accenture payment services - everyday payments · the catalyst for this change is digital payments,...

Accenture Payment Services

Everyday PaymentsHow digital is revolutionizing payments in the Everyday Bank ecosystem

Towards Everyday Payments 3

The heart of Everyday Payments: The digitally-enabled account 4

Becoming an Everyday Payment Provider: Six hot topics 5

A new mindset towards payments is key to remaining center stage 10

The journey ahead 11

Meet John and Jenny

John recently graduated from university, secured his first job and moved into his own apartment. Even though he feels a bit overwhelmed about these life changing events, he is also very excited about the future. He is engaged to Jenny, who lives nearby in the same town.

John and Jenny have had bank accounts since they were children and never regarded their bank as being central to their daily lives. But in the era of the Everyday Bank ecosystem, that is going to change.

The episodes throughout this paper will illustrate how Everyday Payments will be key to making this happen.

2 | EVERYDAY BANK RESEARCH SERIES

Accenture’s vision for Everyday Payments has been created with reference to the “Everyday Bank”1—Accenture’s point of view on how digital is revolutionizing banking and the customer ecosystem (figure 1).

The banking industry, is at a breakpoint, with imminent disruption, similar in scale to that seen already in other retail industries e.g. photography (Kodak), video rental (Blockbuster).

Today’s banks and payment providers have an opportunity to embrace this disruption and become central to customers’ everyday transactions, in the same way that social media and online retailers have become central to consumers’ everyday purchasing decisions.

The catalyst for this change is digital payments, with accounts enabled to initiate payments over all digital channels and becoming the focal points for customer interaction and engagement. In this way, the Everyday Payment Provider will become a trusted and indispensable partner central to customers’ daily lives and activities. By Everyday Payment Provider, we foresee a mix of next generation players in the payment domain, such as today’s banks (and Everyday Banks!), card companies, ACHs, processors, payment gateways, acquirers and other possible players such as telcos and retailers. The Everyday Payment Provider will help fulfill financial as well as non-financial needs and forge deep and durable two-way relationships in the process.

Towards Everyday Payments

BANK AS VALU

EAG

GREG

ATO

R

BANKAS

ACCESS FACILITATOR

BANK AS ADVICE PROVIDER

INFO

RMAT

ION

&ED

UCA

TIO

N

COMMUNICATION

TRAVEL & LEISURE

HEALTH

&PROTECTION

HOM

E

OCONSUMER GO DS

TRANSPORTATION

RenewedBranch Role

Value AddedPersonalBankingAdvisor

ServiceExcellence

EngagingDigitalInterfaces

ModernandRelevantBrand

Pre-SaleEngagement

PAYMENT SERVICES

Save, Spend, Transfer, Borro

w

FIGURE 1. The Everyday Bank

EVERYDAY BANK RESEARCH SERIES | 3

As Everyday Payments emerge and the surrounding environment takes shape, digitally-enabled accounts will become integrated and core components of the complete service offering. These accounts will play a key role in enabling the Everyday Payment Provider to facilitate transactions for customers at any time, over any channel and across the value chain—including pre-sale, payment and post-sale activities.

Figure 2 illustrates the digitally-enabled account’s central role in the Everyday Payments ecosystem. On the consumer side, mobile devices—smartphones, tablets and soon “wearables”—are already at the

center of daily interactions and will serve as “remote controls” for a wide array of activities and services, including the full range of payments from the digitally-enabled account.

On the provider side, the digitally-enabled account will be accessible on an omni-channel basis and will be integrated with services and partnerships that will enhance the experience and capabilities for consumers enabling them to use the account to transact however they want; configure and interact in personalized ways; and take advantage of a range of incentives and rewards that will encourage them to use and keep the relationship.

In Accenture’s view, the move to digitally-enabled accounts is inevitable and presents traditional incumbent banks and payment providers with a stark choice. Either they digitally enable accounts for their customers and extend their reach in the value chain organically or through partnerships; or they leave their customers with “dumb” funding accounts, which would end up merely feeding the smart and digitally-enabled accounts provided by other players in the digital payments market.

The heart of Everyday Payments: The digitally-enabled account

Digitally-Enabled AccountDigital interactions in the day-to-day lives of consumers

Consumers Everyday Payment Providers

Access & Service

Mobile Bank

Tablet Bank

Internet Bank

Configure & Interact

Personal Finance Planning & Management

Retain & Reward

Partnerships Immediate Credit (Push) E.g. real-time credit transfer

Transact

Personalization

Loyalty

Promotions

ATM

Branch

Telephone Bank

Web Chat

Social Media

Online Retailing

In-Store Retailing

Transport & Ticketing

Person-to-Person

Person-to-Business

Deferred Credit (Advance) E.g. credit card payment

Immediate Debit (Pull) E.g. debit card payment

Recurring Debit (Subscribe) E.g. recurring credit card payment

Closed Scheme Debit (Redeem) E.g. air miles redemption

Established and Alternative Currencies

[…]

Education

Travel

Health

Banking

Media andEntertainment

Retail

Utilities


FIGURE 2. The digitally-enabled account

The dynamics of the traditional payments ecosystem are undergoing fundamental and irreversible change. So, what do organizations—whether banks or non-banks—need to do to ensure they succeed in becoming an Everyday Payment Provider in the new landscape of digital payments?

In Everyday Banking, successful players will need to reinvent themselves and offer a complete customer proposition that is truly embedded around consumers’ daily interactions and underpinned by a digitally-enabled account. The same is true in Everyday Payments—and to achieve these goals Accenture has identified six hot topics in the payments landscape that prospective Everyday Payment Providers need to focus on for success in the digital economy.

Payments are becoming Polymorphic as new payment methods proliferate and the landscape fragments. Digital Commerce is driving demand for these new payment methods and creating the environment for them to flourish. Immediate Payments is an important prerequisite for new real-time services suitable for the digital world, providing a superior customer experience through instantaneous payments, 24/7/365. Cards Innovation is imperative to transition to digital and migrating cards from physical forms to mobile devices and the cloud. In the corporate world, a transition is required also to migrate to Digital Corporate Payments and Transaction Services. Finally, Payments Transformation for Digital is the next phase of simplification and replatform programmes already underway in many banks and payment providers, so that they can operate and thrive in the growing, polymorphic world of digital payments.

Becoming an Everyday Payment Provider: Six hot topics

Underpinning each of these are the core digital technologies revolutionizing the way we live – mobile, the “umbilical chord” to everthing digital; social media, the destination for interactions and information; rich data, the glue that enables relevant, contextual and informative interactions and connections; and cloud, allowing ubiquitous and scalable access to digital applications.


The Digital Economy

Polymorphic Payments

Everyday Payment Providers

Digital Commerce

Immediate Payments

Cards Innovation

Digital Corporate Payments & Transaction Services

Payments Transformation for Digital

Consumers Merchants SMEs, Corporates

Government

123456

FIGURE 3. Six hot topics in the digital payments environment for Everyday Payment Providers

John sets out for the TV store— via the café…

One of the first items John would like to buy for his new home is a flat-screen TV. He spent the past couple of weeks researching online retailers, checking price comparison websites, asking Jenny what kind of TV features she would like and getting advice from friends on Facebook. Now he has pretty much made up his mind about the model he wants.

John heads off to the electronics store and as he leaves his apartment, he receives a notification on his mobile phone that the local café around the corner is running a breakfast promotion. So he ‘orders ahead’ and pays for the meal from his digitally-enabled account. When John arrives at the café, he is automatically checked in via low-energy bluetooth “beacon” technology and simply collects the food from the fast-track counter. The payment happens seamlessly and securely in the background.

…before arriving to review and buy his chosen TV

When John arrives at the electronics store, he is reminded how busy it can get on a Saturday afternoon, with customers queuing up everywhere. He finds the TV he wants to buy, uses his mobile app to perform a real-time price comparison against nearby and online stores and decides to go ahead with the purchase. To avoid the queues, he uses his mobile to scan the TV’s unique QR code. This gives him a view of the store’s remaining stock levels and available delivery slots, and tells him that his digital account provider currently offers a “pay later” option, with interest free payments over three months.

John confirms the purchase and receives a welcome package with links to online user manuals for the TV. Simultaneously, an electronic receipt is saved onto his phone and stored securely, so he has evidence of payment readily to hand should he ever need it in the future—for example if the TV proves to be faulty. Separately, John also receives a text message from the retailer reminding him about the delivery time and a text message from his Everyday Payment Provider proposing a favorable offer for an extended warranty on the TV.

An afternoon stroll generates a personalized offer

That afternoon, Jenny is walking down the high-street in the town where she and John live. She is passing the local chemist store when the geolocation functionality in her digital wallet pushes an offer for her favorite brand of toothpaste, giving her a choice of a cashback payment or extra loyalty points. She clicks on the offer, walks into the store and completes the entire transaction on her mobile handset, choosing the option of additional loyalty points (which are also stored on her device). Seconds later she walks out with her toothpaste.

PAYLATER

OFFER



What does this mean for John and Jenny?

John and Jenny can be better rewarded for every transaction. For example, they can seamlessly take advantage of offers, discounts or redeem loyalty points simply by transacting using their digitally enabled accounts. The interaction itself is simplified by combining the offer redemption, discount or loyalty redemption with the amount remaining to pay, in one integrated transaction.


John and Jenny have more control and choice. When making a payment in-store or online, they gain the option to complete the transaction by choosing to use value held with their Everyday Payment Provider or value held in a closed scheme such as air miles or loyalty programme. John and Jenny also benefit from a consistent, familiar and easy-to-use process for every payment, no matter where, how or to whom they are making it, or how small or big it is.

As digital payments proliferate, Everyday Payment Providers give their various customers—individuals, merchants, businesses, corporates—the ability to pay with alternative and emerging payment methods, as well as with cards. They perform digital transactions, no matter the underlying payment method, currency or channel used and independently of

Digital commerce depends on an ecosystem of connected content and service providers. This includes Everyday Payment Providers who leverage their existing relationships with consumers and other businesses (including merchants) and the relevant information they hold—including transaction data, credit scores and customer preferences—to extend their reach and enable collaboration across the purchasing value chain.

where the value is held. Payments are polymorphic. Acceptance is ubiquitous and tailored payments processes “morph” into the integrated customer experience that merchants and Everyday Payment Providers design for customers’ needs (including the use of embedded Application Programming Interfaces—APIs).

The traditional boundaries between pre-sale, payment and post-sale activities are becoming increasingly blurred and integrated. This strategy enables Everyday Payment Providers to deliver an enhanced customer experience and more value for their customers through dynamic and integrated propositions and experiences which are tailored to specific situations and needs.

1. Polymorphic Payments

2. Digital Commerce


To enable Everyday Payments, cards need to be optimized for the digital environment, with transformed processing capabilities. Issuers need to address a number of challenges which range from “dematerialization” of plastic cards, ongoing migration of payments to digital, sustained hyper-growth rates in contactless volumes with changes in customer behavior and diminishing card revenues due to regulatory pressures.

For acquirers the implications of the move to digital are even more profound as they need to expand from a traditional card acquirer role to a much broader polymorphic acquirer role. At the same time they need to address the rapid growth of e-commerce and m-commerce, the convergence of online and in-store payment methods and the emerging demand for differentiated acquiring services and value added services.

4. Cards Innovation What does this mean for John and Jenny?

John and Jenny rarely see their plastic cards anymore as they have become embedded and hidden in digital wallets or integrated in their mobile phones.

For example, John and Jenny can now make card payments online, in mobile apps or in-store (contactless) without having to carry around pieces of plastic in their pockets.

1234 5678 9012 3456John


John and Jenny can send and receive payments in real-time from their bank accounts at any time of the day and no longer experience any delay in seeing the status of the payment. Jenny has left filing her tax return until the last minute, but thankfully is able to do so late in the evening through her government’s 24/7 tax website and is able to pay the tax due before the midnight deadline. She can see on the website her tax office has acknowledged in real-time receipt of both the tax return and tax payment. John meanwhile is reminded tomorrow is his younger sister’s birthday. He sits next to Jenny doing her tax and together they film a short “selfie” wishing Happy Birthday. Opening his mobile banking app, John sends his sister $25 to her mobile phone number, attaching the greeting video to the gift payment.

Digital transactions—and especially polymorphic payments—require a new industry capability that provides real-time account-to-account transfers and payments between connected Everyday Payment Providers, banks and partners. A reliable and efficient immediate funds transfer mechanism with real-time information flow, available 24 hours a day

every day of the year, is a vital building block for the creation of new, innovative digital payments methods and to make modern economies more efficient and competitive. “Immediate payments” with real-time payment finality 24/7/365 and balance update is also essential to a compelling end-to-end payments experience for customers.

3. Immediate Payments


Everyday Payments will also transform corporate payments and transaction services and Everyday Payment Providers will leverage digital to improve customer engagement, increase cross-selling and expand their range of offerings to include full value-based managed services. This includes adoption of mobile devices to

Everyday Payment Providers will update and refine their payment transaction engines to meet digital challenges and customer expectations. Consolidated payment platforms running multiple payment types will become the engines for polymorphic payments, processing growing transaction volumes across a range of digital channels from digitally enabled accounts and supporting real-time transactions and information flows, 24/7/365.

allow treasurers and financial controllers to view transaction information and authorize payments remotely from their offices; and it includes using digital to enable seamless links between physical and financial supply chains, for example across shipping, trade finance and international payments.

In particular, Everyday Payment Providers will need to expose their payment engines through APIs to the outside world, so that merchants and other service providers can embed them in their applications. This transformation will lay the foundation for a strategic capability that is agile, flexible, resilient and scalable enough to underpin new, differentiated and enhanced customer-centric payments propositions suited to the digital world.

5. Digital Corporate Payments and Transaction Services

6. Payments Transformation for Digital


Thanks to payment APIs, John and Jenny can control their digitally enabled accounts directly within retailer apps. This includes seeing their account balances before they confirm a purchase, selecting the account and sending payment directly to the retailer. They notice that the checkout experience is a delight—quick, easy and integral to the rest of the retailer app.

CONFIRMPURCHASE

ACCOUNTBALANCE:$46.23


So what does this mean for today’s banks, payments processors, card issuers and acquirers?

A clear top-line message is that payments can regain center stage for customers of all types, as payments processes capture increasing amounts of information about the customer and act as the vital touch-point enabling banks and payment providers to engage their customers in ongoing conversations. These two capabilities open up a host of opportunities in areas such as cross-selling, relationship-building and the provision of targeted and personalized advice and service.

It is equally clear that the focus of differentiation in the emerging digital payments environment will be across the end-to-end customer experience of the transaction process, not in individual stages. Engagement with customers through experiences that delight is critical to mass adoption of digital payments. To achieve this type of differentiation, the customer interaction will need to be seamless, friction-free and tailored to specific contexts, with complexities such as security embedded and hidden.

Customer interactions will also need to be easy and consistent irrespective of payment or currency type—a need that calls for polymorphic payments. And the entire experience will need to harness the transaction itself as the enabler to something bigger, such as a ride on a bus, the download and use of the latest app, or the purchase of a long-desired item.

All of this means that current banks and payment providers will need to think in new ways. This new mindset will require an acceptance of the need to share information, offer interoperable solutions and make pricing transparent.

It will also involve identifying and exploiting new ways of making money, by providing ecosystem partners—and

thereby individuals, merchants and enterprises—with a widening array of value added services to proliferate payment functions wherever merchants and consumers require them.

Everyday Payment Providers will need to achieve all this against a background of intensifying competition—for example as immediate payments compete with cards—and declining payment fees as regulatory actions bite. Therefore, operational efficiency is also a critical factor, leading some players to evaluate utility plays. Indeed, the optimal new capability model may be utility-driven at its core, with specific capabilities acquired and accessed from complementary partners.

As various players seek to seize leadership positions in the race to become Everyday Payment Providers, it is clear that a one-size fits-all strategy will not apply. Instead, the approach will vary depending on each contender’s existing strengths and positioning. But in Accenture’s view, the winners will be those participants who focus rigorously on the key themes and priorities that we have identified in this paper.

To succeed, are you ready to operate in a fragmented, polymorphic landscape? Are you focused on customer engagement to provide relevant payment services in digital commerce? Are you exploiting real-time capabilities? Are you innovating your cards capabilities to operate digitally? Are you focused on corporate customers and meeting their transaction banking needs with digital payment propositions? Are your payment platforms fit for the digital age and are you ready to expose them through APIs to your customers?

These questions are critical. Get them right and you are positioned to provide the next generation of payment services at scale and mass adoption of digital payments is the key to success for the winners in Everyday Payments.

A new mindset towards payments is key to remaining center stage

Out for the evening

Later in the evening, John and Jenny are having dinner with friends. The restaurant offers the ability to “pay at the table” and Jenny opens her mobile app, scans the restaurant bill and confirms the payment for the whole amount. Their friends then settle their shares of the bill directly with Jenny by “pinging” money from their digitally enabled accounts to Jenny’s mobile phone number. Seconds later, Jenny has received the funds and can see them in her account.

Tired, after a long day, John and Jenny take the bus home. In an Everyday Payments world, they never need to buy physical tickets anymore. Instead they simply tap their mobile phones against the contactless reader on the bus. The system automatically calculates the cheapest fare and stores a virtual ticket in their digital wallets.

CHECKCONFIRMPAYMENT

CHECK


Accenture can help banks and other market participants navigate the complex journey toward differentiation and leadership in Everyday Payments, thanks to our strong set of skills, assets and capabilities honed through our own transformation to digital.

At Accenture, we are continuously developing our own ecosystem of digital assets, accelerators, strategies and capabilities to help banks and payment providers become leaders in digital payments. To support and accelerate our clients’ progress along their Everyday Payments journey, we leverage our expertise in strategy, systems integration, mobility, analytics, interactivity, delivery centers and “Expertise as a Service.”

The journey ahead

ABOUT ACCENTURE

Accenture is a global management consulting, technology services and outsourcing company, with more than 336,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.

NOTE1 For more details, please visit: www.accenture.com/everydaybank

ABOUT ACCENTURE PAYMENT SERVICES

Accenture Payment Services helps banks improve business strategy, technology and operational efficiency in three key areas: core payments, card payments and digital payments. This includes a focus on transaction banking and on compliance, risk and operations. Accenture can help banks simplify and integrate their payments systems and operations to reduce costs and improve productivity, meet new regulatory requirements, enable new mobile and digital offerings, and maintain payments as a revenue generator. Its home page is www.accenture.com/paymentservices

VISIT US AT

www.accenture.com/everydaybank

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@BankingInsights

Accenture can equip your organization with the tools and insights you will need to win in Everyday Payments, please contact:

Massimo Proverbio Accenture Payment Services Global Lead [email protected]

Jeremy Light Accenture Payment Services Europe, Latin America & Asia Pacific Lead [email protected]

Alex Secchi Accenture Everyday Bank [email protected]

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accenture payment services - everyday payments · the catalyst for this change is digital payments,...

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