Technology is catching up with the human imagination, but there remains a long way to go
That is one of the striking features that emerges from a long-term examination of the payments industry, whether at a local, regional, national or international level.
In financial services as in most other areas of endeavour, products that we could literally only dream of a generation ago are now almost commonplace. We don’t quite have warp drive and starships, but we have powerful communicators and medical scanners that might make Captain Kirk and Doctor McCoy cast an envious glance in our direction.
The payments landscape today is unrecognisable. To anyone suddenly appearing from the early 1970s, 2020 would be like entering Utopia. The process of going to a bank branch, laboriously filling in a transfer slip and then queuing up to hand over cash has been replaced by the pressing of a button in the comfort of one’s own home at any time of the day or night, including Saturdays, Sundays and public holidays.
Service essentials remain the same
Whatever the era, whatever the underlying technology, the essentials of service provision remain the same, and those are based firmly on meeting the expectations of our customers, which in turn are centred on the following: one, ease of use; two, speed of payment; three, availability of service; four, security.
Turning to the first, we want to make things easier from a customer’s point of view. We want payments to be user-friendly, even effortless, and transparent. For the second, we all want payments to be made faster, ideally to take place in real time. For the third, our customers want payment services to be available on a 24-hour a day, seven days a week basis. Wherever. Whenever. However, via any channel. They no longer accept that we might close at weekends and on May 1!
For the fourth, we want to make payments more secure, in terms of cyber security, in terms of completion of payment to the specified beneficiary, in terms of anti-money-laundering and in terms of anti-terrorism requirements. We must also remember that plain, old-fashioned fraud will never go away; tackling it remains a key priority.
Reachability is another key factor in the payments equation. Possessing the best of all Platonic services in the best of all possible Platonic worlds would be worthless without a secure network of providers through which to deliver them.
The ongoing growth in the numbers of third-party providers is to be warmly welcomed, especially when they are paying to use and help us maintain the railway tracks we have built as a foundation for the future rather than seek to replicate essential infrastructure. Our experience to date suggests that users recognise the benefits that accrue to them justify the modest fee.
Instant payments
Bearing these considerations in mind, any discussion of the prime innovations to have emerged in recent years must include instant payments. While not in themselves new, in the past two to three years we have witnessed the blooming of a number of initiatives. There are now around 50 already active and another 20 or so in development. All will help reduce the reliance on the use of cash and cheques, and many of the associated inefficiencies and costs.
The emergence of mass instant payments, enabling companies to pay hundreds or thousands of employees, providers or clients at virtually the same time, represents another element in the broader context. Person-to-person instant payments, well established in the UK over the past several years, are now gaining a foothold in other countries. And this new wave is not going to stop: already visible on the horizon is the introduction of ‘request to pay’ messages that will further our ambition and determination to make our payments even easier and more transparent!
It might have taken the industry some time to make systems function quickly and smoothly, but the technology has already improved to such an extent that making a payment can take about three seconds. We have raised the bar to such a degree that even existential purists have stopped arguing about whether three seconds can be classed as instant.
We must never lose sight, however, of the possibility that instant payment can also deliver instant fraud, and must be constantly alert. As I have observed on more than one occasion in the past, the best of machine learning has an important role to play in combatting fraud, combined with real intelligence built on knowledge, experience and sheer gut instinct, all acquired from spending time at the payments coalface.
In conclusion
The combination of technology, security, knowledge, experience and reach helps to enable and foster continuing innovation.
The process never stops, though. We will continue to build, both in terms of infrastructure, and in terms of the uses to which the infrastructure will be put for the common good. Not only have we laid down the tracks, we have also already launched a number of services, including our equivalent of high speed trains, and have turned our attention to maximising the benefit of that investment of time, money and thought.
We financial technology industry specialists need to don our high-visibility jackets and carry on building. Today’s high-speed train is tomorrow’s even faster hyperloop…