Digital Transformation in Payments From Business Continuity to Innovation (2024)

Disruption, traditionally associated with innovators displacing market leaders, has evolved beyond its conventional meaning in the last decade. Recent global events, including a mild economic downturn, acted as the ‘great disruptor,’ affecting individuals and businesses in unforeseen ways. Office closures and event cancellations have significantly interfered with normal business operations.

Forward-thinking payments companies headed into the eye of the storm were at least somewhat prepared; those with a headstart on digital transformation and modernization could weather interference with usual modes of business and more easily transition to remote systems than their analog counterparts.

In this way, the digital transformation gave these organizations a modicum of business continuity where they would have otherwise experienced potentially damaging results. Yet digital transformation is aboutmuch more than business continuity, though it is an essential component. Digital transformation will be the cornerstone of innovation and growth in 2023 and beyond.

Payments companies are attuned to digital channels being critical. Consumers have primarily transitioned to ecommerce and digital payments as preferred ways to shop and pay, especially in the wake of the global pandemic. Thevalue of digital payment transactionsis anticipated to reach US$9.46 trillion in 2023 and to rise at an annual growth rate of 11.80% to US$14.78 trillion by 2027.

Yet some payments companies supporting the platforms, systems, and solutions behind digital payments continue to lag behind when it comes to their own digital transformation. It has been a hard lesson for some who were pressed to fast-track digital transformation simply to accommodate the new business environment. As a result, many have become acutely aware of just how significant digital transformation is for business continuity.

First and foremost, payments companies must enable remote access. Over 93% of employees have agreed that they would insteadwork from home, as it allows them better flexibility, resulting in increased productivity and allowing the workforce to tap into company networks, data, and applications outside the office.

It also requires a secure connection, like a virtual private network (VPN). Centrally storing data is also critical, allowing for the management and security of applications and data. Process digitization also aids business continuity by allowing organizations to reduce manual and physical elements within processes. While not all manual handling can be eliminated, many operational activities can be streamlined through digitization.

Online file sharing, messaging, and collaboration allow teams to work together even when not in the same space. Video conferencing services help team members communicate and interact. However, privacy and security risks are considerations that should be tightly woven into any solutions geared toward file-sharing efforts. In 2022, the financial industry experienced anaverage data breach costof $5.97 million globally, an increase from $5.72 million in 2021. In comparison, the average cost of a data breach across all industries studied worldwide stood at $4.35 million.

Currently, only9%oforganizations are using proper protection toolsto secure themselves and their data against internet-based attacks. Organizations must engage in better practices, as remote working involves continuous data sharing through digital modes, which leaves organizations vulnerable to hackers. Tools must safeguard data as well as documents, devices, and users.

Automation is a crucial component of digital transformation, and it goes hand-in-hand with the digitization of processes. In fact, automation in the banking sector amounted to USD 23.3 billion in 2022 and is all set to reach USD 182 billion in 2032,growing at a CAGR of 22.8%. Areas where manual and physical efforts can be removed should also be evaluated for automation. High-volume processing and repetitive tasks are great candidates for automation and another way to safeguard business continuity.

These are some of the basic concepts behind digital transformation for business continuity. Technology is powerful and can prevent a bad kind of disruption, but it doesn’t stop there. Digital transformation, particularly for payments companies, promises easier, less expensive, and more collaborative innovation—a key measure of success in today’s payments landscape.

The importance of digitization is unmistakable: businesses and consumers have come to expect efficient, fast, and seamless transaction options. As part of a digital transformation strategy,cloudmigration, and an API-first approach lend payments organizations flexibility, agility, and speed. These qualities, in turn, allow payments companies to more quickly launch products and services and improve upon those products and services over time.

APIs are an especially important piece of the digital transformation puzzle as they enable collaborative ecosystems between developers, partners, and other third parties. Not only does this facilitate more innovation, but it also allows for the continuous addition of value to products and end-users. APIs can be leveraged and reused to improve or add functions without having to start from scratch. API mashups and collaboration can yield infinite possibilities that pave the road to innovation.

In the realm of digital payments, customer experience reigns supreme. As consumer expectations continue to evolve, payments companies must prioritize customer-centric solutions to stay ahead of the competition. Digital transformation allows these organizations to gather and analyze customer data, enabling a deeper understanding of their preferences and behaviors.

By harnessing this knowledge, payments companies can design personalized and seamlesspayment experiencesthat cater to individual needs. Whether it’s simplifying checkout processes, providing real-time transaction updates, or offering tailored rewards, a customer-centric approach can elevate the overall payment journey and build strong, loyal relationships with consumers.

As payments organizations think about digital transformation, business continuity must be part of the conversation. Even so, the conversation must expand beyond survival and into the world of innovation. The digital payments landscape is shifting quickly. Having a solid, modern, digitally transformed foundation on which to build new solutions will be paramount moving forward.

Contact ustoday to explore how we can help transform your payments business and unlock its full potential.