The Internet of Things and Embedded Finance Form a New Commerce Ecosystem


No one wakes up, picks up their phone, and declares, “I’m going omnichannel shopping today.”

But three years after the pandemic took root, we’re still interacting online and in person every day.

As Takis Georgakopoulos, global head of JP Morgan Payments, told Karen Webster, even the face-to-face experience is changing based on how we got used to it during the pandemic.

“We are social animals,” he said. “We like to go to the store. We like to order food. We like to go to the restaurant.” We want your experience to be as easy as online. want to skip the queue.

Leading brands are shifting their spending on innovation away from pure online and digital experiences to a greater focus on integrating digital and in-store experiences. Many brands haven’t invested enough in store space for years and the experience simply lags behind, he pointed out. are also beginning to realize, especially in the fast-moving consumer and retail industries.

This is why a seamless omnichannel setup is important. This enables consumer recognition and customized attention whether they are in-store or switching online, mobile or in-store. At least some major brands are replacing the role of chief digital officer with a chief omnichannel officer, allowing them to focus on the customer’s journey, whether online or in-store.

According to Georgakopoulos, building seamless cross-channel navigation requires commerce within all connected endpoints such as mobile devices, voice assistants, handheld point-of-sale terminals and even the increasingly common “smart” cars. must be activated. As the new commerce he ecosystem evolves, social media his platforms will also play an important role. Consumers now use TikTok and Instagram to search and shop as much as they connect with friends.

The next big thing is the Internet of Things — with payments

The Internet of Things is evolving and has built-in payment capabilities. Currently, the smart devices around us are required to have payment functions and instant payment functions.

Georgakopoulos said a secure, interconnected commerce experience must be underpinned by data that moves with the consumer at every touchpoint. As he explained, Las Vegas vacationers can navigate through casinos, play slots, go to the pool, head to restaurants, eat, rooms… all without juggling keys or wallets. increase.

“Why do you need a wallet?” asked Georgakopoulos. “Your face is with you, your palm is with you, your wearable is with you. You are used to using them all. Why can’t you even use them personally?” ?Biometrics will play a big role in eliminating checkout lines, and voice commands promise to become one of the most natural channels for transactions.

right now?

The continuum of the customer journey from the store to the phone to the store to purchase and return is not seamless.

But the roadmap is there.

Payment systems become faster, instantly available 24/7, use smart devices at home to facilitate everyday life, and become more fluent as you get used to things like paying your utility bills. will be biometrics and other advanced technologies.

“The technology is maturing,” he said.

Payments tie everything together wherever commerce takes place. For example, marketplaces and platforms should make it easy for customers to interact so that they can easily checkout without leaving the page they are on. Payment choice is essential to attracting sellers (or drivers in the case of platforms for gig economy workers).

Embedded finance provides loans against merchant sales, provides information about who buys from merchants, and helps merchants adapt the products they offer, he said. As they reach new audiences and markets, expedited or local payments should be prioritized.

“If you’re an ecosystem or platform player, you need to be able to do all these things,” he told Webster. “It has to be done safely and it has to be handled. [commerce] Because the last thing you want is for your platform to go down. “

No need to rewire your business

Georgakopoulos said the model is working, at least for some of the larger e-commerce players. But many other companies have not reached this level of intuitive commerce. They don’t have the capabilities, infrastructure or simply the expertise to get there. Luckily, these companies don’t have to “rewire” themselves.

“That’s why companies like ours stepped in to help these companies develop these capabilities more easily.” JP Morgan Payments, working with partners such as FinTech Sightline, , has facilitated the interaction layer between consumer accounts and credit cards and the proprietary systems of providers (such as hotels), helping closed-loop ecosystems begin to form.

Conventional wisdom may be that the fintech environment is irreparably destroyed. Indeed, investors are trickling in in the wake of the Silicon Valley bank failure, valuations are plummeting, and some fintechs are scrambled for cash. Companies that have relied on relatively cheap capital and low interest rates, and not focused on profitability, will have tough times.

But, as he noted, JP Morgan Payments, which moves nearly $10 trillion every day, requires clients (and thus JP Morgan’s clients) to know their customers (KYC), anti-money laundering (AML), and Other backend features. This partnership enables software as a service and fraud prevention as a service.

“If you can do this well, if you can do it at scale, and globally, then you have a license to do everything else,” Georgakopoulos explains.

Of course, that “everything else” includes payments. Accepting payments is the most basic component. But when the money starts rolling in, businesses need to manage payments and make the customer experience as smooth as possible. No matter what the payment method, whether debit, credit, buy now pay later (BNPL), or face, palm, or thumbprint is part of the equation, all methods work and they It is imperative to ensure that is safe and secure. tokenization.

“Payments become an invisible kind of backend for the whole infrastructure,” he said. They want to spend their time there. And you can preset these options. “

Changing B2B — for the better

The same trends and technologies could reshape business-to-business (B2B) transactions, where 40% of hundreds of trillions of dollars are still done on paper checks, he said. But just as the pandemic has forced consumers and businesses to rethink how and where they find each other, how they price-discover, and of course, how they transact, so too is the industrial economy moving online.

We are witnessing the emergence of embedded finance in the commercial environment, bringing trade credit, net terms, and other financial flows into the supply chain to help improve the nature of the business itself.

“We are in a world of high-interest-rate, high-inflation, profitability-driven market conditions,” said Georgakopoulos.

“Large companies want to be more efficient, and the small businesses that serve them want to be able to work with as many platforms as possible so they can grow themselves. …everyone from the CFO to the CEO to the head of product, to the head of technology, everyone is at the table,” it turns out to be a discussion about digitization.

APIs are taking hold, he said, but B2B has a long way to go before it finally enters the modern age.

Looking ahead, he told Webster there could be more room for a partnership between JP Morgan Payments and FinTechs. “They are very good clients and they raise the bar in terms of what we need to do.” will be It’s resilience.

Commerce, retail and commercial commerce alike, moves between the digital and physical realms, so “value has to be delivered,” says Georgakopoulos. “And increasingly, that value is coming through embedded finance.”

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