Excerpt from TCS BaNCS Research Journal
Brett King is a bestselling author, The American Banker’s Innovator of the Year for 2012 and the founder of the direct mobile bank, Moven. A global thought leader in financial services and customer experience, King is a sought-after expert on innovation, technology disruption, customer experience and channel distribution strategy. We present here, excerpts from an interview where he shares his insights about the payments industry.
When asked what traditional banks, in particular the payments industry, should be doing to stay ahead of the curve, King said: In the banking space the most recent acquisition of Simple by BBVA is an example of the sort of approach to this problem that we’re more and more likely to observe over the next 3-5 years. As branch revenue retreats and the economics of branch banking starts to fail, banks in particular will have a real crisis of identity, and won’t be in a position to build from scratch, so acquisition and investment in new technology developments and start-ups is a real possibility, but only for the larger institutions. For payments companies, the challenge will be the inherent value of the payment network shrinking. As payments become faster, simpler and more efficient, the challenge will be payments simply won’t be differentiated in and of themselves. Staying ahead of this curve is not about innovation so much as a more compelling user experience wrapped around the payment. If the payment becomes invisible, the priority shifts to what happens before and after the payment rather than the payment itself.
On the issue of the alternative payments industry requiring more regulation, especially with respect to non-banking players, he said: Banks have to open up their platforms for collaboration. The problem with regulation now is that it is so complex that it tends to reinforce old structures, product silos and approaches which prevent innovation as a sector. Friction is the big killer in all of this, and partnering forces you to think about the user experience in a fundamentally new way – one that you may not have come to within the confines of a bank. The problem is that banks tend to think like banks, and not like start-ups. Start-ups, however, often completely underestimate the regulatory burden and risk and compliance requirements. Thus the two need to work together.
He also shared the following insight on new technologies becoming a part of the mainstream payments space in the coming years: When it comes to customer intimacy, then the ability to offer context to payments, or give advice in real-time, will be a real staple of the future of banking and payments. Banks need to think about their processing capability as a messaging architecture around the payment, not just a processing of payments.
For more such insights, read the detailed interview.