B2B Fintech opportunities to consider in 2021
By: Tali Seidler
Tags: Online Payments, Fintech, Payments, AI, Risk Management

Contactless payments

Photo by Markus Winkler on Unsplash

2020 saw an increase in card payments, particularly contactless payments, even for purchases that are most commonly paid for with cash — like grocery shopping. Contactless payments are pretty much what the name suggests — a way of paying for goods without needing to touch a terminal. Customers increasingly demand expediency and physical distance, and as a response, we see greater adoption of tap-to-pay systems.

Statistics show that the overall usage of contactless payments in the U.S. has increased by 150% since March 2019. Accenture listed “a strong push towards a cashless society” as the primary long-term impact of the pandemic. Even before the crisis, contactless payments — both by RFID in cards or NFC on mobile devices — were beginning to gain traction. The pandemic only accelerated it. As customers care about how they are paying, so do the merchants who want to provide them with a good experience. As a result, the somewhat sleepy business of terminals might become exciting.

Wireless terminals, with appealing designs and seamless connections to inventory and customer databases are what merchants might be looking for when they opt to update their terminals to provide a better in-store experience.

Online payments

The repeated lockdowns, together with the fear of coronavirus transmission, led to a significant change in consumer behaviour and accelerated the adoption of online shopping. In regards to e-commerce transactions, a report by Digital Commerce 360 shows that U.S. consumer spending increased by 30% ($60.42 billion) in the first six months of the year, compared to the same period of 2019. Digital payment processing companies have grown in sync with the e-commerce spike, and there is still room for growth — especially since a new audience has just discovered the convenience of online shopping.

The spike in online payments is not bringing new requirements per se, but it is putting emphasis on the more obvious ones: a good buyer experience, including fast checkout, a variety of payment methods, taking good care of returning users, and high approval rates. A good experience for payment managers, including high platform reliability and state-of-the-art reporting capabilities is also growing in importance.

AI-based Fintech solutions

Selling products globally, fierce competition, and the need for short delivery times make traditional risk management solutions obsolete. Risk management tools that cannot adapt to fraud trends in real time ultimately lead to overblocking and lost customers. Operations that require active manual review, on the other hand, are very accurate. However, not only they don’t scale, they also slow down logistics creating a poor post-purchase experience.

As more companies shift to online sales as their primary revenue channel, there is an increased demand for machine learning solutions for payment security. The holy grail in this field is achieving human accuracy with machine scalability, and combining it with a good explanation of the models’ logic on the transaction level, getting away from the infamous black box.

According to Mordor Intelligence, the global AI in the Fintech market is expected to reach USD 22.6 billion by 2025. Payment security is naturally not the sole sector seeing a rise in AI-based solutions for Fintech: data-driven customer acquisition, due diligence, and predictive analytics are among the fields where we expect to see interesting developments. If you’d like to dive deeper into the subject, here is a list of 12 AI in Fintech Use Cases compiled by Technopedia.