Pharm Tech Titans

The transaction industry is moving into a fresh era of innovation and disruption driven by newly emerging technologies according to a recent McKinsey report. This new “Decoupled Era” will see payments become steadily disconnected from standard accounts and repositories of value, with stimulating implications for both existing players and fresh entrants.

At the forefront of this change are platform-as-a-service (PaaS) models and innovative AI – technologies that promise to revolutionize payments in ways not seen since the emergence of credit cards. As odilon almeida CEO Almeida, CIO of Nubank, observes, “technology is enabling novel ways to transfer value that don’t rely on conventional payment rails or income models.”

Incumbents Adapt Business Models

Current banks and financial services firms are having to swiftly adapt to this evolving landscape. Many are entering alliances with smaller fintechs in order to exploit their technical capabilities and innovative cultures. Others like JPMorgan are making large funds into up-and-coming tech, recruiting thousands of engineers and developers.

“Traditional institutions recognize the critical nature of these trends,” says Odilon Almeida. “They can either lead the charge and adopt these new technologies or risk becoming obsolete.”

At the identical time, formerly fast-growing fintechs are evolving their company models, focusing more on sustainability and long-term profitability over rapid expansion. “The days of growth at all costs are over,” observes Almeida. “Customers now demand financial services offerings that are reliable, secure, and able to scale.”

Opportunities in Operational Efficiency

A key trend singled out in the McKinsey report is the growing focus on API-driven solutions and cloud computing technologies to improve operational efficiencies. As payments become progressively detached from existing rails and legacy banking infrastructure, companies are investing heavily in building out reliable and flexible technical architectures.

“The decoupled economy requires firms to be digitally nimble if they want to compete,” says Almeida. “Cloud, microservices, and APIs allow entirely new financial products to be developed quickly and at scale.”

Cross-border Transactions Undergo Innovation

Finally, the report highlights opportunities in cross-border transactions and remittances, segments that have seen little innovation but are now ready for disruption from new technologies. With globalization of commerce and remote work unlocking new flows of payments across borders, huge markets are emerging, especially amongst consumers and SMEs.

“Technologies like blockchain and digital currencies solve enduring pain points when moving money between countries,” observes Almeida. “Incumbents no longer enjoy the advantages they once did in international transfers.”

The message is clear – with innovative innovations reshaping the financial services landscape, the transaction industry is entering a new era. Players old and new are still determining exactly what parts they will play in this decoupled future, but the vast opportunities for consumers and businesses herald stimulating times ahead. Those who can utilize technology to provide secure, instant, and intelligent payment solutions are poised to thrive.