BNP Paribas Treasury Insiders: Episode Two

In the second episode of Treasury Insiders, Neil Pein, Head of Payments Transformation and Global Head of Acquiring at BNP Paribas, spoke to Treasury Today about the evolution of ecommerce against the backdrop of the global pandemic, the solutions that have helped retailers pivot their business models effectively, and the role that brick-and-mortar stores will play in the future.

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The COVID-19 crisis has brought numerous challenges for companies around the world, from shoring up liquidity to transitioning entire workforces to remote working models. In addition, some sectors – including retailers that sell their goods via brick-and-mortar stores – have faced particular challenges, with social distancing measures and local lockdowns making it impossible to operate as they have done in the past.

Indeed, the developments of the last few months have resulted in significant changes to customer behaviour. While demand may have fallen for some types of goods and services, lockdown conditions also prompted a sudden increase in purchasing food, clothing and other goods online. “Some of our clients saw a huge increase in demand,” says Neil Pein, Head of Payments Transformation and Global Head of Acquiring at BNP Paribas, citing the rise in sales of sports equipment as people opted to exercise at home.

Meanwhile, in March and April, the crisis led to a considerable decrease in transactions globally. But as Pein points out, this mainly related to in-store transactions – “what we saw online was that there was almost no decrease, despite the fact that activity dropped.”

In practice, many consumers “discovered the convenience of the online payment process” as they turned to online purchases and click-and-collect options offered by larger retailers. What’s more, this shift in consumer behaviour is likely to be here to stay, with consumers expected to continue shopping online going forward.

Supporting clients through the crisis

For retailers, making the move from in-person transactions to online sales is not without its challenges. The shift has presented a considerable challenge for merchants who suddenly needed to cover this new channel, “because it was the only one that was viable and authorised at the time.”

However, necessity breeds invention – and BNP Paribas has taken action to support its clients in collecting payments remotely while their stores were closed. “We set up a secure solution called AXEPTA Lynk2Pay that enables merchants to collect all payments, either by email or by using an SMS,” explains Pein. “Consumers then don’t have to share their credit card details online or over the phone, which makes AXEPTA Lynk2Pay much more secure.”

The solution has been well received by clients, who have been able to stay close to their customers, with some creating a new sales channel that wasn’t previously available to them. Pein cites one client which had previously delayed a payments project, regarding it as ‘nice to have’. “With the current crisis, suddenly this became a big priority,” he says. “With this specific merchant, we onboarded all their stores in France and are now onboarding some outside France as well.”

Pein says this is a big advantage of the bank’s solution, which covers the whole of Europe and offers 300 different payment methods – “so it’s very convenient to extend this type of solution across customers’ geographies.”

User experience

As Pein points out, it is likely that the shift towards ecommerce will last – not least because the trend spans all generations. But as well as requiring an online sales channel, retailers also need to be able to provide a smooth user experience, and to be able to follow customers as they moved through these new channels. The latter can be particularly challenging when customers make a purchase online but then go to the physical store to collect their items.

“We have built AXEPTA Unified Commerce, that enables managers to pilot their sales channels,” says Pein. “It analyses how many clients are coming from online and what they do then – do they go to the store? If they buy something from the store, do they want to go home and then return it, or exchange it for another colour online? Our solution allows merchants to optimise the customer experience and maximises sales.”

Future of brick-and-mortar stores

In light of the events of recent months, what does the future look like for brick and mortar stores?

Pein says he believes these will continue to be part of the sales landscape. “The digital experience is increasing – we can do a lot of things – but in the end, people will still go to a store for the real, physical experience,” he comments, adding that people still want to be able to see real products.

“Maybe the experience that you will have in store will be different, meaning that you might not buy it as you used to,” he adds. “However, you will be still be very happy to enter a shop, see the products and compare them.”

That said, merchants are having to rethink the in-store experience in order to provide the reassurance consumers need in light of the continuing pandemic. Pein cites the rise of contactless transactions and the ability for customers to scan goods. “For example, we’ve increased the limit for contactless payments to €50. As soon as we did this, all merchants and all individuals knew they could use this and they used it a lot, because it was a response to social distance requirements.”

Another shift, Pein says, is that if consumers sample products and then have them delivered to their door, retailers may no longer need to keep large numbers of specific items in their shops. “You don’t need to have 50 samples of your sneakers in the shop to make sure you haven’t run out of products when your customers come in,” he says. According to Pein, this shift provides an opportunity for retailers to rethink their approach – for example by displaying a greater variety of products in store. This can result in a better customer experience.

Currently, Pein says, brick-and-mortar stores are the only channel offering an “emotional experience” for customers. While this could change in the future, with the rise of virtual reality and augmented reality, “these are still very young technologies, and it will take some time before they can catch up with real life experience.”

Small stores

But what of the smaller stores that may lack the reach of larger retailers? How can these businesses maintain their relevance and be part of the industry’s wider journey to digitalisation?

In the new era of purchasing, Pein emphasises that there is still a place for small businesses – “I’m among the people who are very happy to still have my local bakery store” – but adds that lockdown has been a “tremendous shock” to such businesses. As a result, he says, “they need to reinvent themselves and probably provide additional services.”

As part of this transition, Pein notes that AXEPTA Lynk2Pay has enabled even small stores to provide a click-and-collect option for their customers. Also interesting, says Pein, is the rise of local marketplaces – such as a development in France that allows customers to shop online from a number of local shops using a single basket.

“When you think of marketplaces, you think of a very large company reaching merchants in Asia and the US,” says Pein. “But with the crisis, we’ve seen local marketplaces that are gathering local merchants in from the street.” He adds that this new way of addressing customers is beneficial for local shops, and provides a new way of creating client relationships and offering new services.

Post-pandemic?

Looking to the future, Pein says that the COVID-19 crisis has shone a light on the evolution of consumers’ purchasing habits, and the strategic role that both ecommerce and m-commerce can play in supporting those new habits. Indeed, he says m-commerce has proved to be particularly significant during lockdown, “because people were at home – they spent much more time on their mobiles.”

In addition, Pein says, the crisis has focused attention on the role of physical stores when it comes to providing an enjoyable customer experience. “That’s not a paradox – it’s just encouraged us to take the measure of what we already knew: that the retail future will have both channels, and will include the successful implementation of digital solutions into the customer experience and into stores,” he explains. “And what we have also discovered is that this is true for small shops, as well as for very large ones.”

Talking more broadly about the areas of innovation that will most shape people’s lives in the coming years, Pein picks out quantum computing as an innovation “which can tremendously change everything.” He explains: “I think it will force us to rethink all our security and everything we do with current computer science. And it could probably allow the real development of artificial intelligence, including many more uses cases than we can think of now.”

Thanks to Neil Pein for sharing his insights on these trends. You can listen to the accompanying podcast to hear more.