As originally published in PYMNTS.
A decade is a nice, round number — a convenient marker for what has come and what is coming. We as humans tend to measure our lives in decades, referring to ourselves as children of the ’60s, perhaps, or pining wistfully for the synthesized pop sounds of the ’80s.
In payments, 10 years is a long time — where everything can change, and where once fanciful notions can become ubiquitous new ways of transacting. That said, we are now at the six-month mark of 2019, and a new decade looms. Call it the sunsetting of the 2010s, an opportune time to preview everything from eCommerce to artificial intelligence (AI), from A to Z — here, we can term it APIs to Zelle.
To get a sense of the most significant seismic shifts that have pushed payments innovation inexorably ahead through the past 10 years, as well as what lies over the horizon, PYMNTS queried 29 C-level executives with a collective thumb on the pulse of innovation. Each of these men and women were asked to name the single, most important innovation that has had a ripple effect through the ecosystem. The answers were varied, spanning from blockchain to instant payouts.
The particular innovations spotlighted were varied as well, tied to, say, consumer-specific or B2B-specific cases. However, common threads that ran through the tapestry lie with technology’s transformation, marked by speed, intelligence and mobility.
It can be argued that the consumer experience has been leading by example through the past few years, giving merchants and financial institutions a roadmap of what to do and what not to do when it comes to satisfying demand and creating as frictionless a commerce experience as possible.
The flip phones of earlier in the millennium are, largely, a memory. Now, smartphones can help one shop whenever and wherever, transacting by tapping. Machine learning and AI can help merchants tailor relevant offers, real time and in context.
Technology has also proven invaluable in the ongoing fight against fraudsters, who are increasingly moving online, as consumers are doing the same. One laggard has been catching up a bit: B2B, where the paper chase is becoming a bit more streamlined and digital as transactions move across borders, currencies and time zones. No matter the application, risk analysis is crucial, especially in an age when know your customer (KYC) is as much a mandate as it is good business sense.
If there is one constant in innovation, especially payments innovation, it is that it’s constantly evolving. We may look back on the relative clunkiness of what went before and chuckle, and say it was “obvious” that we’d wind up where we are now, given the road we’ve traveled. Past is prologue, as they say, even if it is not a specific predictor. Hindsight may be 20/20, but it’s crucial as we get ready for 2020. Read on.
The Decade of the App
By Anabel Perez, CEO and Co-founder, NovoPayment
Reflecting on the previous decade in the payments space, it’s astounding to see how much we’ve been able to accomplish and innovate in only ten years. As end-users, we have much more control over our data, and how we share it to simplify our day-to-day lives. As merchants and retailers, we can accept payments and pay our employees easier than ever. And as financial institutions, we’re able to streamline processes, remove bottlenecks and facilitate payments in ways our predecessors would have never imagined. And none of this would have been made possible this decade, if it was not for the rise of the smartphone and mobile apps.
There’s an App for That™
At the very top of this decade, Apple secured a trademark for their buzz-worthy phrase, “There’s an app for that,” (originally used in a commercial for their smartphone), and today, with 3.9 million apps available for download between Apple and Android’s app stores, the phrase has never rung more true.
The mobile app world has in fact become an entire ecosystem, supporting billions of smartphone users, millions of developers, and a laundry list of businesses (both big and small). And while this advent brings unprecedented information, entertainment and simplicity to each users’ fingertips, the infrastructure in place has also allowed us to take payments wherever issuers’, acquirers’ and merchants’ dreams (and phones) may bring them.
Some key examples of how the smartphone changed the way we think about payments:
Decade of the App? Meet the Decade of APIs.
While apps and the smartphone have certainly introduced society to new possibilities for payments, what has propelled the industry to new heights and vistas, and will continue to do so? APIs.
About half way through this last decade, we witnessed companies like Airbnb and Uber focusing on improving daily user experiences and services on the front-end, while relying on APIs to address the payments required to facilitate these experiences in the back-end. This collaboration was able to support these companies’ wide-scale growth and adoption without limiting the organizations to the traditional frictions associated with account creation, payment facilitation, accounts payable, etc. It’s a model that’s been able to be replicated and introduced possibility worldwide, for incumbent FIs, new kids on the block, and collaboration for all parties in between.
The power of APIs is the ability to provide greater business agility, facilitate innovation regardless of legacy software compatibility or tech silos, and offer deeper and more meaningful value than superficial innovation on the front-end. The middleware and orchestration that APIs offer today’s companies, allow for digital transformation for payments that will continue to improve user-experience in all types of value chains. And I’m excited to see what new directions the industry moves in.