As the country and economy emerges from the rubble of the pandemic, organisations will be looking to rebuild, retain customers and cut costs where they can.
However, before they do so, they need to understand where they’re currently losing out.
The customer journey sinkhole of payments
Research conducted in late 2020 shows payment processes cost each business a staggering £1.5 million per year on average. And 64% expect these costs to increase over the next two years.
With little automation and integration, most payment processes remain fragmented, labour-intensive and complex, with indirect hidden costs impacting customer experience above all else, according to the research.
Many businesses rely on an outdated banking infrastructure that maintains slow manual processes, file uploads and complex payment flows. This compromises their ability to provide customers with the benefits that products and services using real-time data can bring.
It’s no surprise that 62% of payment professionals now believe the hidden costs of these payment processes outweigh the hard costs, with the impact on customer experience and brand reputation being the most significant.
A poor payments strategy is no longer something that business leaders can ignore, as it clearly has a huge and unseen impact on wider business mechanics. In a hyper-competitive economy, having a streamlined and efficient payments engine is essential if companies want to maintain their market share.
The butterfly effect of payments
For organisations looking to adapt quickly and effectively, addressing the inefficiencies within back-end technology processes should be a first priority. Such changes can have a dramatic impact on front-end outcomes, including customer experience – this is the butterfly effect of payments.
Consider, for example, a scenario where an organisation moves from batch-based payment processing to single, immediate Faster Payments for loan disbursements. The days of customers having to chase support teams to find out where their money is would be a thing of the past.
In this case, moving from batch-based to Faster Payments is the back-end change, but it results in near real-time payments and instant notifications shared with the customer.
Not only is this a better experience for the customer, who receives an accurate, convenient and direct message, it also affords the indirect benefit of saving resources on customer support. This is one of many butterfly effects.
Putting the butterfly effect in action
To best take advantage of butterfly effects you’ll need solid API architecture, either built in-house or sourced via an external platform. Incorporating API technology in the back-end reinforces an organisation’s digital infrastructure and can create untold benefits at the front-end.
API-enabled payment processes can then be easily integrated and provide businesses with faster and more reliable ways to move money. Businesses can also automate payment flows, embed payments and build entirely new payment products and services, managed in real-time, at all times.
The importance of real-time, API-enabled services shouldn’t be downplayed or ignored. We live in an instant economy where customers expect ultra-fast and super-efficient processes.
The benefits that these instant economy-compatible solutions bring are key to creating effective transaction models for clients and pleasing customer experiences.
Far too many SMEs fail to maximise the opportunities of payment innovation, and those that delay for too long run the risk of being left behind.
Make the change
By ensuring payment processes evolve from their current disjointed and inefficient state and are brought into the 21st Century, organisations can gain a measurable competitive advantage.
By following the principles of the butterfly effect and embracing API technology in the back-end, they will benefit from reduced operational costs and an improved customer experience at the front.
Businesses across all industries should look to implement changes and reap these benefits, particularly as we enter the new normal.
Gavin Waddell is payments specialist at Modulr