Page 21 - GS170102

Views

The payments ecosystem could be compared with natural
habitats like coral reefs and wetlands. Properly managed
and conserved, these flexible, adaptable microcosms
sustain an abundant value chain. When disruptions
threaten indigenous wildlife, next-generation species with
enhanced capabilities survive and thrive in the altered
landscape.

It's generally easier for new life forms to navigate fresh
and pristine environments than to muddle through
Payments' accidental dense undergrowth and complex terrain that typifies
older, established ecosystems. Analysts have observed
that fintechs in developing countries outperform those in
ecosystem mature markets. Even in mature markets, most merchant
service providers agree it's easier to sell a new end-to-end
By Dale S. Laszig solution than to try to mix and match devices, networks
and service providers.
DSL Direct LLC Vast, emerging markets

hen Isaac Newton was hit on the head by an Many of today's payments innovators are creating
apple or Benjamin Franklin was shocked by solutions that ride existing credit and debit card rails; some
a wet kite, either could have shrugged it off are building an entirely new set of rails. Analysts have
W and moved on. Instead, the young engineers described fintech companies as new payments industry
used these events to test their theories on the laws of grav- rails, but the majority are overlays on existing payment
ity and electricity and find practical uses for them. networks and infrastructure.

Some of history's best inventions, from chocolate chip The next-generation of flexible, open-source, self-service
cookies to penicillin, have happened by accident. Instead models contrasts sharply with traditional payment
of just fixing something unintended and moving on, methods. Mobile banking, restaurant tablet POS solutions
someone took the time to think about cause and effect and and buy buttons on social media are several examples.
experiment with a medication, cookie dough or payment
processing system. As industries enter the digital age, analysts question the
sustainability of the traditional financial infrastructure. A
As payments evolved from phoned-in authorizations to Capgemini study, Top 10 Trends in Payments in 2016, found
modem-driven electronic transactions, each subsequent developing economies "leapfrogging developed nations"
discovery brought new efficiencies and revenue streams in payments innovation. The authors contended that
to the industry. Over time, a range of ancillary apps, from emerging regions, such as India, Africa and Bangladesh,
gift and loyalty to healthcare solutions, rode the credit and have higher mobile penetration because they are
debit card network rails. unhampered by financial infrastructures and traditional

New and old ecosystems payments instruments.
The payments industry and financial institutions have Developing economies cultivate innovation, Capgemini
consistently tried to create environments that nurture researchers noted. They found broad government
innovation. Some initiatives have succeeded more than support for financial inclusion initiatives through
others. Not everyone warmed to the open floor plans at relaxed regulatory standards and fast-tracked licensing
payment card brands and super ISOs that were meant to procedures. These measures help fintechs get to market
inspire group interaction. quickly and provide essential products and services to
underbanked populations.
However, many budding financial technology (fintech)
companies got their start in community and government- Africa's M-Pesa mobile payment system has 19.3 million
sponsored incubators, where mentors and resources help registered users; Bangladesh's bKash provides financial
nascent companies achieve self-sufficiency. Contests at services to underbanked citizens, and 11 fintechs licensed
regional and national tradeshows place startup companies by the Reserve Bank of India provide a range of services
in the public spotlight as they pitch their concepts to to migrant workers, low-income households and "other
prospective investors. unorganized sector entities," Capgemini reported.

21