Pay.UK has launched a report exploring the key trends that are shaping the future of retail payments. The report entitled “Retail Payments in a Future World” explores the way our homes, work and play are being changed by evolving technologies, smarter AI and changing consumer behaviours.
Alongside the report, Pay.UK has created a Knowledge Hub, designed to encourage the industry to collaborate and innovate around challenges and topics to shape a shared vision for the future of UK payments. The first of a number of planned collaborative projects through the Knowledge Hub has been to ask the payments industry for their views on how the Covid-19 pandemic has changed the trajectory of the industry. Once the challenge has closed, those who have contributed their ideas will receive an insight into the industry response along with our own commentary, providing an informed steer of what is on the horizon for payments.
Kate Frankish, Director of Strategy at Pay.UK, said: “Part of our purpose is to foster innovation in the payments industry. The report, and the launch of our industry challenge, are both aimed at starting a conversation and stretching our thinking about how our society is changing and what this means for the future of payments in the UK.
“As more people become comfortable integrating technology into their lives, and that technology gets smarter through the evolution of AI, making payments easier needs to be balanced with security and reliability. By working collaboratively we are confident that we can continue to deliver a robust and resilient payments ecosystem for the £19.7billion worth of payments that are made every day in the UK, and provide the central enabling capability to ultimately allow the UK payments industry to thrive.”
When looking at what the payments industry can expect in the next decade, the report predicts that we will see a higher volume of payments, the growth of platform companies and digital wallets, the emergence of a small number of “ultra-digital” payments innovators and, crucially, that the majority of people in the UK are likely to be better off as a result of having more choice when it comes to payments.
AI has been identified as one of the greatest drivers of change in the way we use technology in our homes, as it plays an increasingly important role in making people’s lives more convenient. Connected devices, controlled by home AI, have automated chores, shopping, and monitoring of security and health. As this adoption continues, regular purchases could also be managed by AI and would therefore become more regular and not require a conscious engagement.
However, those who do not have access to the credit to benefit from these new AI-powered technologies are likely to continue to be disadvantaged by the digital divide. As AI becomes smarter it will also unlock new opportunities for the retail payments sector. AI-finance managers will be able to ensure active management of customer funds, manage cash flow to avoid going overdrawn or alert users when they overspend.
For businesses across the UK: automation of some tasks, a new outlook on remote working, the emergence of dominant technology companies in particular sectors and the digitisation of reporting are reshaping business as usual.
As businesses become more used to integrating technology, the monthly salary could be replaced by an automated daily payment, which we are already starting to see emerging through the gig economy and zero-hours contracts.
It also has implications for the way businesses interact with each other. Automated processes can be used to reduce friction, remove and simplify the steps required to fund complex or lengthy supply chains.
Kate Frankish continues: “The pandemic has changed the UK’s relationship with work, and also reshaped the way businesses interact with each other both nationally and internationally.
“Supply chains were disrupted as borders closed, and the role that people previously played in manually managing and reporting transfers of goods had to adapt. It’s still early days, but we believe that Smart Contracts which automatically complete once certain criteria have been met could allow quick and easy exchanges of goods and services for payment.”
The need to stay connected during the pandemic saw UK consumers become more engaged with virtual environments, and businesses have started to realise the potential for new ways to engage with customers. The report finds that there is already a move to ‘platformification’, where social networks, shopping and banking to consolidate on powerful platforms which enable the delivery of multiple functions.
With technology giving users more choice, and easier access to a wider range of products, purchases will likely become more frequent, smaller in their amount, and made via personal devices rather than e-commerce checkouts. More choice in the sector will also allow consumers the ability to vote with their wallets and use their purchasing power to shape what the future of the payments industry will look like.