Lots of great analogies during the final session about Bitcoin – in summary it seems that beyond the hype of the idea that its the panacea of currency – I do like the description of it as an open source protocol and a distributed network. In fact it does have the characteristics of a true web network with self correcting and regulatory characteristics. But with healthy skepticism from the bankers on the panel – at some point regulation has to be a part of the equation. and it might streamline some of the regulatory limitations of established payment mechanisms. If nothing else it was amusing to hear the nervous laughter as the bankers all gave their disclaimers when giving praise to the model.
The big theme for mobile wallet and mobile payments on the heels of the Apple Pay buzz at Money2020 and other conferences was how important relationship and loyalty will be in the long run. At TAG Fintech this year, everyone focused on the opportunity to embed in loyalty programs, become part of a decision process so payments are pre-negotiated before the transaction, and security above all. The thought I had after listening to it all was how Apple Pay may turn into the trojan horse iTunes was. Sure – it started out as a way to sell iPods and eventually iPhones; with a bit of money in selling songs too. Today that is really what Apple Pay is about – increasing the halo around Apple devices and selling more product. But iTunes changed the record business as Amazon has changed the book business. At first they seemed like a really great distribution model, it effectively made Apple and Amazon the publishers. There will come a time when Apple Pay starts calling the shots and we shall see how that goes! For now the winner will be those that figure out the magic of offering rewards, a revolving account (30 days to pay), the use of and the security and fraud protection of tokenization – that could be the tipping point for mobile payments and could create an effective alternative to the credit card. Seriously – think about what the biggest banks should be doing to create their own, realtime payment exchange. The key for them will be upgrading the plumbing of payments and implementing a framework for realtime payments.
There was the obligatory focus on big data too. These seminars focused on how data and technology come together for small business lines of credit, investors, and lending. This was the first use of the word sea-change! From cloud/crowd funding to using that historical data to make better lending decisions in a traditional sense. The social media network data, peer lending data, all spawned from the financial crisis of to fill the void of no small business lending; to today’s mature and innovative models. Maybe the big banks won’t offer this kind of lending but they participate in it after its vetted; and they use the data in a negative sense – to find the deadbeats. I loved the quotes from the disrupters – all altruistic: “serving small business is the highest calling” “societies comfort with technology is the great motivation in data driven lending” – Affinity, Ease and Insight
So what about POS terminals and the upgrading to EMV- chip and pin – tokens, call it what you will. This is necessary and in my opinion will be adopted but because of the regulatory requirements not because consumers are smart enough to know this. The small businesses just want to make life easier, make life safer and get repeat business (loyalty). If there were a way to get customers to use their mobile wallet and enjoy the loyalty programs they would be happier. Interesting solutions from companies like @shopkeep – timing in rewards, the buying experience of the customer is being disrupted by the financial technology shift from simply “paying” to shopping and informing.
This was also a big part of the discussion on the Internet of Things (IoT) and that raving buzz in today’s twittersphere. Bachelor with @streetlineinc gave examples of how the cost of IoT technology is worth is. In fact they are seeing SF put in internet aware parking meters and automakers putting in sensors. It seems like an amazing thing – to just park and the payment is taken care of. It seems like a huge infrastructure change too. But just putting in the meters has increased revenue tremendously. Its a transparent world with millennia’s point of view – transactions will need to be transparent too. Imagine if FI’s could solve for the idea of a revolving account or direct access to bank accounts tokenized and embedded in IoT solutions. Pay.gov now offers PayPal and Dwolla as payment options – for the kids. wake up mobile payments are changing things. In fact Visa ia promoting tokenization rather than closed mobile wallets and embedded payments to virtualize their cards – its self preservation!
As the conference opened – the industry has to think about end to end payment customer experience not just the transaction. About people and transactions moving through the customer’s buying cycle and value chain – not our traditional silos (ATM’s, POS, Branches, etc). We can argue until the kids come home from college whether to build a branch or not, whether to upgrade our ATM’s or not. But they will come home and they just don’t think that way. They just go on with their lives and if Apple, Amazon, Dwalla or PayPal figure out how to make their lives easier by being there – with both warmth and competence – they won’t care where your bank decides to spend its money.