Tuesday, November 21, 2017
Having attended the conference the past few years, I wondered in advance what new big thing would be the topic de jour. After attending several conference sessions and making my way through the exhibit hall, it became clear there was no one big thing that jumped out at me as this year's show-stealer. Nevertheless, the event more than fulfilled its mission.
Here are some conference takeaways that have implications for the payments industry today and into the future.
Many fintechs are innovating with artificial intelligence (AI) to solve some of the most difficult problems in payments. Using AI to predict fraud in real time while transactions are in-flight means technology must match the rapid pace and constantly changing tactics of fraudsters in a high-stakes game involving billions of dollars.
And when paired with predictive content, AI has the potential to enrich the consumer shopping experience, providing purchasing options and information relevant to buying history to increase sales and enhance loyalty.
AI is also playing a role in underwriting and risk management, evaluating applicant and customer information at the time of account opening and on an ongoing basis afterward to alert investigators and decision-makers of potentially volatile situations.
Massive database searches can be easily conducted with AI technology, but it also has the ability to learn continually and improve over time to drive efficiency, improve decision-making, strengthen compliance and potentially generate more revenue. However, AI technology is fairly immature with a number of startups lining the field, so which firms will come out on top remains to be seen.
Again this year, a plethora of exhibit hall vendors touted finger, hand, face, retina, iris and voice recognition, plus device, location, and purchase frequency authentication technologies. Ideally, authentication challenges should be based on transaction risk and what is known about consumer digital identity, so all the technologies noted above can certainly play a role in validation.
But there was a lot more focus on creating a smooth consumer authentication experience, regardless of channel used to access accounts. I kept hearing the phrase, "omnichannel authentication management" and got the sense that most vendors are striving to remove friction from the authentication process without sacrificing security. They aim is to create a better, streamlined and consistent authentication experience no matter which channel consumers use for transacting.
Peer-to-peer (P2P) payments, sometimes referred to as person-to-person payments, enable consumers to instantly transfer money from one person's bank account, credit card or virtual stored-value account to another individual's account via Internet or mobile phone.
Millennials quickly embraced PayPal Venmo and Square Cash P2P payments as an easy way to split dinner tabs and rent, plus receive money from friends and family.
Now, a coalition of more than 30 financial institutions is rolling out Early Warning's Zelle which has the potential to touch more than 86 million mobile banking customers in the United States. These bank customers will be able to securely pay the babysitter, gardener, handyman and more with real-time speed and efficiency. Add in a couple new partnerships, and virtually anyone with a U.S. Visa or Mastercard debit card can use Zelle via standalone app.
Not to be outdone is Apple with Apple Pay Cash. Announced in June, but just recently available with iOS 11.2, iMessage users can now send and receive money from fellow users from iPhone and iPad devices.
Real-time P2P payments are going mainstream in the hopes that the 1 billion-plus cash and check payments U.S. banks manually process each year will rapidly decline.
The way we shop and pay for goods and services is undergoing fundamental transformation. On-demand purchase and delivery of just about anything and everything, anytime of day or night is now a reality. Ride sharing, order-ahead meals from mobile devices, digital-only ticket sales, and sending and receiving money from friends and family are all being made simple and efficient through fintech innovation.
And so processing transactions is no longer the main offer. In fact, payment processing is the bare minimum component of much larger solutions that help businesses grow, improve operations and reduce costs.
More payments industry players are working together than ever before to spur innovation. So it was no surprise to see Money20/20's innovation session panelists agree that the next great innovations won't be developed and delivered by one company, but rather through the power of partnership.
From fledgling fintech startups and software providers to the likes of Apple, Google and Amazon, the future of commerce is increasingly being driven by those outside of the traditional payments ecosystem. However, traditional industry players like card brands, processors, gateways and more will continue to play a vital role in making innovation work behind the scenes in the complex world of payments.
Weeks after the conference came to a close, I can truly say that I remain impressed with the vast reach and fast-pace of fintech innovation, which is irrevocably transforming and reshaping the business of payments and the future of money.
Editor's Note: Peggy Bekavac Olson is founder and principal of Strategic Marketing, a full-service marketing and communications firm specializing in fractional chief marketing officer and marketing department services for financial services and electronic payments industry companies. She can be reached at 480.706.0816 or peggyolson@smktg.com. Information about Strategic Marketing can be found at smktg.com.
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