The new year is in full effect, and the list of websites publishing “Trends for 2017” reports continues to grow every week. Given that I provided my own take on the Top Payment Trends for 2017 during my Keynote at NACHA’s Payments Innovation Alliance meeting, I’ll cover the top ones here as a recap.
APIs and Open Banking
It should come as no surprise that APIs and Open Banking is one of the top trends for 2017. Every client of ours, regardless of role in the ecosystem, is working through converting internal interfaces to APIs, and building the right security and business models around their offerings. We’ve been writing articles on APIs for two years now. From more of a business perspective, I agree with other thought leaders that APIs are not the panacea to aging bank model. APIs provide the technical means for making interesting connections and enabling great experiences, which is what will ultimately transform banking.
Mobile Ordering and Payment
Starbucks has once again been at the forefront of the latest payment trend with merchants—Mobile Ordering and Payment. It’s not all roses this time though—the coffee giant also offers a cautionary tale of what can happen when you roll out new technology without the appropriate change management. Starbucks reported that their mobile ordering has been so popular that it’s disrupting the in-store flow and causing a loss of business. As more merchants (Taco Bell, Chick-fil-A, Panera) enable the order ahead feature, they should also pay special attention to physical workflow and other considerations to ensure they don’t have an adverse customer impact.
Most end users aren’t going to see the impact of the new real-time of faster payment networks in the US for a few years; however, the work to enable them is happening today. We can expect to see Zelle launch this year both as a stand-alone app to compete head-to-head with Venmo, as well as an enabler for a growing list of banks’ online and mobile P2P experiences. Meanwhile, TCH continues to target the roll-out of their new real-time network for later this year, and Ripple, ACI, and others are pushing their own products to market. Now if we only had a business case for the services…
The future is here and it’s…a chatbot? Last year, we saw every client we spoke with working on an Alexa implementation (we built quite a few ourselves), and this year we are seeing more emphases on making these interfaces smart, and not just question/response mechanisms. That means incorporating machine learning into logic layers that are able to offer more contextual advice, answers, and even proactive features. The hope is that this investment in back-end technology will allow for a more intuitive user interface, whether it’s voice, chat, or a modality we haven’t invented yet.
The financial services industry is so full of noise about blockchain that I almost cringe every time I hear the word. The truth is that we spend more time telling clients why they shouldn’t use blockchain rather than why they should. In reality, there are several very specific use cases that have potential to be disrupted by blockchain, and in those cases, we see quite a few large organizations and partnerships doubling down in their implementations. Groups like R3, Hyperledger, and the Ripple group of banks are turning all the noise and pilots into commercial opportunities, and I think we will have more than one success story by the end of the year.
The Great Talent Hunt
The interesting thing about all of these examples is that it’s not just the banks or traditional players that are working on these efforts, it’s the tech giants and startups too. The result is an all-out talent war as the more traditional companies try and transform themselves with technology, but they also need to recruit the right talent to design, implement, and operate it. How does a large, 100-year old bank compete with Facebook for the smartest talent? The first wave of effort was the all-too-familiar insertion of a ping pong table, some free snacks, and open work areas. However, the millennial generation wants to believe in the place in which they’re working, not just get free food, and that means also changing the corporate culture.
There you have it, my top payment trends for 2017. Join me in Copenhagen June 26-28 at Money 2020 Europe. Using the code “Scott”, you can get a discounted pass.