Paymentology webinar key takeaways – the changing face of credit

Irina Ionescu, Senior Editor at The Paypers, uncovers the key takeaways from the latest webinar with Paymentology on the role of new tech and issuing platforms in transforming credit into a customer-centric proposition that drives loyalty and long-term growth. 

The credit card industry stands at a pivotal crossroads. After five decades of relative stagnation, where most products offered similar features despite technological advances, a new wave of innovation is disrupting the status quo. In a recent webinar hosted by The Paypers and Paymentology, industry experts David Shipper, Strategic Advisor in Retail Banking at Datos Insights and Stephen Bowe, CPO at Paymentology, explore how modern issuers aim to deliver flexible, customer-centric credit experiences that today's consumers expect.

Projected to reach over USD 952 billion by 2031, global credit issuance is now growing in both volume and complexity. New forms of lending, including popular Buy Now, Pay Later (BNPL) and embedded finance bring true innovation, fuelling consumers’ increasing expectations of credit that should meet their daily digital demands in terms of speed, convenience, and payment flexibility.

Below we have summarised the webinar’s key takeaways.

The legacy problem: yesterday's strategy meets today's reality

According to Stephen Bowe, credit cards have not fundamentally evolved since the first Diners Club transaction in New York, in the early 1950s. Despite having better technology than ever before, the market remains cluttered with similar products offering minor variations on the same basic features. One of the core challenges that traditional financial institutions face today is the executions of yesterday’s strategy today. In other words, financial institutions are heavily focused on protecting existing revenue streams rather than innovating for dynamic customers’ needs.

And, while banks continue competing primarily on rewards programmes, consumers now rank simple online applications and instant digital card provisioning as equally important. The gap between what customers want and what's being offered continues to widen, leaving traditional issuers aside and creating opportunities for more agile competitors.

The generational shift: how different age groups redefine credit

An interesting aspect of the discussion centred on how different generations approach credit. Data provided by panellist David Shipper reveals that older, wealthier consumers use credit cards strategically without carrying balances. On the contrary, younger generations — particularly Gen Z and millennials— are much more conscious about their credit usage as they haven’t reached a financially comfortable level in their lives yet.

Younger generations are dynamic and expect instant decisions and streamlined processes. If a regular issuer cannot provide them with an instant decision, they will most likely choose a competitor. Thus, the new generations want credit that is delivered through seamless digital experiences that match their expectations from other industries.

The rise of Buy Now, Pay Later (BNPL) solutions exemplifies this shift. This payment method’s  innovation was in distribution, embedding credit directly into the point of sale. Modern consumers expect to apply for credit, get approved, receive a digital card, and complete a purchase within the same session, even while standing in a checkout line. Under these circumstances, as Stehpen Bowe mentioned during the webinar, the physical card where the credit is stored is of less importance, as most people are now carrying digital wallets directly onto their mobile phones.

A flexible future

The future of credit represents the dissolution of rigid product boundaries. Stephen mentioned he uses his credit card for everything to maximise rewards, maintaining a separate savings account to ensure he can pay off the balance monthly. When he missed a payment by 24 hours and was charged excessive interest, it highlighted how traditional banks see product boundaries differently than customers do.

Modern platforms are addressing this pain point by enabling seamless transitions between credit, debit, and instalment options within a single interface. Through these modern platforms, customers can convert a high-interest credit card balance to a lower-rate instalment plan with a simple tap or switching a large debit purchase to an instalment to manage cash flow without applying for new products.

Recently, Paymentology launched a new solution catered to powering credit innovation for digital banks and fintechs, PayCredit. PayCredit was developed to help financial institutions deliver tailored credit products that are fast and overcome the limitations of legacy and core banking systems. Some of its core capabilities including built-in billing cycle logic for accurate interest calculation, integrated card issuance with digital wallet support, as well as flexible instalments and cashback rewards. 

The technology revolution: from COBOL to cloud

The technical limitations of legacy systems emerged as a critical barrier to innovation. For instance, changing an interest rate could require submitting a form and waiting two weeks, while accessing basic transaction data like merchant IDs might necessitate a three-month project.

Many legacy systems continue to be based on COBOL, a compiled computer programming language designed for business use. The problem with these COBOL-based platforms is that they are old and outdated, with some having even more than 50 years, that prevent banks from offering basic modern features such mobile wallet integration, instant digital issuance, and flexible product configurations. Unfortunately, some US-based banks still don't support mobile wallets, leaving them increasingly behind in a world where anyone can lose their physical wallet and continue their daily life uninterrupted.

However, the solution is not a complete migration. Experts David Shipper and Stephen Bowe advocated for a ‘sidecar’ approach, where banks run modern platforms parallel to legacy systems, testing and learning with new products before gradually transitioning. According to them, this approach allows for innovation without the nightmare of full-scale conversions.

The age of credit revolution

The credit industry stands at an inflection point. After 50 years of incremental changes, the combination of changing consumer expectations, new technology capabilities, and aggressive competition from neo-banks forces a fundamental rethinking of credit products. In this new landscape, winners must offer flexibility without complexity, deliver instant gratification without compromising security, and use data to actively improve customers' financial lives rather than process data.

With modern platforms enabling configuration-based innovation rather than code-heavy development, the necessary tools for transformation are available. The challenge lies in the courage to use them to attract new-age customers.

If you’re interested in learning more from our experts, watch the full webinar on demand here.

 

About the author

Irina is a Senior Editor at The Paypers, primarily specialising in online payments and fraud prevention. She has a Ph.D. in Economics and a strong economic academic background, with interests in fraud prevention, chargebacks, fintech, ecommerce, and online payments. Reach out to her via LinkedIn or email at irina@thepaypers.com.

 

About Paymentology

Paymentology is the leading next-generation issuer processor, empowering fintechs, digital banks, and retail banks to effortlessly launch and manage innovative payment solutions on a global scale. The company drives greater customer choice and value through easy-to-use, integrated platforms and services that help clients to disrupt the status quo, accelerate time to market, and achieve growth. With a superior multi-cloud platform offering a vast global footprint and enhanced real-time data, Paymentology distinguishes itself as a leader in the payments industry.