RANCHO CUCAMONGA, Calif.– It isn’t just the fintechs credit unions should be focused on, but the “big techs,” according to one expert—who says the reason is clear.
Amit Seru, the Steven and Roberta Denning Professor of Finance at Stanford, told CO-OP Financial Services’ THINK 20 Virtual Conference Apple, Google, Facebook are all entering the financial space and especially payments because it provides a critical missing piece in the massive amounts of data those companies continue accumulate.
“How and why is this so important?” asked Seru. “We understand how households make decisions over lifecyles. Payments are the space where all households are. Many households are now doing online payments, something that began even well before COVID. It’s not a fad.”
Moreover, added Seru, online and digital payments are not a phenomena limited to younger generations, as all generations have made changes in their payments behavior.
“It’s a source of data for (the big techs). Not just online, but in stores, too, where consumers are using digital wallets and moving away from credit card,” said Seru. “Payments generate a lot of data and this data can be very useful.”
It isn’t just one player, Seru added, pointing to Visa, Apple Pay, Zelle, PayPal and other big players in the payments market outside of traditional financial institutions.
Improved Customization
“The data allow you to help customize the product,” Seru said. “What you find is you can easily segment consumers into four groups: the digitally adverse, the tech savvy, the offer junkies, and the convenience seekers.”
Seru said the COVID-19 pandemic is reshaping the marketplace, with households looking for better online self-service tools, and small to medium enterprises seeking integrated solutions on payments, inventory management, accounting, credit and more.