Plenty of creativity, talk of collaboration and just a little impatience about the coming of blockchain. That’s how I would describe the mood at Money20/20 in Las Vegas this year.
The annual FinTech conference, as usual, was a heady mixture of innovation, dynamism and high energy. But there was, strangely, a noticeable undercurrent of boredom with the endless discussions around blockchain. We’ve been waiting for a while to see blockchain come to fruition, or for something really useful to emerge for the use of this technology. True, we are still in the nascent stages of its development, but the market really needs a ‘win’ that moves blockchain from something that’s going to happen to a technology that is more than an idea.
That said, Earthport was involved in a session that did discuss the potential for blockchain to replace existing proprietary ledgers, increase transaction transparency and to reduce costs, among other things. But very little of this will be short-term – hence some restlessness in various quarters.
Elsewhere, the pace of change around the payments industry is quite breathtaking. For example, front-end innovations continue on an exponential growth path with developments in both retail and multi-channel commerce.
This wave of invention is altering the customer-facing experience, although not affecting the underlying infrastructure, which still lags behind. This is largely because of siloed legacy systems and the ongoing requirement to comply with regulations.
One of the big trends is the ongoing pursuit of speed and real-time payment schemes. Non-bank technology companies are driving innovation and setting new industry benchmarks around payment processing speed, efficiency, accessibility and cost. We have recently seen some frantic activity around these initiatives, with 22 countries upgrading their domestic payment infrastructures to real time.
Some countries in Europe are already live with real time payments and the European Payments Council (EPC) is actively pursuing the idea for SEPA payments. Further afield, in Canada and the US, they are now talking about revamping payment infrastructures.
From Earthport’s perspective, our model leverages existing ACH infrastructures to offer local payment capability, so we are heavily focused on enabling faster payment schemes for the benefit of our clients and their customers. However, in the P2P space, we are seeing a fight-back from the incumbents as they address the inefficiencies of the existing model. This is not a bad thing at all, as the latest phase of disruption is really acting as the catalyst for greater innovation and the delivery of components of the value chain.
At the same time, revenue models for payments are definitely being scrutinised. With banks looking closely at their pricing models, largely prompted by the low interest rate regimes in place and the sheer energy coming from tech companies, change is in the air. On top of that, regulation will enable companies, especially third party processors, to compete with the banks in payment processing and the customer data space. There is also a chance that if regulators focus on fostering innovation, this might lead to further fragmentation of the payments value chain.
Plenty of food for thought, as ever, from Money20/20 – but by the time we reconvene at the next leg of this series of conferences, how will the pace of change have affected the landscape?