In today’s digitally advanced environment, it is easier than ever for individuals of all ages to find and connect with peers who share similar causes, interests and hobbies.
Cyber communities such as Facebook, Twitter, YouTube, Instagram, Reddit and blogs create environments where like-minded users can connect, share opinions and cultivate a sense of camaraderie. These virtual connections are creating an unprecedented number of distinct nano-segments.
Such segments may be as general as Harry Potter fanatics debating which Hogwarts house they belong in, or as specific as women who own pink Smith & Wesson handguns collaborating on who offers the best training options.
Regardless, these nano-segments share one common characteristic. The members are all consumers. Whether they are meeting at industry conferences, taking group trips or purchasing the latest memorabilia, nano-segments are spending money, and are in need of financial services. Organizations that really want to “know your customer” should take note.
It’s likely that these individuals’ preferred payment methods are as diverse as their interests and hobbies. Cash, checks (yes, still checks), cards, Apple Pay, bitcoin and other very specific, individualized mobile payments apps represent just a few of the overwhelming number of payment options available in today’s landscape.
While some options are mainstream and already universally accommodated, such as cash and cards, others are not, like individual payment apps. No matter how obscure a preference might be, players in the payment landscape are expected to support and facilitate transactions of all types or risk losing customers and revenue. After all, there’s always a new start-up willing to fill an unmet need.
While nano-segments and their various preferences can be daunting, there is some good news. With the advanced technologies available today, it is possible and maybe even easier than expected to accommodate a wide variety of payment options. It’s often relatively inexpensive and quick to introduce new payment routes, if the acquirer of that transaction has invested in a flexible infrastructure. This type of modern payment architecture also makes small scale introductions of new payment types simpler, and is flexible enough to quickly make any necessary adjustments in the transaction path.
A crucial first step is identifying the emerging payment methods relevant to consumers. Payment providers who do not have a good grasp on changing consumers’ behavior, including how they prefer to shop, interact and pay, will be challenged to remain competitive and relevant. Data must be gathered from numerous sources such as social media and call centers and then rapidly analyzed to identify common payment trends and requests. One customer that speaks up is likely to represent many others.
Once a new payment option is identified, its processing path must be mapped, documented and thoroughly tested. Since existing payment methods don’t go away, each additional payment method increases overall system complexity and, consequently, risk. Unfortunately, most testing is still done manually or with legacy tools developed last century. This type of testing is expensive, time consuming and not thorough enough. In fact, in these legacy environments only about 20 percent of the total code or transactions are typically tested, leaving entirely too much to chance.
Instead, organizations should consider implementing a modern, server-based payments testing environment that supports an automated, continuous testing approach to ensure the fastest and broadest test coverage. This allows issues to be identified as quickly and as early in the test cycle as possible so they can be corrected before there is customer impact. After all, reputation is still one of the most important assets financial service organizations have, something that’s put in jeopardy if customers can’t successfully complete transactions every time they pay.
Organizations that fail to keep up with the evolving spectrum of consumer payment preferences not only risk becoming irrelevant, but also losing customers to competitors who will accommodate their favorite way to pay. By planning ahead, knowing your customers and ensuring transactions are successfully completed, your financial service organization will be well positioned to optimally serve its customers now and into the future.