The next generation of banking and payments discussed at the Digital Freedom Festival X Citadele
At the fifth-annual Digital Freedom Festival, the Innovation Bazaar stage hosted the “Banking 4.0: Banking everywhere & mobile first X Citadele” panel discussion, placing a focus on technologies changing the way consumers interact with payments.
The panel consisted of Deniss Fiļipovs, Head of the Payment Systems Policy division at the Bank of Latvia, Astra Cīrule, manager of Digital Channel Business Development at Citadele Bank, and Eduards Timofejs, Head of Product at Klix.app. The panel was moderated by Mārtiņš Bērziņš, head of Digital Channels at Citadele Bank.
The panel highlighted the speed of change and innovation that can be observed in the banking industry. Particularly, the growth in instant payments. Deniss Fiļipovs noted that Latvia was the first country in the Eurozone to process instant payments in line with the SCT Inst scheme in 2017. Now, this has become an industry standard. Taking this one step further, Citadele Bank has taken meaningful steps to take advantage of instant payments, by launching an instant payments registry, which allows registered individuals to pay instantly by simply using a factor such as a phone number, email address, social media account, or whichever alias is registered. In only one month of launching the option for instant payment registry, already 2000 individuals have signed up.
These innovations are based around the market’s demand for convenience in every aspect of their lives, including when making payments. This forms the basis not only for instant payment registry, but also for Klix.app, which aims to reduce the amount of clicks required to make a payment online. However Eduards Timofejevs notes that shorter is not always better – that it is possible to reduce purchases to one click, but additional levels of safety are often required. Astra Cīrule echoed this sentiment:
“On the one hand you must be compliant, on the other hand you have to be really simple, convenient, and with the best UX. This is a great challenge to overcome.” – Astra Cīrule, manager of Digital Channel Business Development at Citadele Bank
Answering the question of what can be considered as successful innovation, Astra Cīrule highlighted, that innovation has to matter. It has to solve a real pain point and bring real benefits to the users, such as making a process faster, easier, etc. Eduards Timofejevs emphasized that it requires truly understanding the needs of the users, and in the case of Klix.app, the merchants. Meanwhile, Deniss Fiļipoves argued that true innovation can’t simply improve existing processes, it has to come with something truly different than what’s already available, similarly as when the iPhone came into the mobile telephone market.
When considering what the future of banking is, and what can be expected in the financial industry in the near future, the panelists provided a variety of insight. D. Fiļipovs believed that as Europe is struggling to identify their differentiator to serve as a “superweapon”, we can expect the EU to attempt to further harmonize and standardize the market. This is even to protect itself from the influence of Visa and Mastercard, both American companies. A. Cīrule believes that mobile solutions will still continue to grow in importance, especially with the expected influx of data from VR, AI, IoT, and instant payments. M. Bērziņš foresees the growing importance of voice. Both in voice recognition, connecting additionally to the role of virtual assistants creating experiences for their customers.
The panelists collectively highlighted to trend towards simplifying online and physical banking and payments. It’s expected that online payments continue to grow, as the Baltic Ecommerce market is expected to grow by 39% by 2023. As a result, financial services will have to keep up with consumer demand for reduced friction in payment processing.