance on the app and engage with suppliers directly. This presents a much more appealing option over having to contend with bills coming in different formats, which are often not digital.
In short, Request to Pay largely answers pressures on banks and financial services to embrace audience behavioural changes, turning the business challenge of providing digital bill payment solutions into a competitive opportunity.
From open banking to open finance… the bigger opportunity to embrace audience behavioural changes
In the background, since 2020, the financial services industry itself has not stood still, while all this behavioural change has happened. Digital payments present a greater opportunity to put data to work in ways that substantially improve the customer experience.
More and more providers are embracing open banking to simplify digital applications processes, reducing the need to interrogate users, when data is already held in the banking system.
The ability to leverage known data becomes even more interesting when the number and variety of supplier stakeholders sharing their data extends beyond banks.
Peter Cornforth, Commercial Director for Answer Pay, argues that the bigger opportunity for banks and services providers is to expand horizons from open banking to open finance. He says
“Open Banking has been a huge success with over 5M people having tried the service. Open Finance is far broader and will include the opening up of APIs from other industry sectors e.g. Energy. We think Request to Pay provides an exciting opportunity for banks and payment providers to leverage these new APIs in creating better bill payment experiences.”