Despite regional differences in how technologies are developed, applied and adopted, all major fintech markets across the world are sharing a strong mutual interest in the power of payment network partnerships.
Fintechs collaborating with payment networks will trigger the next big wave of emerging payment technologies, according to insight from Discover® Global Network and 451 Research (part of S&P Global Market Intelligence).
In the annual Fintech State of the Union Report, this year’s survey provides insight into the most current trends among consumers and fintech vendors in the markets of Canada, China and Hong Kong, Germany, India, Singapore, the UK and the US.
With regional analyses of fintech innovations and trends, the study makes clear how the coming together of fintechs and payment networks will power payment innovation across the board.
“It’s clear that fintech is transforming commerce and financial services across all markets, and partnerships are essential to global adoption,” said Matt Sloan, VP of international markets at Discover® Global Network. “As the fastest-growing global payments network, we recognise the value that these partnerships deliver and are excited to bring our experience and knowledge of the payments landscape to help design solutions to fit businesses, acquirers, issuers and other payments providers.”
Fintech in Asia
The APAC region represents one of the world’s most mature and enthusiastic environments for fintech. Seventy per cent of consumers have three or more financial services apps installed on their smartphones, while just under half have been using these services for two years or more.
Whether it’s the use of QR payments or digital wallets, the Fintech State of the Union data makes clear that the appetite for fintech innovation is highest in the region.
Consumers in Asia were found to be particularly keen to see new payment experiences, including real-time payments, which have grabbed the attention of more than nine in 10 of those surveyed.
The study also found that the banking sector in this region plays a vital role in delivering new services, including peer-to-peer payments and buy-now-pay-later (BNPL). This role, however, comes with added expectations, as the study also found that the region’s consumers were among the most demanding when it comes to their banks providing them with what they wanted. Improvements to the digital banking experience, payment speed and the availability of payment options all dominated consumer desires.
Given this environment, the survey emphasised the need for the region’s fintechs and payment networks to come together to power this innovation. Seventy per cent of Asia’s fintechs are ‘very interested’ in leveraging such a partnership to develop use cases, such as embedded finance and open banking, while a smaller 68 per cent would utilise it for connected commerce.
Fintech in Europe
The survey paints a different picture of the fintech landscape in Europe, but one that remains nonetheless immersed in fintech’s advanced payment services.
The report specifically highlighted the popularity of contactless payments within the region, emphasising the importance of contactless capabilities to both the consumer experience and the transactional abilities of businesses.
Europe’s appetite for contactless capabilities, cited as the preferred way to pay by 56 per cent of respondents, far outperformed the global average of 32 per cent. For consumers in Europe contactless remains a core element of the overall payment experience.
This focus on contactless matched the desire of the region’s fintech community to partner with payment networks around the provision of these and other digital solutions.
Sixty-eight per cent of fintechs are ‘very interested’ in developing online cardless payments with payment networks, while 62 per cent are looking towards payments-as-a-service. Similarly, 61 per cent are looking to develop in-store card-less experiences and to enable further payment acceptance.
Fintech in North America
While the desire for payment innovation and convenience was present in North America also, the study found that region placed a higher emphasis on the security of payments.
When choosing a digital payment service, for example, 62 per cent of consumers cited personal information security as critical, eight percentage points above the global average.
For this reason, when partnering with payment networks, 66 per cent of fintechs pointed to payment data security and payment acceptance as the two main areas of development.
The North American region, unlike other areas of the world, also strongly indicated some hesitancy in adopting digital payment methods with consumers continuing to depend on physical cards for swiping or inputting details at checkouts.
“It’s clear that fintech is transforming commerce and financial services across all markets, and partnerships are essential to global adoption.”
The region also trailed in both interest and adoption of emerging payment technologies with fintechs indicating much lower interest in cryptocurrency, blockchain and embedded finance. in comparison to Europe and Asia. But North America scored around average for consumer interest in connected commerce and open banking, both of which represented 78 per cent.
Additionally, only 44 per cent of consumers actively use digital wallets, while 16 per cent have engaged with QR payments.
Perhaps explaining their lower interest in digital payments, consumers in North America continued to prefer payments in-person and manual card entry techniques, which was cited by 38 per cent of respondents.
Partnership innovation is the future
In all, there is no doubt that payment innovation is occurring globally, and collaboration between fintechs and payment networks continues to be key. While this year’s Fintech State of the Union Report makes clear that significant differences exist among the world’s regions in terms of the focus of innovation, customer behaviour and prevailing transaction types, the emergence of new payments technologies shows no signs of slowing.
A marketplace preference for convenient, quick, secure and frictionless payments – no matter the currency or transaction method – will continue to shape the partnerships formed between the world’s fintechs and payment networks.