Most industries and businesses continue to face a number of challenges, some carried over from 2020 and others new to 2021. The payments industry is no exception to this. In difficult times it is even more important to understand our key challenges, so we are able to manage and overcome them.
The biggest challenge facing payment providers is the continuing and overriding state of uncertainty in the short and long term. This isn’t limited to fintech and payments. The past 12 months have been difficult for businesses in most sectors.
This causes a problem for businesses in trying to juggle near and long term goals. Increased uncertainty in customer behavior and preferences, rules and regulations, and the economic outlook adds complexity for payment businesses.
It would seem the current state of uncertainty may persist for some time. With the struggles that COVID-19 has brought upon us, customer shopping behavior has been forced to change and organizations have had to work hard to keep up with demands and requirements.
This has led to many businesses having to completely rethink their plans for the year and change much of their existing business model, which in turn has a knock-on effect to their business partners such as payment providers.
Uncertainty as to whether the shift in customer preferences reflects a permanent change, or whether consumers will revert back to "normal" once the pandemic is over, adds further difficulty in maintaining a balance between short and long term goals.
Uncertainty does bring opportunity, and it is often challenges and uncertainty which drive leaps in innovation. Businesses need to remain proactive in these times by staying up to date with industry developments, emerging customer trends and having a close eye on any new opportunities that may arise.
Regulations are also likely to see a further overhaul. Following the Wirecard scandal, regulators worldwide will want to avoid any similar high profile and catastrophic collapses within the payments industry. As a result, regulators are likely to introduce tougher and stricter rules to keep customer funds safe and to protect the financial system.
Most of us would recognize that regulations are a good and necessary thing, but changes in regulation can often present a challenge from a business perspective. Where there is any doubt, it is always worthwhile to seek external advice, which can help the business make the required changes and ensure compliance quickly. This can often be more cost effective in the long run.
It's important to constantly review updates from regulators, which can help the business anticipate when new regulations will be announced, and can help assess what is required for compliance.
Overall, there is a need for business to maintain investment in its compliance function to ensure this is fit-for-purpose and is effective in ensuring the business is meeting current and emerging rules.
