It’s no secret that the pandemic has been a catalyst for digital evolution. Technology timelines for businesses all over the globe were brought forward as companies found themselves in a new digital realm. Steps that were due to take place in five years’ time suddenly had to take place now, from restaurants adopting click and collect, to whole enterprises shifting to remote working. The organisations that were able to diversify their offering and support changing customer demands are now on top.
But just like biological evolution, in digital Darwinism, it’s not the fastest or the strongest companies that have excelled. It’s the most agile. The ability to adapt is key and always will be because of the competitive world we live in. For Financial institutions, it is no different. A considered approach to digital evolution is what works best; scrambling to buy the latest headset for all your employees is little use if you’re a bank anchored by legacy tech and can’t keep up with customer expectations for cross-border payments. Think about the needs of your customers and the most effective way to get there, and this will keep your business on track.
Strengths and weaknesses
Digital evolution is fundamental to the way a business or industry operates, otherwise, it stagnates. Those who ignore this will be unable to stay competitive, and there is a long list of companies that serve as a warning – take Blockbuster and Toys R Us, for instance. And organisations in the payments sector are at a crucial stage of digital evolution, facing a rapidly growing demand for instant access service options, driven by the world becoming more digital and consumers becoming more comfortable with transacting online.
This trend is quickly becoming an expectation in the B2B payments space too, with not only traditional banks having to keep up with digital customer demand, but Payments businesses of all kinds having to pivot to respond to this challenge.
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It comes down to knowing what your business’s strengths and weaknesses are. To be agile banks need to focus on what they are good at and collaborate with experts for the rest, meaning working with FinTech partners is crucial. Payments businesses will stay relevant by widening their offering, for example, providing new payment methods such as Buy Now Pay Later (BNPL) and Request to Pay. But there is still one big hurdle many of these organisations face that can seriously hinder the ability to be agile.
When it comes to cross-border transactions, the existing correspondent banking network is the slowest and most expensive way to move money for their merchant customers. Banks – especially smaller domestic players – and Payments businesses working with incumbent banks are ultimately being disenfranchised and are losing out to newer players in the Payments space because they have not moved away from the traditional correspondent banking network.
Two heads are better than one
Collaborating with an expert payments specialist – such as a tech-first licensed bank – allows Payments businesses and banks to respond to customer expectations and stay agile. In particular, a trusted partner with a ‘super correspondent’ network that integrates local clearing and payment schemes will take care of back-office processes like cross-border payments in a fast and compliant way. And all of this can be achieved without the need to invest the significant time and funds required to replace Financial institutions’ legacy systems or overhaul their existing infrastructure.
To work smarter, not harder, Banks and Payments businesses must open themselves up to collaboration with external providers. Staying agile in the age of digital Darwinism can make or break a business and you can’t always do it alone.
Written by Anders la Cour, CEO and co-founder of Banking Circle