In the digital transformation of telcos, payments gain prominence

Magdalena Ovalle

Líder de Comunicaciones Internas @ Kushki

April 15, 2021

3 min read

Telecommunications or telco companies are known as some leading companies in the path of digital transformation. It is logical: They work with the Internet, with new technologies, helping that all productive sectors can connect at the speed of a click.

Access to telcos’ services is becoming more and more massive, because according toStatistathere are about 4.6 billion Internet users worldwide The International Telecommunication Union (ITU) ensures that around 97% of the world’s population has access to a mobile cellular signal.

A F5 Networks report ratifies it and says that telco companies are becoming the digital pioneers and transformers of the business world, with up to 80% of their professionals working on projects of this trend, compared to 69% of the other sectors.

But the truth is that, according to experts, this sector also carries risks if not modernized integrally, especially in matters related to payments and with customer attention and satisfaction. The pandemic is not making the situation easier, with a planned growth of the sector that decreased from 6% to 3% with the health impact of the Covid-19. These reductions, according to IDC, could mean losses of up to USD 4 billion in connectivity for the whole of Latin America, only in 2020.

Benefits of digital transformation

In addition to jumping into the digitization bus, which is a tendency worldwide, it is estimated that a digital transformation process in telecommunications companies can improve EBITDA, that is, gross profit calculated before expenses, by more than 30%. The same happens with consumer satisfaction, which is also notoriously increased by about 30%.

In terms of internal affairs of the company, employee satisfaction rises by 50% and reduces operational expenses by more than 50% when making more optimal and efficient use of resources.

According to a survey conducted by EY, called Digital Transformation for 2020 and Beyond, 71% of those surveyed from telco companies, believe that process automation is what will guide the path for the digital transformation of their companies. Also, 51% believes that data analytics will be essential. In that, respondents themselves pointed out that legacy and lack of technical skills are the biggest hindrances of digital transformation in their companies.

How can fintech and telcos collaborate?

With the pandemic and saturation of its market, there is no doubt that telco companies are being challenged in multiple aspects. On the other hand, fintech is a sector that has demonstrated impressive potential, especially in the last year. With these two sectors collaborating, impact is safe.

If telecommunications companies take advantage of fintech services and incorporate digital payments in different formats for their services, they can obtain profits in processing fees, operating costs, and even in currency conversions, in the case of companies with a presence in several countries of the globe.

From the customer side, having digital payments allows the consumer to ensure the supply of telephone or internet services without being cut-off for forgetting a manual payment, having subscriptions accessing discounts, and defining which payment periodicity he/she prefers, among many other features. It sounds simple and obvious, but the customization of services is more relevant than we all believe, and subscriptions, through debit and credit cards, are gaining space in the world.

Generation Z and new customers

The consolidation as consumers of millennials, and the appearance of Generation Z (born from 1994 onwards) means that today, a large portion of the current customers of telecommunications companies are digital natives and large internet users. For the same reason, they tend to adopt new technologies early and almost automatically.

That’s why telcos cannot be allowed to lower the pace of innovation, since with the high competition, which will increase even more with the arrival of the 5G network, numerical portability, and all facilities for changing from a company today, it is not feasible to leave digital trends aside, because that would make them obsolete in the market rapidly quickly.

It is proven that a good payment experience and good attention help to keep the customer happy and gain loyalty, so implementing a digital payment system that incorporates customizable subscriptions and recurrences is a good alternative for telcos.

A gain for both sides

In an industry such as telecommunications on is, where changes are constantly approaching, it is important to choose a good partner, that delivers the services necessary to not lose the customer. There, fintech have much to contribute to telcos, to be able to stay competitive, to improve the experience and go hand in hand with all the advances that are coming in the industry.

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