Payments technology and systems changed in three key ways in 2021.

Today, those changes are unlocking opportunities for financial institutions and fintechs — as well as their business and retail customers, said Glenn Geil, head of payments for the Americas at Endava, a custom digital transformation and automation services provider that supports large banks, payments companies and retailers.

1. The evolution of open banking

Payment changes start with open banking, which connects banking data to other apps and services, typically through application programming interfaces (APIs). Where is open banking headed in the United States? Geil pointed to Europe, where open banking with data access is already a given; the next step is to connect and transmit funds, he explained.

“Open banking is now also moving money between bank accounts by third parties — it’s open everything, not just ‘open pulling data,'” Geil told Bank Automation News. “It’s pushing money and pulling money as well.”

2022 will be the year the U.S. “catches up with” Europe and Asia-Pacific in fintech, cloud services and open banking, predicted Zac Maufe, head of retail banking for Google Cloud, in a conversation with BAN.

“Financial markets continue to increasingly move to the public cloud, driving greater access and transparency for more market participants,” Maufe said. “It’s a big change from recent years, when siloed data streams and expensive trading technology created inequities among market participants.”

APIs, artificial intelligence (AI) and data analytics will be used to embed digital banking into consumers’ everyday lives for things like grocery shopping, travel, entertainment, health care, food delivery and even home buying, Maufe added.

2. The buy now pay later (BNPL) boom

Last year saw examples of tech-driven BNPL advancements, both in investment funding as well as offerings by dedicated companies like Klarna and financial services incumbents such as PayPal.

Thanks to widespread adoption of open banking, BNPL is now being embedded at retailers and other services across the financial sector.

“Open banking has really opened up BNPL, because now you have access to all of this data in real time,” Geil said. “There are alternatives to a credit score for being able to approve somebody for credit.”

Banking data is increasingly being used not just for basic functions like balance inquiries, but to solve a variety of use cases such as savings, reoccurring payments and payments in specific areas, Geil said. Consumers can parse out money to different service providers to handle various use cases.

Through real-time data access, BNPL and other specialized financial services providers are creating payment customizations — but Geil said there’s a trust factor involved, and customers may look to banks as trusted intermediaries.

“The people I might trust to aggregate my data or give me a dashboard like Chime aren’t necessarily who I’m going to trust to move my money around,” he said.

3. The transformation of payment devices

Smartphones are becoming “instant payment acceptance terminals,” Geil said, and are replacing the payment bricks that have been used to swipe credit cards in past years. Other payment terminals also have come into play for businesses.

“Now, you’ll go somewhere like a restaurant and you might see Toast, you’ll see Clover, you’ll see Rebel — you’ll see all these cloud-based terminals that are really based on iOS or Android devices,” Geil said. Beyond just processing payments, businesses can use these cloud-based terminals to capture and use data for inventory, timecards and order management.

Consumers are also benefitting from a payment evolution by migrating to self-service models for banking, insurance, payments and other services, Maufe noted.

“Consumers are now moving from the DIY, ‘do it yourself’ world of fintech to newer DIFM — ‘do it for me’ — models,” he told BAN. “Mobile apps have automated daily, mundane tasks in other industries with great success, and now we see financial services hurrying to catch up.”

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