The past few years brought an influx of digital transformation to the payments industry as modern technology emerged to meet rising consumer expectations. Specific demographics of consumers, such as immigrants and older adults, have unique needs that can be well-met with innovation and investment in the future of banking.
In an interview with PaymentsJournal at the 2021 Money20/20 event, Jairos Riveros, Chief Strategy Officer at Paysend, spoke about emerging payment corridors for consumers and the future of digital and open banking.
Meeting the needs of immigrants
As someone who has immigrated twice, first from Latin America to the United States then from the United States to Canada, Riveros has witnessed firsthand the challenges that immigrants face around financial education and inclusion. That firsthand experience, along with his involvement in industries including payments, pensions, and investments, fueled Riveros’ passion in three key areas: financial education, financial inclusion, and innovative and disruptive solution development.
Tackling the challenges around payments involves reducing the costs, barriers, and time it takes to move money. “If we focus on reducing costs, removing barriers, and reducing the time or eliminating the time it takes, then we’ll be supporting some of the trends that we are looking at [as an industry],” said Riveros. Building a platform or solution with a customer-centric focus, partnering with other financial services organizations, and investing in both employees and customers can help conquer these challenges.
Underscoring the importance of collaboration, Riveros explained that financial services organizations “can’t do it alone. I believe that we, as financial institutions and in the fintech world, need to come together and work with each other to support us in many different ways… If [we] join forces together, it could be even better.”
Meeting the needs of an aging population
Older adults are another demographic that represents a huge opportunity for financial services companies. The amount of money in motion among this age cohort is enormous, with North Americans ages 50+ controlling an estimated 80% of U.S. and Canadian aggregate net wealth. Around 10,000 people are retiring every day, with $765,000 in average total wealth per household.
“That [money] will go into the flow system as soon as you start retiring. You have to pay. You have to live. And we all live longer, about 20 years longer than it used to be on average,” said Riveros.
This gives financial services organizations the opportunity to understand and meet the needs of individuals during significant life transitions, such as retirement, and develop products to meet such needs. “Financial institutions could look at the trends then align to provide solutions that are more geared toward them,” he added.
The rise of open banking
To address the needs of these populations and more, Europe is increasingly adopting open banking, which refers to a banking system where users’ personal and business data can be shared between applications and banks at their request. This gives consumers access to financial products that can save them time and money.
This is particularly true for consumers whose assets span across different financial institutions and regions. “As you relocate yourself to new places, you will start realizing that you have spread your limited or large assets in different areas, in different countries, in different financial institutions. This is something that we will be looking quite heavily [at] around how open banking can help that,” said Riveros.
The United States has fallen behind Europe when it comes to implementing open banking. This is largely due to a ‘if it ain’t broke, don’t fix it’ mindset. “In the U.S. and in North America, we were in the comfort zone. And that comfort zone has reduced the interest, and I would say to some extent the appetite, to start embracing new models and new ways of [banking.] We have a system that has worked. It is working, so why change it? Why break it?” explained Riveros.
However, evolving consumer preferences and needs will motivate financial services organizations to move forward with open banking efforts over time. By making the strategic decision to leverage technology that meets consumer needs, financial services organizations can successfully compete for business within key demographics and markets.
“We could do well by doing good. That will be a very important element that we need to focus on. That is the choice—the choice of your people, the choice of how you offer [solutions], the choice of leveraging technology,” Riveros concluded.