Disruptive Innovations in Payments: A Deltec Bank Perspective

Disruptive Innovations in Payments: A Deltec Bank Perspective

Deltec Bank
Deltec Bank, “Change happens when people understand the “how” of a new process instead of being informed about the “what” it provides.”

Payments continue to migrate away from cash because consumers are purchasing goods and services through mobile channels and online platforms. Having more competition in this sector is leading toward lower costs, but that also means profits move downward because more providers are in this space.

Challenging regulatory requirements are adversely impacting traditional payment providers and those who wish to become disrupters in this industry.

Since customers are somewhat reluctant to switch to non-traditional schemes for their needs, the only way to create successful experiences is to offer significant benefits to early adopters. Without their influence, new technologies will continue to see limited adoption in the marketplace.

Why Are Money Habits So Difficult to Change?

Each time a person makes a decision, there is an intense battle that takes place inside of the brain. There are two ways that people process the information they see in the world.

You can make snap decisions based on subconscious thoughts, or you can take a more in-depth, logical approach through concentration and choice.

Making decisions about money involves risk. Most people tend to be adverse to the idea that they might lose something they earned, so the logical approach dominates the financial sector. This process is the reason why changes happen only when a payment disrupter can provide evidence that significant benefits can occur without a high threat of loss.

It’s like trying to decide to spend a $2,000 bonus on a vacation to Disneyland or to contribute the money to your 401(k) retirement plan. Instant gratification is nice to experience, but it is the logical mind that often takes over.

How Can Payment Disrupters Create Meaningful Change?

It is uncomfortable for people to go against their fundamental beliefs about money. Everyone wants to make better decisions, but there are also internal biases in place that prevent actions. If financial stress is part of the equation, then the decision-making process becomes even more challenging to navigate.

The approach that the payments industry has taken in the past to encourage disruption and positive change was to provide people with more information. What we have discovered about this process is that filling someone’s brain with more data isn’t enough to alter their perception.

That’s why hundreds of financial literacy studies show that interventions to improve thinking patterns in this area have a success rate of 0.1%. It is even lower than that when household income levels hover around the poverty line.

According to Deltec Bank, “Change happens when people understand the “how” of a new process instead of being informed about the “what” it provides.”

Then providers in the payments industry must understand the triggers that people need to activate their reward centers. People make choices that seek out pleasure while avoiding pain whenever possible. Lighting up the centers in the brain that make this outcome possible will encourage movement toward the disrupters in the payment industry.

Right now, most customers see the idea of using a different form of payment in the same light as purchasing a television because they made paid the minimum amount on their credit card on time. It doesn’t make sense.

When the industry can show how there are numerous benefits waiting for customers who are willing to adopt this new idea, then meaningful change can happen.

Disclaimer:  The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.

About Deltec Bank

Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.

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