Innovations in mobile payment systems are rapidly changing consumer payment behaviours, creating opportunities for non-banking players to enter the digital payments industry. The global tech giants, Google, Amazon, Facebook and Apple, in particular, are utilizing their formidable market reach and consumer behaviour know-how to reshape consumer expectations and the digital payments landscape.

Millennials and Gen-Z display far less brand loyal than Baby Boomers when it comes to digital payments and will quickly abandon their mobile banking app for an app offering a better user experience. They want much more from their payment app than simply emulating a plastic card. They want one app for every payment with a single, personalized user experience.

But it takes more than a cute app to be successful in digital payments. The banking industry and the tech giants both have issues of cost and trust. The infrastructure on which the banks operate is decades old and fraught with unnecessary compliance costs and the ever-expanding cost of fraud. These costs are further compounded by the high cost of the terminal hardware required to interface with the consumer’s debit or credit card or digital wallet.

The tech giants have even bigger problems. Processing payments is not their core business but merely a means to an end. When users sign up, they give these companies access to their online and offline shopping behaviours, their personal information, and how much money they have in their bank accounts. As demonstrated by Facebook’s recent Cambridge Analytica scandal, this creates a serious conflict of interest. And since the current crop of digital wallets are little more than card emulators, they also suffer from the same cost issues the banks have with the cards they emulate.

The diversity of secure technologies employed by the industry also has a significant influence on the adoption of digital payments. Each payment app, payment gateway, telco and financial institution employs its own security method, each with a separate user name, password, PIN, dongle, biometric, or passcode. The diversity and complexity of these security measures discourages users, especially users who are older or less tech savvy.

The tech giants have certainly made significant inroads into the market, but the banking industry still retains control of the core switching, clearing and settlement processes. And if you control who pays what to whom, you control the industry. But to effectively counter the threat from the tech companies, banks must up their game and start meeting the needs of their customers.

The good news is that a growing list of central banks and national switches are now examining and building next-generation payment infrastructures, powered by Bluechain’s versatile request-to-pay (RtP) technology, which will enable their member banks to not only compete with the tech giants, but to beat them at their own game. The Bluechain switch overlay supports the full range of secure push and pull, nearby and remote digital payments, but without the high cost and complexity of digital wallets and the card schemes.