Traditionally, banks offer value to their customers through loans and savings accounts. The bank's corresponding revenue streams come from the fees and interest earned from said accounts and loans. Yet today, we see the market inching closer to an open banking future where payments are effortless and where you as a consumer might not care exactly how your payment takes place. 

In this future, payments, loans, and deposits are all commoditised. They are frictionless and digital, driving down the opportunities for banks to charge fees and interest. So, where does this leave banks, and how can they continue to provide value to people in the future? 

When adding any type of new feature to an online experience to increase its value, we use the umbrella term of "moving from 'tap-to-pay' to 'app-to-pay'." With contactless payments (tap-to-pay) used at a point-of-sale, it is hard to add more value. Yet, when the customer pays through an app, there are real possibilities for banks and issuers to add value. Simply put, if you have the right set of features, you can drive adoption for your payment service.

A problem here is that consumers don't want a lot of different payment apps. Why? Because the shopping experience should be as seamless as possible, regardless of which store, website, or app they are buying from. This can be challenging to do across Europe, a continent with a lot of different markets. One possible solution is a 'European wallet app' - sort of like what Google Plex or Apple Pay offers. Preferably, this will be linked to the 'trusted and secure Digital Identity wallet' recently announced by the EU Commission, making it easier for EU citizens to sign up. However, this would require the banking industry to come together with merchants, which we see as quite the challenge.

So, where can banks potentially generate more value? One way is by improving the payment experience as a whole. Exactly how the payment happens or is initiated is not so important anymore (for instance, the payment could be initiated with NFC or by scanning a QR-code, two pretty 'valueless' options). Instead, the real value comes from special offers, rewards, storage of receipts, warranty information, or perhaps even allowing for pre-payment and payment-by-instalment.

Of course, improved security can also offer a lot of value. Imagine getting a notification saying, 'we just noticed your account being used in Oslo, but you're in Paris. Do you want to stop the transaction? ‘. When someone's hard-earned money is at risk, the price for security becomes invaluable. 

Ultimately, app-to-pay might be the way to move away from current card schemes and towards account-to-account payments (which would help cut the fees involved). However, a significant challenge to keep in mind is how this will impact the user experience, as app-to-pay needs to be a feasible alternative to traditional payment cards. A frictionless payment scheme should be more than just the APIs provided by individual banks - it also needs to be useable in online e-commerce and at point-of-sale in stores.

In the future, banking apps will have to handle online e-commerce, point-of-sale, and SCA using an omnichannel model where the same singular app does everything. This has been tried before but didn't see much success, as Masterpass and Visa Checkout initiatives didn't add any extra value. However, MasterCard and Visa are still traditional card schemes, whereas the future may be marked by fully digital payment services that don't involve traditional cards.

One of the most significant changes to the payment market is that big platforms, such as Google and Apple, are launching banks through their platforms. While Apple has had its Apple Pay service since 2014, Google hasn't had as much luck with Google Pay. But this might change soon, as Google has launched a new service - Google Plex - that offers its customers the option to open new accounts. While banks hold the accounts, Google controls the front-end, turning the account-holding service into a commodity. 

Big platforms such as Google Pay and Apple Pay likely have their eyes on the payment markets, as they're in an excellent position to provide an omnichannel app around their infrastructure. Suppose you can search for it with Google, buy it with Google, get a discount with Google, and keep the receipt with Google. In that case, Google becomes quite appealing by offering a one-stop-shop for a frictionless and convenient shopping experience.

It is hard to predict who will be in charge of the payments in the future. Will it be banks, issuers, merchants, or platforms such as Google or Apple? One thing is for sure - in the future, it won't just be about making payments as cheaply and as quickly as possible. Instead of simply moving money around, the industry will focus on moving customer information. This is where the highest value lies, not in fees or payments.