Navigating the Payment Trends of 2024

Typically, at the back end of a year, most of the major Payment Consulting firms publish their annual views in a series of reports, which are free and available for download.  We have taken some of these reports (including Boston Consulting Group, McKinsey, Accenture, Cap Gemini, EY, Deloitte, JP Morgan, FIS, and Consult Hyperion) and our forthcoming emails will provide a precis of the content over the next few weeks as well as a link for you to download the full report from the author should you wish to read the more detailed paper.

In this, our first article in the series, our objective is to highlight Stanchion’s take on the year ahead and offer our insights on some of the key payments trends expected.

Stanchion Payment Solutions is entering its 23^rd year in the industry. Our traditional role (which we still play) was to provide expert technical skills around payment switches and card-management platforms from vendor organisations such as ACI Worldwide Postilion platform.  We provide these from our global network of full-time technical experts located in our offices based in Africa, the Middle East, APAC, North America, and the UK/Europe.

Our much newer role, which we are accelerating into in 2024, evolved from our traditional role to bridge the gap created by the speed of digital change between the capabilities of existing technology and the requirement to meet a demand from the market.  Here we use our knowledge and experienced skillset to help organisations that have invested in and operate their own vendor-purchased payment platforms to extend the capability of their investment(s).

As a strategy, rip and replace is not an option most banks and well-established retailers/processors can afford in the years ahead.  Several factors contribute to this, such as the current slowdown the macro-economic environment caused in part by higher interest rates but also in the dynamic, changing demand environment arising from:

1. rich experience offerings luring customers from competing fintechs,
2. the incessant pace of customer demand for alternative and new payment methods such as digital wallets and faster real-time/instant payments, and
3. regulators seeking to open up the industry competitively to give consumers greater digital choice.

Against this backdrop, through the assignments Stanchion undertakes, we see a continuing demand trend for banks’ to:

• Deliver their payment change programmes with ever-greater agility and efficiency. Being constrained to quarterly or fewer change timeframes, owing to the complexity and criticality of the core platform is not an option.
• Extend and, if possible, turbocharge the modernisation and digitalisation of, for example, their card-issuing management platforms, payment switches etc.
• Seek to offer their customers experiential engagements, a behaviour demanded by Millennial and Gen Z customers who are increasingly taking up a larger share of the global workforce (during 2023 more than 50% of working population were made up of this younger generation).
• Consume an ever-greater volume of APIs to identify which value-added services such as embedded finance products will most resonate, as this functionality seems to offer what consumers increasingly seek and will likely be the future source of margin contribution.

Key to delivering the above is enabling agile change on (or rather with) your core tech stack, delivering the right propositions from advanced analytics and insights, reducing cost through fraud and risk management, and offering a quality, efficient service from your payment operations teams.  Done correctly, marginal gains in each one of these areas will lead to an overall outsized positive return in competitiveness and results.

A key trend from 2023 was the explosion of assistive tools like ChatGPT.  These trends are set to stay as will the increasing use of automation tools BUT what is less talked about is how organisations can symbiotically weave all these trends whilst achieving change agility when they have an existing perhaps aged (legacy) core infrastructure that hinders these goals.

At Stanchion, we believe the answer lies in an enablement platform that wraps around the core existing product. This is a modern, API friendly, microservice composable architecture in nature that can function on-premises, in-cloud environments or a hybrid of both.  Whilst there is not a consistent name in the industry for this technology, we term it Payment Fabric.

Stanchion’s payment fabric offering is called Verto.  Designed from digital transformation payment projects pre-pandemic, we turned it into a product and now have 18 customers in the space of four years, with at least one customer logo per continent and represented across banks, acquirers, processors, issuers and major retailers.

A well-designed, productised payment fabric solves many of the cumbersome problems banks need to resolve to innovate with agility. It also offers a highly efficient way to move toward enabling a modern enterprise-grade payment hub.

Whilst we are not the only organisation to be offering a payment fabric solution, what does make Stanchion stand out is our depth of technical knowledge of vendor solutions and gaps, our integration heritage to enable efficient implementation, our multi-region breadth of our customers and teams, and the augmented service offering we can provide on a 24/7/365 basis to support and enhance existing payment operation teams within your organisation.

In 2023, we commissioned research from a well-known global analyst firm, which conducted 150 interviews in over 20 countries. An overarching theme emerged that confirmed the above-mentioned needs going into 2024.  From this research, another stand-out theme was the need to deliver customer relevance through experiences.

Most interviewees highlighted their struggle to do this at the pace they desired owing to constraints in their existing tech stack and operations.  This need will only amplify into 2024, which is why we believe the topic of Payment Fabric enablement will increasingly be picked up by analyst firms and conference organisers and why the topic of augmenting existing payment operations teams with enhanced monitoring tools and skills will also be high on the agenda.

In 2024, our:

• product focus for Verto will be laser focused on the Card Issuing community, helping banks to close the gap with leading firms like Revolut. Our theme will be to “Revolut-ionise your Card Issuing offering”. Market demand from banks (driven by their customers) include control-like experiences such as the ability to:
  • generate or replace an ePin on-demand,
  • set and manage parental controls,
  • customise and manage spending controls,
  • rapidly issue virtual cards for different spending buckets,
  • proactively manage mandates for subscription/recurring payments, and
  • use rule engines to drive notification and prompt instant loyalty, surprise and delight etc.

• service focus (which we deliver through a programme called SwitchCare) will appeal to issuers, acquirers, processors, and large retailers who own their payment switch. Our goal for the year will be to offer augmented, enhanced monitoring and automation tool capabilities to payment operations teams through the theme of “Marginal Gains lead to outsized returns”. This includes offering next-generation solutions with a service to help organisations deal with the increased in-fraud and scams arising from growth in the Instant Real-time Payments world.
• focus on technical solutions expertise to help organisations continue to solve for their complex, payment problems. Where agile change is needed explore if Verto is the right fit to achieve this as a payment fabric wrap to your core vendor offering, so you gain the best of both worlds. A hot topic that will continue into 2024 is that of Tap to Phone where a smartphone can be enabled to accept contactless transactions.
• keep an innovation eye on the topic of biometric authentication for a more frictionless checkout experience in future. There has been a lot of change in this area in recent years but much friction in the shopping process still exists.  The Card Schemes are looking at how step change improvements can be made, and large retailers have a keen eye on this.  Linked to biometrics are topics such as security, and we will still be keeping our eye on quantum computing and identity.

If you believe the above match well with your goals for the year, please reach out and invite us to have a conversation with you. You can email us here: engage@stanchionpayments.com

Having reviewed the key reports looking toward 2024 and beyond, we believe the focus areas we have chosen, resonate well with the research and findings documented.  Over the next 10 weeks, we will provide you with a synopsis of reports from:

• Boston Consulting Group
• McKinsey – both the Global Payments and Global Banking reports
• Accenture
• Cap Gemini
• EY
• Deloitte
• JP Morgan
• FIS
• Consult Hyperion (CHYP)

We will adopt the same format for each in our precis. They represent our thoughts on the report, and encourage you to download and read at your own leisure.

If you have enjoyed the content and would like to engage with us, please feel free to:

• Follow our Stanchion LinkedIn Page and join our engaged community.
• Request a call with our Chief Growth Officer, Norman Frankel.
• Visit our website for more information.