The transformation of payment methods has fundamentally changed the way individuals view traditional banks. Dematerialization has had a definite impact, and digital and information technologies have developed a new way of conceiving of banking. Is banking then doomed to disappear, or can it adapt to change?
The Dematerialization of Payment Methods
The gradual disappearance of the checkbook is due to the advent of digital technology and the opening up of the banking sector to competition. Online banks that now offer 100% virtual account opening with all available payment methods and services, or startups specializing in simplified payment, traditional banks are suffering from fierce competition. Individuals have access to technological evolution and an expanding offer thanks to contactless payment, online platforms such as Bitcoin, PayPal and eBay, Amazon and Google, which offer electronic payments without a bank account. Prepaid payment cards, contactless NFC payment with smartphone, can Internet users do without their bank?
Simplified Contactless Payment
NFC technology allows you to pay for small purchases without a bank card. Through your smartphone, it is possible to pay at many merchants who have adopted this technology. The largest digital groups in the world, such as Apple, Amazon, Google and others, now offer contactless payment via their platforms. Apple Pay on iPhone 6, Google Pay and Wallet, Amazon’s exclusive credit card reader, contactless NFC technology has created many followers.
However, the recent demise of Monéo launched in 1999 demonstrates a lack of consumer confidence in this simplified payment method. According to the NFC and Contactless Observatory, only 280,000 points of sale are equipped with this technology, representing less than 22% of merchants. Only the latest smartphones are compatible with NFC, representing around 81 devices on the mass market, which concerns 700,000 people. A survey conducted for Syntec Numérique by Odoxa in January 2015 also indicates that 57% of individuals find this technology useless.
Advantages and Limitations of Simplified Electronic Payment
With many e-commerce sites that allow you to pay through PayPal, Monéo, Google Wallet, Facebook or Bitcoin, Internet users have a more or less reliable alternative to traditional banks. Creating a virtual account that can be funded by credit card remains a quick and easy way to make purchases online. However, the encryption and security of digital data pose many problems for specialists.
The dematerialization of banking products and services and the advent of electronic money, benefit consumers by offering 100% online simplified electronic payment. With the monopoly of large banking groups such as Visa Mastercard and American Express, it seems difficult to compete with a network that weighs billions of dollars and users.
The attractiveness of this electronic money then lies only in the presence of personalized offers and discount coupons available. E-commerce thus allows to retain a loyal customer base by offering several payment options, and the popularity of sites like eBay and Amazon is conducive to simplified payment. In order to avoid registering your credit card at each transaction, sites similar to PayPal then allow you to facilitate all transactions.
Additional Information
- The French banking sector is highly concentrated, with four major players: BNP Paribas, Crédit Agricole, Société Générale and BPCE.
- The online banking market is growing rapidly in France, with the number of online banking customers expected to reach 20 million by 2020.
- The main challenges facing the banking sector in France are the dematerialization of services, the advent of new technologies and the need to adapt to the changing habits of consumers.
