The Evolution of FinTech in Travel & Tourism
The lifestyle of the current population is built upon years of technological evolution. From education, medical treatment, and travelling to most of our day-to-day functionalities, everything is more or less dependent on some form of innovation. Even the way we pay for every service or material we use has evolved over time, and now thanks to the evolution of fintech, it has achieved heights way beyond contactless status.
The way the impact of digital technology on the travel and tourism sector cannot be undermined is the same as with fintech. Since the twenty-second century has witnessed the rise of some of the most lucrative e-commerce websites and digital service platforms to this day, it gave tech experts a chance to spread their creative wings to come up with newer, faster and more convenient payment systems. This is where the advancement in financial technology or fintech takes the wheel.
Almost every well-established service provider has adapted their businesses to incorporate a seamless payment system that upholds the motto, “pay anywhere, anytime”. These innovative systems are in a constant state of development to keep pace with the way money moves. Thus it has a prominent impact on all the major industries, including the travel and tourism industry.
The proper use of Fintech in the travel and tourism industry can evidently multiply profit while also enhancing customers’ experience. It is highly regarded by the industry jaganaughts as one of the most important technological advancements in travel and tourism. It is viewed as a high-priority investment by nine out of ten industry kingpins for enabling the travel and tourism sector’s rebound from the downfall it faced due to the pandemic.
Nowadays customers are becoming very comfortable with tapping on making online purchases with just a few touches on their phone screens. It is evident that the evolution of Fintech in travel and tourism has been heavily influenced by consumer behaviour. The more complex the itineraries become, the easier methods of payment will be adopted by the industry.
As the incorporation of fintech in travel and tourism seems to be progressing in an upward trajectory, all the businesses in the industry should become more acquainted with its concept and understand its contribution to the industry.
What is Travel Fintech?
Fintech or Financial Technology is a digital innovation like online banking, blockchain, cryptocurrency, and digital payments, that enable all forms of online financial services, transactions and products. And in the Travel industry, Fintech is responsible for enhancing the customer experience throughout the booking process by protecting the client’s financial investments with the incorporation of a variety of progressive payment methods and other financial tools.
Any consumer would feel squeamish about spending their hard-earned money without being delivered any sort of return on investment. However, travel fintech can provide more reliable security around those investments during trips, for transport, accommodation and most other affiliated services.
Since Fintech addresses and manages all of the consumer concerns regarding their finances, it helps to drive in more new customers while helping retain the old ones. Thus it has played an excellent part in the recovery of the travel, tourism and hospitality sectors and is taking it to new heights of success.
Now that we have briefly discussed what Travel Fintech is, let’s look at some of its most popular products out there.
Travelling can often call upon unforeseen circumstances, whether inbound or outbound. The risks affiliated with travelling can range anywhere from missing airline connections to more serious situations like injuries or major illnesses. Travel insurance can provide coverage for all those instances that are connected to travelling. It can protect travellers from any risks and financial losses that could potentially happen while travelling. These are insurances that can also be effective on international destinations and can easily be handled by your travel booking companies and banks.
A couple of years back, there weren’t many companies that could enable international purchasing due to the obvious currency difference. But now companies have become more ambitious and are always looking for ways to expand their businesses overseas. For this reason, the first thing they had to achieve was a business platform that accommodates all their foreign target audiences by incorporating Frictionless Payment tools. Generous investment in alternative payment methods and multi-currency pricing tools can efficiently improve the customer experience by enabling international travellers to conveniently make travel purchases.
It has only been a few years since Open Banking entered the scene. Customers no longer have to stand in the long line at the banks for monetary transactions. They can easily make online purchases with the user-friendly banking app on their smartphones. All they have to do is input their banking details on the travel booking websites and monitor the transaction taking place on their mobile screen in a matter of seconds. This increases both transparency and control. Because any transaction occurring in the client’s bank account will immediately be notified to the account holder. This minimizes the risk of fraud and elevates any concerns the client may have. This has been proven to be a significant advantage for travel and hospitality businesses. Many travel companies are forming a partnership with popular banks for alternative payment methods that are lucrative to both parties.
Price Freeze or Fare Locks:
Price Freeze is a cost-saving service that enables a customer or agent to freeze or lock the price of a flight for a certain duration of time. This gives the traveller more time to properly plan different parts of their trip without worrying about fare prices fluctuating. This also helps the customer save money and secure the best travel deals. Some Price Freeze services covers any additional cost if the prices of the tickets increase after the duration of the fare lock is over. On the other hand, if the prices go down then they will pay the lower cost. These services have some strict rules the client must follow to reap all the benefits.
Expansion of Loyalty Programs:
Travel companies often give their customer flyer miles, points or rewards for their purchases with their company. This service is beneficial to both the company and the customer. Since these reward points can be converted into a prize, like a gift hamper, TV, electronic appliances or in some cases even a trip to an attractive destination and stay at a nice hotel and resort, domestic or international, customers feel motivated to keep on making travel purchases with the company to get collect as many points as they can, which bring recurring businesses to the travel companies.
BNPL or “Buy Now Pay Later” is a service that was purely designed and implemented to enhance customer experience by providing them with flexibility regarding payment. Through this service, the customer can book their travel plans by making a down payment on a certain price. Later even if the prices rise, they only have to pay the remaining amount of the price on which they initially booked the trip. Hence, it is very close to Fare Lock. This is super convenient for travellers who do not have the full amount on hand but are afraid of increased prices that may occur later.
In conclusion, it can be said with confidence that fintech in travel and tourism has evolved a lot over the past couple of years, especially during the pandemic, to provide potential clients with flexibility regarding payment for their much-needed holidays or business trips, and in turn making the entire travelling process much faster and convenient for them.
The world is always adapting and the travel industry is adapting with it. In this day and age, people are more technologically inclined to try out any new method of payment just to get what they want. This compels travel companies to constantly look for better and newer innovations and research the latest fintech solutions to stay ahead in the travelling game.