Over the last year, we‘ve seen the continued rise of digital commerce based on customer adoption of FinTech innovations like cryptocurrency, buy now pay later (BNPL) and digital banking solutions including virtual card issuance, to name a few. Considering the pace of innovation and high consumer adoption rates, the payments industry is primed for even more innovation throughout 2022.
While crypto isn‘t necessarily the future of money exclusively, it’s certainly becoming part of the fabric of commerce.
We‘ve already begun to see crypto enter the digital commerce space. Today, converting cryptocurrency into fiat and then funding bank accounts and payment cards that ride the traditional payment rails has increased the utility of cryptocurrencies.
In our own analysis of crypto-backed card transactional data we‘ve seen engaged users across all age groups, and we see higher monthly active rates than traditional cards.
Crypto is not going away. In fact, crypto didn‘t stall out in the absence of government regulation; rather, the market has advanced, indicating that crypto is anything but a flash in the pan.
With BNPL, we‘re seeing a different flavor of lending evolving within the larger context of credit, with distinct applications and value for different parties.
For some consumers and businesses, BNPL has clearly demonstrated cash flow incentives and benefits. There is data that shows that more affluent segments are using it in this way and it’s not hard to see it having a place in the household budgeting equation.
For other consumers and would-be lenders, there is a strong case for it playing an introductory role on the road to credit, with the potential for long-term benefits for both sides.
An interesting aspect of the emerging BNPL picture is the ability to deliver it in pre-, during and post-purchase moments. And there’s a real opportunity to accelerate the category as banks, retailers and others enhance their BNPL products based on deeper customer insights.
Back-office Tech Investments Will Pay Off for Treasury and Accounting Teams
The bottom line is that tech investment in more agile, global and product-deep platforms delivers faster speed to revenue resulting in improved cash flow and reduced financial risk – two key focus areas for these teams.
The other payoff comes in the inherent ability of these kinds of tech investments to deliver global reporting – a central function of treasury and accounting – across markets, products and customers.
It’s an area where many firms struggle. It’s the difference between living with a degree of opaqueness that goes with operating disparate systems versus the clarity and efficiency of treasury and accounting having all their data in one place.