Two important shifts recently occurred in the United States: Gen X surpassed baby boomers in spending power and Millennials became the largest segment of the workforce. With both generations actively living on their smartphones and embracing new technologies, the digital age has fully arrived.
Along with these changes have come new expectations among consumers and merchants have no choice but to keep pace.
Brick-and-Mortar’s Foundation Has Weakened
Commerce is slowly migrating from the traditional brick-and-mortar point-of-sale (POS) to e-commerce and other digital payments. By the third quarter of 2017, e-commerce accounted for 9.1 percent of total U.S. retail sales. And this past holiday season, e-commerce sales grew by 14.7 percent year-over-year – nearly three times the rate of total retail sales growth.
It’s not just e-commerce that transfers payments away from the POS, however. Online buying with pick up in-store (BOPIS) has become a popular alternative to paying delivery and shipping charges. Buy online, pick up curbside is expanding rapidly among convenience goods businesses, such as grocery and drug stores. And, mobile order ahead is surging at quick-service restaurants and other venues, such as movie theaters. Payment capabilities or “buy buttons” in voice-activated devices, smart appliances and smart cars are also moving payments farther away from the POS, offering consumers convenience and frictionless payments experiences.
Leading companies inside and outside the Fintech space are continually raising the bar for what consumers expect from all brands, regardless of industry. As an example, Nordstrom tested 24/7 curbside pickup in 10 stores during the holidays to support its customers’ desires to shop where, how and when they choose. Consumers are becoming accustomed to one-click payment and same-day delivery offered by Amazon and other big-name retailers. The pressure to compete for consumers’ loyalty and spend has never been fiercer.
Although financial institutions still rank first as the place where consumers turn to for their financial service needs, the gates have opened. If financial institutions fail to deliver on consumer expectations, innovative competitors could grab that business. With customer loyalty at stake and limited resources to devote to developing digital payments solutions, more financial institutions are turning to partnerships with FinTech companies and providing application programming interface (API) access to third parties to deliver new payment products.
We cannot stand on the sidelines and watch our clients lose customers to non-traditional competitors that beat them in speed-to-market. We are re-engineering ourselves to respond to the challenge of the quickening pace of change in the payments industry.
We are transforming into a product-centric organization to ensure that our clients are prepared for the digital future and the growing demands of their customers. In becoming product-centric, we have also become customer-centric through the creation of modern solutions and services that enable tighter connections between clients and their consumers, thus improving their financial lives.
When the rubber hits the road, what does our transformation really mean? It means that we have committed to creating and bringing solutions to market that will speak to consumer demand, and surprise and delight our clients’ customers.
To meet this commitment, we are transforming ourselves into the “world’s greatest pit crew” in the race against time. We are working collaboratively to identify market issues and assess opportunities quickly, build new products and validate them rapidly, while deploying them through mass adoption efforts and bringing them to market in record time. This commitment to operational efficiency will enable our clients to run their business more effectively, compete in a demanding marketplace, connect with customers and grow a profitable business.
If you’re interested in learning more about how FIS is transforming the payments ecosystem and how we can help your company RUN – CONNECT – GROW in today’s competitive marketplace, then register to attend our Payments Summit at FIS Connect 2018. FIS Connect is the perfect blend of education, thought-leadership, and networking opportunities in an ideal forum to mingle with business acquaintances, industry experts, and the FIS team.
I look forward to seeing you there in April!