What’s next in payments? – HEXAWARE SPONSOR CONTENT


By Swati Dublish, Rajsekar Jayashankar and Navin Mishra

The payments space is rapidly evolving, with the arrival of new players in addition to banks and financial services institutions. These competitors are disrupting the status quo and moving payments from the realm of funds transfers and remittances to innovative concepts such as buy now, pay later (BNPL) and open payments.

With customer expectations rising, people expect the “art of the possible” from their payment providers, and traditional players need to rethink their strategy to retain their position and customer loyalty lest they become irrelevant. All stakeholders within the payments ecosystem must align with the broader issues that are emerging now and in the near future.

We live in a world of artificial intelligence (AI), machine learning (ML) and cloud, a world of “pay as experience (PaaX).

The key payment themes of the future:cryptocurrency, central bank digital currency (CBDC), financial inclusion, Y integrated finance—represent stages of the next evolution of payments that your bank should be prepared for.

Based on its current relevance and growing adoption, the starting point of the future of payments is cryptocurrency, any form of currency that exists digitally or virtually and uses cryptography to secure transactions.

The cryptocurrency boom is fraught with challenges like youUncertain regulatory status, lack of awareness, security, scalability, and misuse of virtual currency. The challenges of Crypto and the need for regulated alternatives call for an evolution of CBDC, a phase we define as “payments as a lifestyle (Paa L).”

Banks will issue CBDC as legal tender, just like cash today. But unlike bank deposits, the CBDC would represent a claim to the central bank.

The current state of the financial infrastructure will drive determination of the speed and extent of CBDC adoption. The main concerns about CBDCs include privacy in individual transactions, retail CBDCs (consumer accounts) as a new function of central banks, the use of an offline CBDC, and cybersecurity risks.

In the mid-term future, enabled by CBDC, financial inclusion will play the most important role in making payments the mainstay of economies around the world. Financial inclusion refers to including the unbanked segments in the financial ecosystem. Key barriers to financial inclusion include financial education, unwillingness and ability of the private sector to participate, lack of access to smartphones, and unsatisfactory anti-money laundering controls.

Financial inclusion, in turn, will help integrated finance, the future of banking, with the bank going to customers at the point of need and not the other way around, a phase we define as “invisible payments.”

Integrated finance is the integration of financial services, including lending, payment processing or insurance, with the infrastructures of non-financial companies without the need to redirect them to traditional financial institutions. The integrated funding opportunity for banks involves rapid customer and deposit acquisition, fee income growth through partnership agreements, and reduced customer acquisition and unit processing costs.

Technology will be key to propelling banks into the new realm, where payments will no longer be proprietary but democratized as a service. To keep your bank relevant and future-proof your payments business, your bank needs to:

  • Look at your technology. Banks need to start preparing for the impact these new payment vehicles will have on digital banking onboarding, security, channels and platforms. Banks must align digital payments and digital banking modernization initiatives to reuse digital banking applications and solutions to support this transition.
  • Evaluate your role. Fintech products and services will be the essential tools that promote inclusion in the financial systems of the future, helping communities around the world build long-term economic resilience and enabling financial growth. Banks will play an important role in driving this change.
  • Take your chance. Integrated finance will help banks reach more customers with lower acquisition costs, expand distribution channels and develop new value-added services, creating unprecedented opportunities for scale.

Future of payments reimagined

The era of payments as a product is over as banks approach a shift in consumer expectations. The payments journey is likely to go through a three-generation transformation.

First generation: payments as experience (PaaX)

The world of payments is on the cusp of transformation, with a focus on improving the end-user experience through improved interfaces and smoother transitions. Banks and fintechs are using the power of artificial intelligence, machine learning, and the cloud to enable Gen One. This experience is commonly called frictionless payments.

Second generation: payments as a lifestyle (PaaL)

As the current experience stabilizes and wearable technology becomes the norm, payments will become part of the lifestyle of individuals and businesses, ushering in the next era. The flourishing of state-owned cryptocurrencies could become the singular force for smooth operations for both domestic and cross-border payments.

Generation three: invisible payments

Over the next three to five years, payments will play a revolutionary role not only as a ubiquitous feature, but also as a seamless operation behind the scenes. The monetization of payment transactions will ensure that payments are financially inclusive and integrated into the broader business transaction ecosystem.

generational change


Society is embarking on a change in experience, in value creation and for a better quality of life. Payments will power this transformed experience for a large segment of the population as we go through these three generational shifts.


Hexaware banking solutions include Astonishment®, a cloud enablement platform; tensai, a automation platform; Y HARVISan incubator and a virtual banking laboratory. Learn more about the future of payments and how Hexaware can help banks and financial institutions keep up in a dynamically changing industry.


Swati Dublish is a banker driving business transformation through technology for banks and fintechs at Hexaware Technologies. Rajsekar Jayashankar is a Banker, Researcher, and Core Banking Product Specialist at Hexaware Technologies. Navin Mishra is a Public Sector Financial Services Strategist at Hexaware Technologies.

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