Fintech has rapidly gained ground across the travel industry in the last few years. New and innovative fintech solutions are undergoing a significant transition and has become a key factor in the changing travel tech scenario, leaving us at the cusp of the next phase of fintech evolution.
So what is Fintech?
Financial technology or Fintech refers to several types of specialized software technologies that can digitize financial services and allow businesses to better manage their finances and operations, while improving revenue and market share.
Many legacy organisations are working with advanced technology that will eliminate inefficiencies and improve customer experiences. New payment innovations and fintech trends such as open banking, embedded finance and banking-as-a-service (BaaS) are bringing new opportunities to the table, allowing companies in the travel space to access new revenue streams and improve customer loyalty.
By investing in contactless payment systems, new avenues for providing new financial service capabilities to hotels, airlines and OTAs, through embedded finance, have become possible. Automating mundane payment processes and gaining data-driven insights from these figures is possible when partnering with fintechs.
Amadeus’ recently released its ‘Travel Fintech Investment Trends’ report, based on research conducted with over 70 senior leaders from large airlines and travel sellers. The report highlights that, 2022 will see over 80 per cent of travel businesses plan to match or go beyond 2019 investment. A third of firms plan to match 2019 levels while a significant 50 per cent plan to increase investment. When questioned more broadly on company-wide investment, 70 per cent of participants plan on investing through 2022 to capture an expected rebound in travel, with only 30 per cent opting for a more conservative strategy.
The end goal is to ‘improve the traveler experience’ while ‘increasing revenue through payments’.
According to The Travel Payments Guide, that provides an overview of the global travel payment landscape, travelers now choose to pay for digital travel with alternative methods such as e-wallets and PayPal, more often than cards and cash combined. These alternative methods of payment account for 51 per cent of global travel e-commerce spend.
For many other travelers who are still planning their travel, there has been an increase in demand for payment in installment options. This means the demand for flexible payment options in travel is high as household budgets come under increasing pressure.
This means travel sellers and hotels are left with no choice but to adopt new technologies that can help them easily accept the widest range of alternative, local payment methods such as real-time bank transfers, e-wallets, direct debits and digital payments.
Global Distribution System, Sabre recently took new inroads in their payments with a new partnership with Conferma Pay. The goal behind the partnership is to enable Sabre to make advances in virtual card payments in travel and lay the foundations to develop technologies that enable the future of B2B travel payments.
For Conferma Pay, the pandemic period saw many deals and created integrations to help spread the adoption of virtual payments. This includes Visa’s ‘Visa Commercial Pay’, a suite of business-to-business payment solutions that aims to replace most manual processes.
For the traveler, this opens more opportunities as travel companies can offer more financial services to their customers. From installment options to digital currency, multi-currency charges or even ensuring cybersecurity, the benefits and potential ROI are many. New embedded banking technologies are sure to broaden the scope of financial services offering by Airlines, hotels and travel agencies too as it also allows them to upsell, offer frictionless payments, create virtual products or introduce loyalty program which will incentivize customers to use their services.
These opportunities are recognized today and are sure to change the way we travel once again.
