Data is the new money
In today's digital economy, the payment industry is undergoing a transformation. Traditional strategies based on pure transaction processing are becoming less relevant as margins shrink towards zero. Instead, the real gold mine lies within the data generated from these transactions. This change has significant implications for payment providers as they navigate through the dynamic business landscape. By harnessing the vast data troves, they are now exploring innovative opportunities and creating new revenue streams, marking a revolution in the sector through data monetization.
Hyper-personalisation: the key to winning the race
In this race towards redefining the industry, the winners will be those who embrace hyper-personalised value-added services backed by data. These leading providers have the power to mine transactional data and deliver highly personalised offerings, custom-tailored to align with their customers' behaviour and preferences. This level of personalisation goes beyond merely understanding the customers. The ability to decipher consumer patterns can enable businesses to provide personalised recommendations, timely offers, exclusive rewards and discounts, or even predict future spending behaviour. Such deep, data-driven insights are redefining customer engagement, creating a competitive edge in the increasingly customer-centric digital economy.
Handling the data deluge: a double-edged sword
The world is witnessing an unprecedented data boom. According to Fintech Magazine, it is estimated that 90% of all data globally was created in the last two years alone. A staggering 3.5 billion people are contributing to this data deluge through their smartphones. These devices are collecting and transmitting enormous amounts of data from a single endpoint. This data explosion presents a unique opportunity for payment providers. At the same time, it poses the complex challenge of managing such large volumes of data and extracting meaningful insights from it.
Leveraging technology to unlock data's value
To address this challenge, payment providers are turning to technology. In particular, data analytics tools and artificial intelligence (AI) technologies are quickly becoming essential instruments in the payments sector. These technologies possess the power to sift through vast troves of data, identify trends, discern patterns, and generate actionable insights that can drive strategic decision-making. The application of AI and machine learning can automate data processing, enabling businesses to rapidly analyse their data and extract valuable insights that could otherwise be missed.
Navigating data protection and privacy laws
However, the road to unlocking data’s value is not devoid of hurdles. One crucial step to this end involves navigating through the complex landscape of data protection and privacy laws. These laws dictate the standards that should apply, who should control data, and how the rules are enforced. The interplay between these aspects is complex and varies regionally, adding an additional layer of complexity. Ensuring compliance with these standards while leveraging data will be vital to both preserving customer trust and capitalising on data's potential.
Data-driven expansion into financial services
In their journey to unlock the value of data, payment companies are continuously capturing data on a variety of consumer actions. This includes the type of payments made, the frequency and time of purchases, the nature of goods or services bought, and more. With this wealth of data at their fingertips, expanding into additional digital financial services seems a logical next step. Offering services such as insurance, wealth management, banking services, and lending not only creates additional revenue streams but also serves the customers' broader financial needs.
The future of payments: beyond transactions
In conclusion, data is becoming the lifeblood of the payments industry. Its role has shifted from being a mere byproduct of transactions to becoming a critical asset that fuels growth, drives innovation, and redefines customer engagement. As payment providers continue to refine their data capabilities.
Download the Report Five Critical Payment Lessons from the New Economy, created in collaboration with Kapronasia.
