Global Fintech Series Interview with Shantala Sadananda, President of Banking and Financial Services; Communications, Media, Entertainment; and Emerging Markets at Innova Solutions

Shantala Sadananda, President of Banking and Financial Services; Communications, Media, Entertainment; and Emerging Markets at Innova Solutions chats about the latest innovations defining digital wallets and payment trends across the global fintech landscape:

Hi Shantala, tell us about yourself and your fintech journey…

Thank you for having me! I’ve been in the industry for over 28 years, leading and transforming organizations and their clientele through consulting, technology, and outsourcing—leveraging decades of cross-industry experience.

My current role is President and Global Head of BFS, CME, and Emerging Markets at Innova Solutions, a $3B global organization with over 55,000 employees and 50+ delivery centers. I lead the transformation and innovation agenda for our clients and stakeholders across various regions and industries, including global financial services. Prior to joining Innova, I served in senior global executive management and leadership roles at Capgemini, Globant, Hexaware, and Mindcrest

We’d love to hear your thoughts about the state of digital wallets…what key trends are dominating the market today?

Digital wallets have been growing rapidly in recent years due to the value they provide customers, and now they are set to disrupt the cards market entirely. Per a recent forecast, over half (56.9%) of the US population will use digital wallets this year, totaling 161.6 million users. A digital wallet is already the most preferred mode of payment for many customer segments, largely driven by younger demographics like Gen Z consumers, and we predict the demand for these offerings to only rise.

Not only is the technology beneficial for better consumer experience, but it also creates new revenue streams for merchants and banks. Many pre-paid card programs and loyalty programs are soon going to move to digital wallets due to their advantages in terms of convenience, security, cost reduction, access to data, and customized customer experience. I’m also seeing financial services getting embedded in digital wallets, whether they are buy now, pay later (BNPL) products or other value-added services like multi-currency wallets.

Soon, we’ll see digital wallets incorporate advanced encryption and tokenization to protect user’s payment information as security, data breaches and cyber fraud remain a paramount concern.

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Take us through some of the most innovative digital wallets from around the world, those that stand out for you in terms of their features or usage lifecycle?

Innovative digital wallets target secure, seamless experiences across different business models and use cases. The best offerings feature enhancements like the ability to connect with wearables and devices, support various payment models, and utilize AI for personalization. These innovations aim to meet the evolving needs of consumers and businesses.

Broadly, we are seeing innovation in interactive shopping apps that allow consumers to make purchases directly from videos without leaving the app and closed-loop wallets designed to function as identification tools ensuring funds are used only within a designated ecosystem.

Innovation in the payment industry has expanded to connected devices like cars, wearables, and smart home devices. Both Samsung Pay and Apple Pay integrate with smartwatches, allowing users to make payments conveniently without their smartphones, broadening the use cases for digital wallets.

Digital wallets are also being integrated into gaming and virtual reality environments. Platforms like Steam and Oculus have implemented wallet systems to facilitate in-game purchases and transactions within VR ecosystems, enhancing user experiences and enabling new revenue streams for developers.

Digital wallets support various business models, including pay-per-use, pay-on-the-go, micropayments, and subscription services. Examples include:

• Revolut for multicurrency accounts and international transactions
• Cash App for easy peer-to-peer transfers and Bitcoin transactions
• Alipay for social features, investment options, extensive in-store integrations
• Twisto for flexible payments and credit solutions like BNPL

What will push the growth and adoption of digital wallets down the line? Why in your view should more service brands and FIs use digital wallets to ease end user payment pain points?

The growth and adoption of digital wallets will be driven largely by convenience, security, and the ability to seamlessly integrate into various customer journeys. A well-designed digital wallet provides an intuitive and user-friendly experience, offering quick transactions and a more convenient payment process for service brands and financial institutions alike. For instance, consumers can make payments directly within apps they already use, reducing the need for physical cards or cash. These stored-value closed-loop systems also allow for secure, repeated transactions with minimal friction. Advanced encryption, multi-factor authentication and tokenization are all added layers to ensure security for sensitive industries that financial institutions operate in.

What are some of the factors that FIs should keep in mind when investing in new platforms that can help them build digital wallet capabilities?

Aside from the standard considerations for evaluating a platform like scalability, security, and performance, I’d also consider how much customization and input you have in designing the end customer journey. The platform should allow FIs to create intuitive and seamless customer journeys that enhance user experience. This includes easy onboarding, effortless transactions, and clear navigation.The ability to tailor the user interface and experience to meet specific customer needs and preferences is vital for higher adoption rates and customer satisfaction.

The platform should also support various business models, including B2B (Business-to-Business), B2C (Business-to-Consumer), B2B2C (Business-to-Business-to-Consumer), and C2C (Consumer-to-Consumer). The ability to handle different transaction volumes and types depending on the business model is essential for scalability and flexibility.

I would also recommend looking at fund management flexibility, the opportunities to create new revenue streams through fees, subscriptions, or value-added services and the ability to evolve into a super app, integrating various services such as payments, banking, insurance, and more within a single platform. Others to consider include Federated Authentication Mechanisms (FAM), data custodianship and future-proofing.

Five interesting observations about the state of global fintech before we wrap up?

1. Convergence of Business and Consumer Expectations:

The increasing presence of a young, mobile-first workforce in corporations is blurring the lines between business and personal fintech expectations. Both groups demand seamless, user-centric digital experiences that allow tasks to be completed on the go with minimal effort. Both businesses and individuals prioritize the ability to customize their fintech experiences and access advanced financial tools to aid in decision-making. Security and privacy remain top concerns across the board.

2. Rapid Adoption in Certain Fintech Segments:

Fintech adoption has been particularly swift in areas like payments, lending, foreign exchange, and reporting. Consumers have become comfortable using these services due to their convenience and efficiency. Despite the rapid adoption in other areas, consumers still prefer traditional banks for deposits, valuing the regulatory oversight and perceived security that banks provide for their hard-earned money.

3. Investment in Generative AI:

The global fintech industry is actively exploring and validating use cases for generative AI (gen AI). Although immediate benefits may not be evident, fintech’s are investing in this technology to stay ahead of the curve and adapt to the rapid pace of technological change. By investing in gen AI, fintech companies are positioning themselves to leverage AI advancements, which could transform various aspects of financial services, including customer service, risk management, and personalized financial advice.

4. Growth of Open Banking and Open Finance:

Open banking initiatives are gaining traction worldwide, promoting greater data sharing and interoperability between financial institutions, fintech startups, and technology companies. This collaborative approach aims to enhance the customer experience and foster innovation. The concept of open banking is expected to evolve into open finance, extending data sharing beyond banking to include other financial services like insurance and investments. This will likely integrate AI to further enhance financial services and create a more holistic financial ecosystem.

5. Integration of Blockchain Technology:

Blockchain technology is increasingly being adopted in fintech for its ability to provide transparent, secure, and immutable transaction records. This enhances trust and reduces the risk of fraud. The rise of decentralized finance (DeFi) platforms is transforming traditional financial services by offering decentralized alternatives for lending, borrowing, and trading, thereby reducing reliance on traditional intermediaries.

 The use of smart contracts on blockchain networks is automating and securing complex financial agreements and transactions, increasing efficiency and reducing the need for manual oversight. Blockchain facilitates faster and cheaper cross-border transactions by eliminating intermediaries and streamlining the process, which is especially beneficial for global businesses and remittances.

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