Data-driven payments. How financial institutions can win in a networked economy
BY, Mark Flamme, Partner; Kevin Grieve, Partner; Mike Horvath, Principal
Over the past 30 years, the electronic payment facilitation services that financial institutions (FIs) offer have essentially become a commodity, with limited upside and growing regulatory, competitive, and pricing pressure. Meanwhile, most of the recent innovation in payments has come from new market entrants. These companies are creating a wave of new offerings — capitalizing on mobile platforms, social media, and location-based technology to expand their presence along the consumer’s entire path to purchase and capture a greater slice of each transaction.
FIs can capture this opportunity as well, provided they can access and leverage the wealth of proprietary transaction data that they control — coupled with data from external sources — to generate a clear marketing ROI for their merchant customers.
Doing so will require that FIs address four important attributes: (1) rapid, responsive access to data throughout the business; (2) coherent data architecture; (3) a culture of data-driven decision making, rather than intuition; and (4) data-savvy talent. The right approach — including all four elements — will help FIs make the most of data, allowing them to create new value propositions for both merchants and consumers, and increase their payments revenue and extend their existing payment franchise.
Kevin Grieve is a partner with Strategy& based in Chicago, a member of the firm’s financial-services team, and head of the North American card and payments practice. He has more than 25 years of consulting and business experience in financial services.
Mark Flamme is a partner with Strategy& based in Chicago and a member of the digital business and technology practice, where he specializes in the financial-services industry.
Mike Horvath is a principal with Strategy& based in Chicago and a member of the firm’s financial-services team.