New technologies tend to disrupt established industries and markets in interesting and unpredictable ways. Digital payment solutions are a great example of this, not only turning traditional banking on its head but also creating ripples in all sorts of unexpected areas.
Here is a look at how the companies behind digital payment products have made their presence felt in recent years, and what the future holds for this comparatively fresh-faced ecosystem.
Digital payment companies and the rise of mobile
Electronic wire transfers have been around since the 19th century, so the principle of paying someone remotely without the need for tangible currency to be involved is well established.
However, it was only with the dawning of the internet age towards the end of the 20th century that digital payments became a mainstream reality which the majority of people could access and enjoy.
Things progressed further still thanks to the arrival of smartphones in the 2000s. In conjunction with digital payment platforms, mobile devices essentially democratised payments and made it simpler for people to send money to one another, as well as to pay for goods and services without relying on cash or a payment card.
Today, a combination of cutting edge smartphone handsets and contactless payment technology means that traditional payment methods are falling out of favour faster than ever, even if other circumstances have hit ATM usage in the past two years.
The emergence of alternative financial services
It is not just payments that are simplified and streamlined thanks to digital payment companies, as a whole host of associated technologies have come to the forefront thanks to the era of connectivity in which we now live.
Alternative financial service providers have grown to meet the needs of modern customers, filling niches that were overlooked by incumbent institutions. From paystub generator providers to online-only banks like Monzo and Starling, the idea of needing to visit a bricks and mortar premises to manage your money, or to deal in physical documentation, has been well and truly quashed.
It is not just that these new companies are disrupting the market because they are cleverly branded and take a digital-first approach to serving customers; the benefits go much deeper than that. From offering improved security to providing better budgeting and payment tracking capabilities, these service providers have innovated in ways that their better-established rivals could only dream of.
This is all good news for consumers, of course, who are now able to reap the benefits of a brave new world of payments and banking which is far removed from the stodgy, sluggish and exclusionary before-times.
How digitisation is impacting retail banking
The most significant shift that online payment companies have brought about in a retail banking context is forcing firms to change and adapt.
You could argue that it felt as if online banking was treading water for quite a while, until the recent flurry of alternative services cropped up and suddenly retail banks have had to scrabble to improve their own features, or else face falling by the wayside.
Customers of well-known banks like Halifax, NatWest and Barclays will no doubt have noticed that these firms have all made major changes to their digital offerings, especially with regards to their mobile apps. As well as streamlining payments and transfers, retail banking has had to add in more money management features as standard to remain relevant.
What’s next for digital payment companies?
The next stage of the digital payment take-over is still being put together as we speak, and while predicting what might happen in the future is tricky in any scenario, it is safe to assume that blockchain technology and cryptocurrency will play a part in plotting the course forwards.
So much hype and attention has been paid to Bitcoin, as well as altcoins like Doge, in the past year that it is becoming another revolution that mainstream finance firms cannot afford to ignore.
Digital payment companies have managed to put more control in the hands of consumers, and made things better for customers who prefer to stick with their current banking provider as well.
This disruption looks set to continue for the foreseeable future, and hopefully the average person will still be the main beneficiary of the shifts it instigates.