During the past few decades, the way Australians make payments has changed dramatically. Cash has given way to cards, tellers to terminals. Even internet banking is being usurped by wearables, mobile wallets and a myriad of other apps and devices.
Senior Financial Executives from Australian businesses have embraced this change. In their responses to American Express' new Payment Revolution study, 86% of 355 CFOs surveyed said they had already gone some way towards modernising their payment processes. Two-thirds of senior Finance Executives described their acceptance of financial innovation as "high". Among the benefits they listed were improved cash flow management (41%), improved business processes (41%) and frictionless payment (40%).
Within this generally progressive group, there is a smaller subset of Financial Executives that are looking even further ahead. The Payment Revolution research found that 16% of CFOs could be classified as "early adopters" – business leaders that seek out emerging technologies to gain a competitive advantage over rivals that are slower to innovate.
The modern payments landscape includes everything from distributed ledger technologies to virtual payments, APIs and mobile transactions. American Express' study found that most early adopters had trialled over five of these new payment technologies in the past year. Over half had already experimented with peer-to-peer payment technology (compared to 14% of all respondents), and 42% had deployed blockchain in the finance department (compared to 25% of all respondents).
Appetite for risk
Early adopting CFOs shared another trait that separated them from other senior Financial Executives: a much higher tolerance of risk. Some 54% said their appetite for risk in payment technology was very high, compared to an average of 27% of other CFOs.
They also tended to invest more. Some 73% of those surveyed had invested more than $100,000 in new payment technologies in the past three years. Unsurprisingly, 83% of early adopters said they had sufficient budget to invest in innovative payments technology, compared to just 52% of all CFOs.
So is this higher spending, higher risk approach worth it? According to the research, many of these highly-innovative CFOs had seen improvements in the finance department. On average they were four times more efficient at processing payments than business laggards and two-and-a-half times better at managing cash flow.
Early adoption of advances in payments technology also seems to have wider business benefits. Businesses whose CFOs drove forward new payment technology were almost twice as successful at customer retention as those which clung to more traditional payment methods. They typically expected to see business growth of 20% or more in the next 12 months.
The keys to success
Early adopter CFOs surveyed by American Express said that successfully introducing cutting edge payments technology means taking a people-first, rather than technology-led, approach. This enables CFOs to highlight broader strategic opportunities arising from innovative payments technology, helping them to create a compelling case for investment.
Many of the CFOs surveyed emphasised the need to work closely not only with CIOs, COOs and CEOs, but also with broader business teams, to increase understanding and build confidence in new technology. Some 50% of these business leaders said their colleagues' uncertainty was the factor most likely to impede payment innovation. One CFO from a labour hire company told researchers that “you've always got people who don't like change. They've probably been doing things one way for the past 4-5 years."
By embracing risk and working closely with colleagues to drive innovative approaches, these early-adopting CFOs are helping to shape the payments landscape of the future.
- 16% of CFOs are early adopters of new payment technology
- Forward-looking businesses introduce an average of five new payment technologies each year
- Early adopting finance departments are likely to see revenue increases of 20% next year