Digitally-Led Mid-Tier Merchants on Track to Win Global Innovation Race, Research by ACI Worldwide and Ovum Reveals
Trailblazing merchants focus heavily on payments innovation, including new payment options, a mobile focus, and a seamless cross-channel payment experience
The index identifies five types of organizations, as defined by their approach to innovation and business transformation: Laggards, Emerging, Tech-led, Advanced and Trailblazers. When it comes to the world’s largest merchants, the situation reverses: 37 percent of merchants with annual revenues of at least
“Digital-led mid-tier merchants may well be on the way to becoming the super-merchants of tomorrow,” commented
While there is no single formula for driving innovation within an organization, the Merchant ebook - How to become a Payments Trailblazer outlines seven key characteristics of ‘Trailblazing’ Merchants - the most innovative enterprises – that stand out from the rest of the market. Among those key features are: a strong central function tasked with driving innovation, an agile culture that is responsive to customer needs, taking advantage of emerging technologies and focusing on customer experience by bringing innovative products and services quickly to market.
“There is no single recipe for success in today’s new retail environment, but our research provides a blueprint for what the most innovative and successful merchants do right,” continued Quartermaine. “Catering to a growing customer preference for digital-led or digital-influenced purchasing is key. This includes new payment options; a focus on mobile, especially in-store, and a stronger, more seamless cross-channel payment experience.”
Other key findings:
Overall merchant performance
- Overall, the merchant segments (telecoms, retail, digital goods and hospitality) featured in the Culture of Innovation Index are spread across the Laggard, Emerging and Tech-led categories, placing them behind fintech, retail and corporate banking in the overall ranking
There are significant regional differences in terms of innovation
Europe, 35 percent of all merchants are classified as Laggards, compared to 30 percent globally. European retailers particularly fall behind their global peers, with 43 percent in the Laggard category, reflecting the challenges that many have faced as a result of the rapid shift in customer habits toward eCommerce
In contrast, merchants in
Asia-Pacificare highly focused on investing in technology; 32 percent fall into the Tech-led group, with 26 percent in the Advanced category; only 19 percent are Laggards
- Merchants in the US are polarized, with 34 percent falling into the Laggards and 16 percent into Trailblazers category, reflecting the growing gap between more traditional merchants and many of the more digital-native businesses
Customer experience is key
- Innovation in payments is focused on areas that enhance customer experience – new payment options, a focus on mobile (especially in-store), and a stronger, more seamless cross-channel payments experience
- Security initiatives like PSD2 and SCA are driving the need for technology innovation in order to balance fraud prevention with maximizing conversion rates; regulatory requirements may drive merchants to close the innovation gap relative to banks
The Culture of Innovation Index, based on interviews with senior executives in close to 1,200 enterprises, scores each organization based on its plans and behaviors across a range of cultural, organizational and technology-centric factors. For the Merchant segment, 538 merchants globally were surveyed: 237 retailers, 100 merchants from the digital goods sector, 74 from the hospitality sector and 127 form the telecoms sector.
Interviews covered a range of topics relating to two broad themes: Inputs to the innovation process (cultural and organizational drivers of innovation, particularly the way that the organization is structured with respect to identifying changing customer needs, competitive challenges and new market opportunities) and Outputs from the innovation process (outcomes from the process, in terms of factors such as the adoption and investment in emerging technologies as well as specific product innovation relating to the business area in question). Across the study, the responses to more than 100 individual questions were scored and weighted to produce combined scores for each of the Input and Output categories.