As more and more nations are feeling the effects of the COVID-19 virus, virtually every aspect of our lives have been impacted in one way or another.

To decrease the speed at which the virus spreads, social distancing, curfews, and in some areas commercial business shutdowns of all but essential services have become the norm.

The economic impacts of this global pandemic are enormous and are forcing quick action by governments around the world to provide relief for citizens, while also providing protections against the virus.

As the pandemic spread into the Western hemisphere, the government of Honduras found it necessary to announce a national-level curfew would be starting on the night of March 16th. At this same time, banks in the country were asked to find ways to assist businesses with providing financial relief in the form of salary advances to their employees during the pandemic. A handful of banks were able to do this as a teller transaction. However, Banco Atlantida, the largest bank in Honduras, and a long-time customer of Euronet, wanted to go the extra mile for their customers.

The bank has the largest ATM fleet in Honduras, with over 450 ATMs at locations throughout the country. Banco Atlantida’s leadership had the idea that by making the salary advances available at the ATM, not only would it be more convenient for their customers since ATMs have 24-hour availability, but it could be potentially safer for their customers since ATM transactions don’t require face-to-face contact and would be in line with social-distancing guidelines.

Recognizing the importance of the request, Euronet’s software implementation team committed to deliver the transaction even though the project posed a significant challenge due to the quick turnaround and resource constraints, as well as the fact that this new transaction had implications for other ongoing projects and dependencies. Despite these challenges, with a true team effort and a determined mindset the project was delivered successfully in time for the new salary advance transaction at the ATM to be available at the start of the curfew. ​

​Consumer adoption of contactless payments via cards, wearables, and mobile wallets, has been increasing at a consistent pace. Not huge leaps forward, but consistent growth. Solutions like those for the London Underground has helped propelled consumer usage. Still, certain regions of the world are trailing in the adoption of contactless. Will the novel coronavirus serve as another step change to drive contactless payment transactions to greater growth?

The impact of the virus on our health and the economy changes daily, but the frenzy surrounding the possible effect on us individually has had an immediate, significant, and perhaps long-term impact on social behavior. In our own industry, the handling of cash, passing credit cards between consumer and merchant, and keying in PIN codes by hand are all susceptible to passing viruses across the population. In fact, the World Health Organization (WHO) has suggested switching to contactless as just one more safety measure to protect yourself from the coronavirus (The Telegraph, March 3, 2020).

In response to the current events, UK Finance has raised the contactless card daily limit from 30 to 45 pounds. Meanwhile, small businesses who previously eschewed online sales are being forced to move product sales online or shutter their doors, facilitating an immediate need for better digital payment solutions.

Is this uncertain time also a silver lining moment for the growth of contactless payments? If so, are you prepared for the expansion? How will you keep up with competitors who offer strong solutions today? Can you move quickly to meet the needs of customers with minimal downtime? We would love to hear your thoughts on this subject.

The adoption of instant payments, nearly doubling over each of the past five years, has motivated countries to implement their own Instant Payment networks. These national networks seek to create a streamlined and regulated channel by which instant payments can thrive in a controlled and trackable environment.

Some of the earliest adopters include TIPS in Europe and NPP in Australia. The momentum continued in 2019 when The Netherlands and Russia each launched national instant payment networks. This is certainly a trend that will continue into 2020 and beyond.

In those and other countries that are building networks, banks are now left with a decision. Do we adapt and join the race for instant payments or stay out of the race and try to protect our legacy payments business?

According to Accenture (Accenture, 2019), banks must transform a) to protect legacy payments revenue that is being displaced by new payment types, and b) to capitalize on the over US$500 billion in incremental revenue growth that is being created by new payment types over the next five years.

Against that backdrop, joining these networks seems to be the right financial decision for most banks, yet we know it isn’t that simple. ISO 20022 has become the standard message type for instant payments, but the majority of banks use ISO 8583 messages. Banks will need to either transform their legacy system or adopt a message layer that can convert message types to those required by the Instant Payment network.

In addition to the infrastructure changes that instant payments require, there are other factors out of the banks’ control. The national networks are all relatively young, if not brand new, and it will take time – and iterations – for each network to operate flawlessly. Each of these networks also carry strict requirements. These requirements can range from the amount of time that is allowed to complete a transaction, to the scalability of the program, to the security around the transaction itself. Banks must be prepared to operate in compliance.

It is undeniable that instant payments are here to stay. In order to stay competitive with other banks and stay relevant with consumers, banks will likely face the task of creating their own mode of instant payments or integrating to a national payments network. These transformations will be unchartered territory for the banks. Undertakings of this magnitude require a knowledgeable, trusted partner to help guide you through the adoption of the technology, and message formatting, with an understanding of the requirements expected of a participant bank operating within a national instant payments network.​

Incremental Innovation – Evolving in a Changing Payments Landscape

Rapidly Changing Payments Landscape

Payments are experiencing many evolving trends which are disrupting and reshaping the payments landscape. The highly competitive financial industry is faced with a level of constant change which h​as forced organizations to adapt at a pace which has never been seen in their history.

Consumer sophistication and payments convenience expectations are evolving at record levels. Payment channels are increasingly leveraging new technological advances and consumers are eagerly adopting alternative payment instruments other than cards.

Organizations are facing increased competition where speed to market drives market share. Highly agile non-traditional organizations are bringing innovative payment solutions into the market which threaten traditional financial organizations and force collaboration with new and innovative payment channels.

At the heart of the problem is many traditional payments organizations are faced with aging legacy systems where rapid and cost-effective adaptation is not easily accomplished. However, there is one underlying theme all organizations must face:

In order to compete you must adapt…

Pick the Right Strategy

The key to rapid and cost-effective adaptation is a solution which empowers organizations to quickly enable responsive and innovative solutions to address ever increasing payments market pressures. But the migration of complex legacy systems often seems quite daunting and organizations frequently struggle with how to proceed with such complicated replacement strategies.

Some market pundits recommend a complete technology rip-and-replace to solve the legacy system issues and shortcomings. This approach frequently results in multi-year projects, higher cost, and a greater level of risk to an organization’s core business by adopting an all-or-nothing migration strategy.

Incremental Innovation is a more realistic approach. Identify key pain points which need the most immediate attention while maintaining the longer-term vision for a full technology replacement. Addressing immediate pain points through strategic technology replacement allows organizations to see incremental successes through more manageable phases. This allows organizations to gradually replace their complex legacy systems while protecting and enhancing their businesses.

Evolving Through Incremental Innovation

The key to incremental innovation is to choose a replacement solution which will solve the immediate pain points while providing a platform which may replace all the complex requirements of the legacy system over time.

Financial institutions should adopt incremental innovation strategies with the goal of deploying future-proof solutions which allow them to expand technical capabilities to meet the ever-growing demand for evolving consumer-centric solutions. Euronet’s REN Innovation Ecosystem is a modern, future-proof, and flexible solution which allows organizations to adapt as the payments landscape evolves.​

Open Banking – Empower Consumers Through Innovation

The Open Banking Revolution

Open banking, the ability of third-party applications to access consumer banking and financial accounts using Application Programming Interfaces (API), is becoming a major source of innovation and is poised to reshape the competitive landscape of the banking industry.

By networking accounts and data across institutions for use by consumers, financial institutions, and third-party service providers, the consumer benefits from a seamless and transparent banking experience.

Competition Creates Opportunity

Financial institutions have long held a monopoly over their consumer data. This data control, once a competitive advantage, is a hinderance in the era of Open Banking.

It’s critical that we view Open Banking as an opportunity, not a threat. It invites openness and innovation among financial institutions which will benefit the consumer. And Open Banking is not just a benefit to consumers. It will cause large, established institutions to compete with smaller, more nimble banks and FinTechs, resulting in lower costs, better technology, and a more seamless and integrated customer experience. Financial institutions can take advantage of this new technology to strengthen customer relationships and customer retention by becoming an active partner in managing consumer’s finances rather than acting simply as a transaction processor.

Legacy Systems & Incremental Innovation

Legacy financial systems may present a barrier to innovation since these systems may not be well positioned to address Open Banking strategies. Financial institutions will need to address limitations within their current systems and invest to adopt new technologies which allow them to compete.

Incremental Innovation allows financial institutions to deploy next generation solutions which are better suited to address speed-to-market needs of an effective Open Banking model. These API Gateway solutions integrate with legacy financial systems to allow improved speed-to-market while reducing risk to legacy systems and traditional financial services.

Pick A Strategy

Financial institutions should define incremental innovation strategies with the goal of deploying future proof API Gateway solutions which allow them to expand technical capabilities to meet the ever-growing demand for consumer-centric solutions. Euronet’s REN Innovation Ecosystem is designed to meet these ever-changing needs.

ATMs, initially designed to dispense cash, have greatly expanded services over time. Cash and check deposits, transfers, ordering of checks or statements, and FX currency dispensing all connected the customer to an increasing number of banking products and services.

Connection to a larger payments ecosystem followed with the introduction of utility bill payments, remittance, charity donations, prepaid airtime and digital wallet top-up.

Today, the ATM is a marketplace for a host of non-traditional banking services, enabling the user to purchase digital content, lottery, event and museum tickets, as well as transportation passes. At the same time, ATM screens have found their place in the world of advertising, displaying generic or personalized – often interactive – targeted messages to users.

These enhanced services attract new consumer market segments of digitally savvy individuals who view the ATM as a one stop shop, fulfilling multiple payment needs, banking or retail, at home or when traveling.

Globally, Gen Z users come to expect these ATM transactions. They receive or transfer money, buy digital content, pay bills, buy airtime, and travel the world. When transacting, they appreciate the practicality and speed of diverse digital channels. Innovative ATMs fit well with the Gen Z profile as a fast and reliable hub to a variety of everyday activities or special experiences. The ATM underlying technology is also rapidly evolving, transitioning from cards to mobile phones and from PIN security to biometrics, in line with Gen Z preferences.

Financial institutions and ATM operators who embrace diverse transaction capabilities and cutting-edge technology on their terminals will succeed in attracting the next generation to the ATM and enhance their presence and brand identity in the payments landscape of tomorrow.​