PAYMENTS 2020: ARE APPLE, GOOGLE & OTHER TECH PLAYERS THE NEW RETAIL BANKERS ?

AnandAuthor


Anand Ramakrishnan

President and Chief Executive Officer at Opus Consulting Solutionslinkedin

No one can know, with certainty, what the future will bring, however it should not stop those of us who are passionate about our businesses from having a vision of what the future may hold for our industries, which for me and Opus Consulting Solutions is payments.

Mine is not the first “2020 Vision” for payments, and it most likely will not be the last. The intent here is to focus on the technology applications that support payments processing and how — by focusing on these applications — we can chart a course for 2020 that helps us better serve our customers and constituents, as well as manage our businesses.

Here is how I think 2020 would look like

• Retail banking services including customer relationship management would be provided by technology companies like Apple and Google and mobile-only banking will be the order of the day
• 75% of retail payments will be real-time and the remaining 25% will be using the more traditional methods like check, ACH or credit/debit cards.
• US payments industry will not embrace EMV as tightly as has the rest of world, instead focusing on the adoption of Near Field Communications (NFC) technology to support mobile payments.
• Biometric authentication and tokenization will make security in NFC transactions far superior to any other method
• Retail banks will remain relevant in the commercial and corporate markets for traditional payment services.

Are Apple, Google and other tech players the New Retail Bankers?

In a world of instant gratification and m-commerce being the most popular channel, technology companies will thrive on the consumers’ adoption of mobile devices and the mobile apps written for them. The point is that these technology firms don’t have to be in the “banking business” to provide superior payment and money-transfer services, credit-debit accounts, digital wallets, and other consumer conveniences that today are the bread and butter of traditional retail banks. The younger generations of mobile customers and retail consumers will increasingly opt for the speed and convenience of Real Time Payments — via their technology provider of choice.

Real Time Payments is the norm

The Baby Boomer generation is no longer the largest demographic in the U.S. population. According to the latest U.S. Census data, there are now more people in their 20s than in any other 10-year age group. We know that the comfort level with new technologies is much greater among the younger generations; and these include NFC-enabled, mobile-payment apps. Based on this behavioral change of consumers and sophistication of the available technology, Real Time Payments will become the norm.

NFC wins over EMV

In spite of the focus on EMV deadlines and the amount of money being spent by the US payments ecosystem including retailers, acquirers, issuers and processors, I think NFC will come out the winner in this battle of technologies. No question that there have been, and will continue to be, issues with early-adopter implementations and use of NFC technology. However, with the addition of biometric authentication and tokenization capability, NFC will offer a level of security that will be unmatched.

Banks will continue to be big players

Banks focused on the commercial and corporate markets will continue to provide the traditional payment services their customers will still want and need in 2020. The Clearing House, NACHA and the Federal Reserve now all agree, conceptually, that the priority is same-day settlement. Real Time Payments will follow, but — given the Federal Reserve’s current plan — not within the timeframe of this 2020 Vision. The U.S. Real Time Payments network eventuality will build on what already is becoming a total transformation of the US payments industry.

An Open Invitation . . .

I invite my professional peers from across the spectrum of payment services and technology providers to join this conversation. Specifically I would like to invite David True from NYPAY, Amit Goel from Lets Talk Payments and Deb Baxley from Capgemini to share their views on this topic and I would request each one of them to invite three of their industry colleagues so that way we can keep the chain going.

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