By Grant de Leeuw, Global Sales Manager at TALKINGTECH
It can be a challenge to look up from the detail of everyday business and clients, beyond the next week or month, and think about future technology and service innovations with a fresh pair of eyes.
We’re all guilty of not doing it enough, but it’s a chance that I had when I attended Money20/20 Europe in Copenhagen in June. The agenda was extremely impressive and allowed me to sit back and consider, half-way through 2017, which trends and developments could have the most impact on our business and the wider B2B payments industry:
1. Partnerships are the cornerstone of every organisation. In every industry, very few companies can succeed, evolve and stay ahead of the direct competition without partnerships. The approach to researching and forming a strategic partnership is increasingly robust and open. Where a few years ago, the default for many businesses was to build, we are now seeing the most progressive form mutually-beneficial partnerships to elevate each company’s specialist areas to be the best they can be.
There are two great examples of these partnerships. The first is Visa’s new equity investment and planned strategic partnership with Klarna, a Swedish payments company that allows consumers to pay ‘on invoice’ within an agreed number of days, make planned payments or pay on the spot with a card. Some may say that Klarna is a competitor to Visa or that Visa should have developed this technology in-house, but Klarna have successfully demonstrated their expertise in this area making it difficult to replicate let alone be successful. The second example is the UK-based challenger bank Monzo. The Monzo team to date has built most of their platform from scratch, have chosen to partner with Jumio and leverage the Netverify solution to help it meet the FCA’s ‘Know Your Customer’ obligations.
2. AI and machine learning is the new celebrity in payments town. It’s a wide-ranging topic and the one on everyone’s lips in the payments industry. How are technology companies and customer-facing providers integrating machine learning into their processes? As always, companies like Google are at the forefront, in the sense that they can translate the incredible innovations made by some smaller tech companies, into practice for the mainstream, faster than most. At Money20/20, its Director of Product Management detailed how machine learning is already being applied to help new Android Pay users get set up. Furthermore, he hinted that machine learning will soon be used to recommend which new loyalty programmes each user might like to apply for.
3. Segmentation increasingly leads to personalisation. This isn’t a new trend but personalisation strategies and communications are something that are happily being implemented more and more. And AI is going to play a bigger part in enabling that shift. Our goal must be to help service providers understand each customer’s preferences - for example how they like to be contacted or use the service they’ve bought – and then to design lifecycle journeys based on that understanding, rather than grouping customers into stale classifications.
4. The regulatory agenda in Europe is changing. Two key pieces of regulation are the focus for every payments company now. The first is GDPR, which aims to better protect all EU citizens from any privacy and data breaches, since the last directive was created in 1995. The world has certainly moved on a lot from then and technology companies and service providers will need to step up their internal processes ahead of this new regulation.
Secondly, the Payment Services Directive 2 (commonly referred to as PSD2), is open banking regulation and will apply to post-Brexit UK as well as the EU. Its effects will be wide-reaching, with some commentators saying it will cause ‘the death of credit cards’. However, for an example in practical terms, companies like Amazon and Facebook could have direct access to your bank to take payments, with customer consent, without going through existing payment frameworks. No matter what, customer authentication will revolutionise, with techniques like biometrics coming more quickly to the fore as date of birth, linear passwords and postcode/zip codes won’t be fit for purpose. Something called Strong Customer Authentication (SCA) will be introduced as standard, to include two or more elements classed as knowledge (something only the user can know), possession (something only the user owns) and inherence (something the user is).
I came away from Money20/20 even more excited about the industry and TALKINGTECH’s direction, from the existing partnerships we have formed and the future agreements we are working on, to the exciting technologies that our innovation team are developing in AI and biometrics, as just two examples. But, we must always keep our eye on the main prize, and the one that has kept us in business for over thirty years – better engaging end customers in personalised payments and collections.