We are mobile and digital and operating in a connected economy that is moving at 5G (and in a few years 6G) speeds, but the digital transformation of global economies is far from over.
After going through a scary time for health and commerce, we find the world being pushed towards a goal of digital connectivity and engagement, which would seem futuristic if it weren’t an absolute reality right now that is having a profound impact on how the world’s consumers buy, pay and bank. .
Going forward, the digital shift that ignited in 2020 will have picturesque scope and scale, as new research shows that despite the ubiquity of smartphones, internet connections and services, most of the world’s developed economies are still in the early stages of transformation.
This march towards full digital potential is tracked and quantified quarterly in Benchmarking The World’s Digital Transformation, a PYMNTS and Bandaged collaboration measuring consumer engagement across 40 key activities across 10 categories that we call the “pillars” of the connected economy – touching every aspect of how technology is reshaping our lives.
In the ConnectedEconomy™ Index Q1 2022 edition of this series, our survey results from over 15,100 people in 11 countries concluded that “there are huge benefits for entrepreneurs, investors and consumers …[as] digital transformation is only at 27% of its full potential in the 11 economies we studied.
Examining results in three key areas – how we buy, pay and bank – gives insight into the broader opportunities that exist and hints at the hurdles that remain to be overcome on the path to transformation. more complete.
Get it now: Global Digital Transformation Benchmarking – The ConnectedEconomy™ Index Q1 2022
Shopping should watch streaming
With 87% of consumers surveyed connected to the internet, we found that only 19% of them are highly engaged in digital activities like shopping – a surprisingly low percentage during a waning but ever-present pandemic.
On the contrary, the study states that “seven times as many consumers watch videos daily than buy from a marketplace, and five times as many consumers check their social media feeds daily than order food from food aggregators. This social context has the potential to become highly transactional as these social platforms monetize consumer attention by enabling payment for these experiences.
Eating out and grocery shopping – in a word, food – is a connected activity that draws on others in cascading network effects, as obtaining food touches at least four of the 10 CE pillars. The study found that 70% of consumers who are highly digitally engaged in the “store” pillar (retail shopping) “are also highly digitally engaged in the “eat” pillar (purchasing food from restaurants and grocery stores),” and 64% of these shoppers “also show high digital engagement in grocery shopping, and 75% show high use of digital methods to purchase food from restaurants.”
It’s a clear call for a greater focus on social commerce and integrated payments that make digital engagement a seamless and convenient – and even natural – part of daily routines.
Data point: Consumers are nearly 40% more engaged, overall, in channels that aren’t specifically designed for transactions. This is a major in-app payment opportunity.
Payments are leaning towards digital, but plastic prevails
Our research found that cards were the most used form of payment by consumers in the countries studied, “with 55% of in-store transactions and 49% of digital transactions paid for with network-branded cards, for example, Visa and MasterCard”.
But markets like Singapore and Germany are forging ahead with wider adoption of digital alternatives to credit and debit cards as consumers take greater advantage of how connectivity in finance delivers the truly modern experiences. that the rest of the world is just reading now.
“While we find that global and domestic cards are the most widely used method of payment for global consumers, both online and in-store,” the study notes, “payment preferences vary across the 11 countries studied and include strong preferences for local payment methods, account-to-account transfers, digital wallets, carrier billing and new flows such as installment payments.”
Digital wallets are the key to unlocking the potential for transformation, and after languishing somewhat, trends such as growing consumer adoption of contactless/contactless payments are accelerating their adoption. Again, the models differ depending on your geography and portfolio of choice.
“Consumers in different countries use different digital wallets to varying degrees,” the study found. “PayPal is the most widely used digital wallet in Germany, where it accounts for 37% of all online transactions. Germany is also the most digital wallet-centric nation, with 44% of all domestic online transactions using digital wallets and 84% using PayPal.”
Data point: Digital wallets account for 61% of the 51% of all digital transactions that are not made using cards.
Get your copy: Global Digital Transformation Benchmarking – The ConnectedEconomy™ Index Q1 2022
Bank pillar among the best processors
The bank ranks closer to high-engagement activities like streaming entertainment and social media than many others, given the central role it plays to other aspects of connected living – a clear demonstration of how using an activity often leads to a network effect.
We found that nearly 6 in 10 consumers (59%) across the 11 countries were engaging in some form of mobile banking, because “the availability of attractive mobile banking alternatives to physical banking—combined with the widespread availability of smartphones — driving both adoption and usage, and an increase in their overall ranking in the banking pillar’s CE Index.
The study observes that the bank has been on the path to digital transformation for longer than some other sectors surveyed, “particularly in developing economies where mobile apps have overtaken physical banking options and brought more consumers online. for more of their banking and similar services”.
Additionally, we concluded that “the integration of payments and finance into high-engagement experiences is one of the greatest sources of untapped potential in the digital economy.”
Data point: 33% of all P2P and online bill payments use bank transfers, which accounts for only 8% of all retail payments.
Download now: Global Digital Transformation Benchmarking – The ConnectedEconomy™ Index Q1 2022