Brett King, banking disruptor and futurist, claims that by the end of this decade, 90% to 95% of all daily financial transactions will go through a technology layer owned by technology companies – not banks.
This may even be before we see the end of the decade. One only has to look at We Chat Pay, Ali Pay, Apple Pay, Samsung Pay, Amazon, Google, FaceBook etc. and the rise of crypto currency as a payment channel and the massive inroad that they have already made – and one may realise that the above statement is not only “shock tactics” .
The fundamental question to ask is whether in fact banks want to be in the retail payments space? I have always maintained that it is too big a piece for the banks to ignore and that they should be an active participant. However, they are tied to the traditional and legacy systems and that is exceedingly difficult to change. The new incumbents are nimble; they are aggressive; they understand the needs of the customer; they understand the needs of the merchants/retailers; they are not bound by the stringent rules and regulations imposed by the traditional players.
Should banks be the innovators in the payments space? Can they “buck” the system or, strategically, should they seek to partner with these innovative disruptors? Or, should they quietly leave the payments stage? What about the card associations who have invested significantly in laying down the global payment rails, standards and the associated rules. This has created massive barriers of entry to potential rivals and competitors. Today, the new challengers are creating their own rails, their own standards and their own rules. Costs of retail payments are being driven down for the benefit of the retailer and the consumer – BUT – are these “upstarts” trusted? Are they ubiquitous? Are they globally accepted or restricted to certain countries and or geographies? Are they secure?
You see, payments are not just about paying for goods and services. Payments is about a whole bundle of processes that come into play if things go wrong; about chargebacks; about fraud; about my payment instrument falling into the hands of a villain; about stopping payments; about getting refunds; about acceptance and about trust from the consumer; the retailer and the bank.
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