Does Payments Innovation Really Need To Take 10 Years?

Does Payments Innovation Really Need To Take 10 Years?

Oslo CAC Cards Academy Conference

Last week I was lucky enough to present my thoughts on Payment Trends at the CAC Card Academy event down in Oslo. For those of you who don’t know this was the last in a series of conferences which focus on Payment Card matters in the Nordics and Baltic Rim countries. It was a great chance to learn about the local market and network with a number of interesting people in the industry. I was somewhat surprised to find several ex-pats like myself working here in Norway, one even brave enough to live closer to the Arctic Circle than me!

Over the course of the event 3 issues/questions started to emerge from the various presentations:

  • How do we do Mobile Payments well?
  • Is it possible to secure our systems from all the threats?
  • What does the future look like for Payments?

Starting with the issue of Mobile Payments, I guess the hot topics were naturally wallets, Trusted Service Managers (TSMs) and Contactless Payments (NFC). According to John Olav Olsen, more iPhones are sold each day than babies are born (378k vs 371k) – not sure if this is a good or a bad thing! Perhaps the most interesting presentation for this topic was from Telenor’s Elisabeth Falck in which she described the “Door Step” or tap2pay trial here in Norway – a collaboration between DnB and Telenor – Norway’s largest Financial Services provider and largest TelCo . Like many of the other presentations there was mention of an open architecture approach – in essence offering your competitors (i.e. other Banks, TelCos and wallet providers) a slot to install their rival wallet product alongside your own. All this sounds rather nice but I have to wonder what is in it for the end user? Why replace your physical wallet with 20+ virtual ones being offered by the great and the good of the payments industry? Early adopters haven’t minded but the late majority may well have a different attitude and as António Madureira of UL  pointed out at the end of his wittily titled presentation “The War of the Wallets”, for all these companies it should be about

ecosystem, not egosystem…

I’m sure for most consumers it will be about one digital wallet to replace their physical version but of course there will still be space for multiple apps on the mobile device which will access the core wallet functionality (payments, loyalty and NFC). Something which I think Russel Jones from First Data hinted at in his presentation on the changing world of payments:

It will be the consumer that takes control of payments [not the providers]

On to the security issue next and I won’t go into too much detail in the interests of keeping this brief. Suffice to say some alarming examples from Michael Dreves and Steven Bickford of how easy it is to get hold of data (freezing memory to -60C!!) with typically the weakest link being the human who ends up being tricked by clever social engineering tricks – certainly thought provoking stuff.

On the final hot topic, the future of payments, I gave my thoughts on the Mega Trends in Payments that we have seen at PayX in 2012 and how they might influence the Nordic region in the coming months and years. Essentially I boiled it down to the following 3:

  1. Cash-less – how digital money and payment methods are increasing and replacing cash;
  2. Banking 3.0 – how banks are developing their customer services using latest technology and new service techniques;
  3. Data Rush – how data can be used in smart ways to help the consumer and unlock profitable opportunities for banks, credit card issuers and retailers alike.

Good to know I’m not alone with some of my thinking, with mobile apps and service (Banking 3.0) heavily discussed as I already mentioned. Mikkel Freltoft Krogsholm from Copenhagen Finance IT Region talked about some of the research he is doing on payments and revealed some interesting stats on the challenges of becoming a truly cashless society, for example in Denmark over 50% of people said they prefer to use cash for transactions under 100Kr (roughly £10) but more promisingly 49% also thought we will have a cashless society – surprisingly the older survey respondents believe this even more strongly than their younger counterparts. Echoing my Bank 3.0 thoughts, Jan Damsgaard from Copenhagen Business School gave, in my opinion, a clear view of the future for Financial Services by stating:

All future financial services must be MOBILE FIRST and PC as special

To this end, some worrying insight from Thomas Bostrøm Jørgensen, ex-CEO of Luup (who talked about his latest venture Encap). Thomas made me laugh when he said:

In 2002 I launched mobile payments here in Oslo with Luup, you could go into a McDonalds and buy your burger with your basic Nokia handset using just SMS.

10 years later and we are still discussing how to do mobile payments! Does innovation in payments really have to take this long? Let’s hope the next 10 years sees some real innovation come to market – perhaps some of the concepts imagined in this video from First Data!

Leave a Comment