“The only thing we can count on is uncertainty,” Albert Einstein once said.
While this statement is universal and applies to almost every endeavor in life, uncertainty continues to exist in business, especially in the payments sector.
The last four years are proof of that. The pandemic has sent us all home and back online, forcing merchants and financial service providers to rethink or quickly establish their digital footprints. The stressors on supply chains that span the globe may have been almost unimaginable until they became a reality and front and center.
And now that the pandemic has passed, the challenges facing business leaders are different from those listed above, but uncertainty still prevails. Inflation persists. As of this writing, it's hovering around 3%+, below his 9% peak a few years ago.
But even at these levels, planning for rate cuts remains as difficult as ever, even though rate cuts seem more like an “if” than a “when” for the Fed. Input costs are higher. Private consumption appears fragile and unstable. The ultimate sacrifice may be a company's sales momentum and profit margins. Consumer card delinquencies are on the rise, indicating stress in the paycheck-to-paycheck economy.
For banks and fintechs, it adds the wild card of regulatory uncertainty. The Consumer Financial Protection Bureau is trying to cap credit card interchange fees and late fees, which could cut into revenue streams. FinTech is under increased scrutiny in terms of risks and vulnerabilities related to its handling of customer information.
Artificial intelligence may have been a hot topic just a few years ago, but it is now expected to have a major impact on all businesses, large and small. This can be seen as both a competitive advantage tool and a tool for scammers to prey on victims without them even realizing it.
Gather insights and strategize
None of this suggests that management must act blindly and simply react to changes in competition, regulation, and global conditions.
Data comes from every corporate activity, interaction, engagement, strategy, and transaction. The right technology leverages that data, taking raw information and spinning it into more than a set of metrics.
As 18 payments industry executives say in our Q1 e-book, The Impact of Uncertainty, data provides real-time insight into what's working and what's not. The data can help identify where fraud is occurring and uncover anomalous transactions before new attacks are successful.
Data helps payment service providers route payments across borders, time zones, and currencies in the most streamlined (and cost-effective) way. Information provided in real-time helps financial institutions and fintechs accept faster payments and innovate faster in line with end market expectations.
Executives who provide advice and insights in this eBook believe that data models are likely to be disseminated throughout the organization, as existing customer preferences change, and new customers (and markets) are considered for future growth. He noted that it would likely be used to segment and explore potential locations.
They pointed out that insight is part of strategy, and strategy recognizes both opportunities and challenges and translates challenges into: chance.