October 6, 2013. The date we all have been waiting for. As thousands of people converge from all over the world, we expect the atmosphere to be electric. We expect brainwaves to flow. We expect that being in the same physical space will catalyze many new business connections. We expect that the thousands of discussions will open many more minds. That’s why we feel confident saying, “It’s on!”
One of the goals of Money2020 is to be thoughtful, concise and insightful. That is why we have asked our moderators to create 3 short-answer questions that can be answered on a 1-5 scale (1-completely disagree, 5-completely agree). The group of questions below is the final list we have received from many moderators. We think you’ll agree that they will stir interesting debate. These questions will turn on the discussion!
The Evolution of Carrier Billing:
In 5 years, the majority of in-app purchases made on your mobile phone will be paid for using your carrier bill.
In 5 years, the majority of physical self-service pay stations for parking, vending and ticketing will accept payments from your carrier bill.
In 5 years, at least a dozen or more countries will allow purchases of physical goods to be charged to a carrier bill; for example pizza or flower delivery.
The Rise of Tokenization
The hardware focused solutions to mobile payment (i.e., NFC) will be replaced by token based software solutions (as payments become part of the OS).
In 3 years, more than 20% of cards held in digital repositories will be tokenized.
The value that tokens could deliver to the network are in control of issuers, and they are doing a poor job at constructing a value proposition.
Infrastructure Innovations in Fraud & Security
A lack of guidance from the FFIEC on mobile authentication has negatively affected the security of consumer accounts.
Cooperation and information sharing among banks, payment providers and merchants will remain grossly underutilized.
The integration of a fingerprint scanner in the iPhone is going to drive rapid growth in consumer facing biometrics for financial services.
Developing and Managing an AML Compliance Program
New FS companies can innovate more because they aren't considering the regulatory consequences.
Regulation lags innovation by at least 3 years
Regulators are becoming increasingly concerned about new payments systems, and more likely to scrutinize and deny these systems from startups.
P2P Payments: Is Now the Time?
In 2018, mobile-based P2P will be an everyday form of payment for a majority of U.S. consumers.
P2Ps greatest market share will come from replacing cash exchange.
By 2018, all P2P services will be real-time.
Emerging Identification and Authentication Methods
In 5 years, most of us will use digital form of identity instead of username/password/PIN combinations.
New forms of identity verification and transaction authentication will reduce payment fraud by 50% within 5 years.
In 5 years, biometrics will play a role in all forms of digital identity.
Current State of NFC in the US: Is the Industry on Hold?
EMV migration will be the key catalyst for NFC adoption in the U.S.
NFC will ultimately prevail as the dominant technology standard for mobile payment technology in the U.S.
Mobile payments at the POS (using NFC or other technologies) will achieve mainstream adoption in the US in the next 5 years.
O2O: Driving Retail Commerce with Connected Value Propositions
Mobile payments are the major driver connecting online and offline shopping.
With more than half of consumers still using newspaper circulars to plan and shop, there is still no proven digital equivalent for effectively driving in-store traffic.
By the year 2020, the line between online and offline commerce will have disappeared and mobile payments methods will have matured to the point that a typical consumer can leave their traditional wallet at home.
Emerging Wealth Management Solutions
By 2020, the majority of “real” wealth management solutions will still involve significant “human” involvement.
The primary hurdle preventing more people from engaging with wealth management solutions today is complexity.
By 2020, the average person in the U.S. will be significantly more able to meet their long-term financial goals because of better technology and solutions.
Gift Cards: The Way to Pay Everyday
Gift cards are only for gifting.
Gift card sales in third party channels, including digital and B2B channels, are slower than sales from own-stores.
Digital gift cards/egifts will displace and cannibalize physical gift cards in the next 12 months.
The Latest eCommerce Value Chain Explored
In 5-10 years, virtual currencies will make online payment processing capabilities irrelevant.
In 5-10 years, ecommerce and retail will be indistinguishable from each other.
In 5-10 years, alternative payments and/or new payment networks will significantly challenge legacy networks in terms of market share.
New Gift Paradigms
Within 5 years, most consumers will have bought their last physical gift card.
By 2020, 50% of gifting will originate from social channels.
By 2020, paying with gift cards will be a third of credit card payments.
Enabling Global Solutions: International Processing Landscape
Large merchants will concentrate their global relationships with one processor that integrates multiple payment methods including alternative payments and multiple acquirers.
SME merchants will become increasingly interested in value added services including integrated ERP, loyalty and location based marketing as a complement to core payment functionality.
Data monetization will become an increasingly important and relevant part of the overall revenue mix of payment providers and processors.
Innovations in India
India is headed the way of China with the RiPay local scheme dominating bank card issuance and payment volumes.
India will lead the world in terms of mobile enabled payments through a combination of mobile penetration and the aadhar scheme which allows biometric authentication of all its citizens.
India will lead in terms of payment transaction growth globally but will lag in terms of revenue growth due to a highly competitive market and decreasing margins.
Preparing for Investors & Investments
With limited resources, a management team should expand the business as rapidly as possible and adopt a “we’ll-deal-with-that-later” approach for regulatory or other matters.
The complexity and uncertainty of the regulatory environment gives new market entrants a competitive advantage over established financial institutions.
A founder should carefully stage the company’s diligence information to be given to prospective investors.
Host Card Emulation
Security can be effectively addressed outside of the Secure Element.
Decoupling NFC from the Secure Element can bring NFC back into the mainstream debate around mobile commerce.
Host Card Emulation can lower the entry barriers for NFC payments and make it accessible to outsiders.
Mobile Ecosystem Views
Outside of the U.S. and at the 2018-2020 horizon, do you think that NFC will be the dominant technology for mobile proximity payments?
Outside of the U.S. and at the 2018-2020 horizon, do you think that telcos will play a critical or central role in the provision of mobile payments?
Outside of the U.S. and at the 2018-2020 horizon, do you think that mobile phones will be used more for remote payments than for proximity payments?
Secure Element TEE
Within the next 3 years, cloud based solutions will achieve dominant adoption in the marketplace, displacing hardware centric solutions, such as NFC, as the preferred payment method for mobile transactions.
Cloud based payment solutions can be enhanced with hardware centric solutions – the best solution is not one or the other alone.
The best customer experience and usability can best be achieved with hardware centric solutions.
Difficulties Banks and Non-Bank Partners
It is in the public interest that banks remain the main driver and conduit of the world's payment systems.
Despite the burdens of being highly regulated, banks are still able to adequately innovate.
Current banking law needs a complete overhaul to adequately deal with emerging technologies.
State of Fintech VC
Startups building consumer brands in Fintech are highly risky, and VCs are focusing more on B2B / B2B2C
Fintech valuations are becoming frothy and we should expect disappointing VC returns on average over the next 5 years
Crowdfunding platforms and services like SeedInvest / AngelList will become permanent fixtures in the VC arena
International Cloud & Mobile POS Innovations
Five years from today, over 50% of retail transactions in the developed world will be processed using mobile / cloud POS devices
Today, the majority of retailers adopting cloud POS solutions do so based on propositions other than payments
Providing data to merchants will become just as important as the actual m-POS process itself
Processing the Future: CEO Roundtable
Traditional payment processors need to open their issuing and acquiring platforms to remain relevant, enabling connectivity for alternative payments and access to data
5 years from today, Square will be worth more than Vantiv's current enterprise value of "X bn" (fill it in to just a round number the enterprise value, not market cap ... Ie add their debt, etc)
10 years from today, Mastercard and Visa will have similarly powerful, non-threatened duopolies / "monopolies" that they seem to maintain today
White Label Wallets
By 2020, more than 50% of consumers will no longer carry plastic payment cards.
At a time when digital wallets are commonplace, the majority of consumers will get them from their bank.
Regulators will be required to intercede in the mobile payments ecosystem to address risk and consumer issues before 2020.
Frictionless Commerce
The majority of consumers are willing to trade off privacy to enhance their retail shopping experience.
By 2020, 80% of payments will move into the background and disappear from everyday purchasing experiences
Frictionless commerce will cut check-out time at retail POS by 50% by the year 2020?
Consumer-Centric Innovations in Fraud and Identity Management
5 years from now the majority of consumers will use some form of digital identity instead of usernames and passwords.
If consumers are using a digital identity in 5 years, it come from their bank.
If it doesn't come from their bank, it will be a social media "identity."
Kafka Revisited: Money Transfer Licensing
It is reasonably possible for a payments start-up company to obtain licensing on a national basis before launching a new payment product.
If a non-bank payments company partners with either a national or state bank, with the bank agreeing to be ultimately responsible for all funds loaded or transferred through the non-bank payments company, then there is no reason to require licensing by the non-bank payments company.
Third party payment processors hired by businesses, that hold and transfer money as a subcontractor on behalf of such businesses, present definite safety and soundness risks to consumers and should be licensed.
Emerging Online & Mobile Consumer Bill Payment
Billers are evolving electronic bill presentment capabilities but still lack fully integrated “omni-channel” billing experiences.
Current online and mobile bill pay services are meeting the needs of digital consumers today.
Online and mobile bill payment will be a winner-take-all market with a single entity managing more than that 50% of the market by 2020.
Loyalty’s Leap to the Next Level
Within 5 years, brick-and-mortar retailers will have more personalized information about their customers than e-tailers currently do.
The upcoming 2015 chip and pin mandate will drive retailers to implent real-time loyalty at POS.
To gain a larger share of customers’ wallet, retailers across all categories will have to implement a tiered loyalty program.
Borrowing and Credit
Innovative entrepreneurs in the U.S. may be missing opportunities for growth and globalization due to the lack of early stage financing.
Convenient and rapid access to business financing will be the single most important component to U.S. job growth in the next 3 years.
In the next 3 years, traditional banks will once again return to small business lending in such a way as to satisfy the market demand and substantially impact non-depository lending.
Underserved Lending & Borrowing
In the next 10 years, competition for the small-dollar customer will increase, leading to lower prices, more diverse product structures, more innovative features and better customer service.
In the next 3 to 5 years, new technology solutions will expand underwriting options, allowing issuers to collect and analyze information about the borrower’s total monthly income and expenses to determine his or her ability to repay the loan while still meeting basic needs.
In the next 1 to 2 years, the regulatory uncertainty around underserved lending and borrowing will be over; there will be clear regulatory guidance about what is allowed and what isn’t. This will lead to new products and solutions.
Innovations in Online Payment Networks
Innovations in online payment networks won't have much of an impact on the financial lives of the 99 percent.
By 2020, the average person will trust payment networks more than paper money.
Within 5 years, 80% of the innovations that you and the industry are betting on will be wrong.
Changes in China
Mobile payment go main stream in China within the next 5 years,
The current China payment market structure (number of players, types of players, their market position) will fundamentally change.
A foreign payment player will achieve market significance in domestic or cross-border payment market within the next 5 years.
Location Based Marketing
Within 3 years, the majority of consumers will actively participate in location-based marketing.
Location/check-in capabilities will prove to be a major marketing channel, alongside social media, advertising and email.
Mobile promotions based on location and transactions will be more important for promotional spending than paper coupons, daily deals and gift cards.
International Transfers & FX: Consumer Solutions
Social media and mobile will be the most important channels for the remittance business in the future.
Customers worldwide will in the future use non-bank specialists for most of their international transfers, even for some broader financial services.
A large part of the market for cross border transfers and FX will move to Bitcoin or Bitcoin 2.0 at some point in the future
New Models for Consumer Credit
Convenient, safe and rapid access to short-term liquidity is one of the most important drivers to consumer’s sense of control over their environment and their ability to manage their financial lives.
The demand for non-depository consumer credit is increasing primarily because consumers generally don’t have savings of any sort when a financial emergency arises.
Non-depository consumer lenders have few prospects for growth or even survival given competition from banks, regulatory pressures or other factors.
m-Commerce and 1-click Buying
Security concerns will discourage one click shopping.
One click is often viewed by merchants as a relationship/revenue/data disruptor.
Merchants will adopt one click to increase conversion.
Loyalty, Marketing & Offers that Enhance the Shopping Experience
In 3 years, 'Big Data' will be used at nearly every retail touchpoint.
Within 3 years, payments data will enable offers that drive at least 20% of our purchases.
Loyalty is the most important value proposition of digital wallets.
Invoicing, Billing & Payments
In the next 3 years, an alternative to cards and ACH will emerge as the preferred electronic B2B payment method.
Interoperability between payment schemes, billing solutions and accounting/ERP systems is necessary if we're ever going to reduce reliance on checks for business payments.
To date, the payments industry has put a disproportionate emphasis on large buyers, neglecting suppliers and smaller business purchasers.
Sources & Uses of Social & Other Consumer & Small Business Data
Data from expressed consumer preferences and garnered from consumer engagement will drive more than 50% of retail sales within 5 years.
Within 3 years, companies will use social network data for financial decisions on a regular basis.
Social data will reduce fraud and improve customer satisfaction in payments and financial services by 50% in 3 years.
Retailer Mobile Commerce and Payments Strategies
The third-party mobile payments solution providers in the market today do a good job considering the perspective and needs of retailers.
My decision as a retailer to invest in mobile payments solutions is motivated primarily by lowering operational costs.
In 5 years, customers in a significant number of retail stores will be able to pay for their products in the store without physically swiping or tapping a card or phone on a POS terminal.
Bitcoin 101
By 2018, one BitCoin service provider will have the vast majority of market share, similar to Amazon for retail or Google for search.
Bitcoin will be regulated out of existence within 3 years.
By 2018, an alternate new math-based currency will be as popular, or more popular, than BitCoin.
Cloud Based POS Startups
By 2018, more than 50% of retail transactions will be processed using mobile/cloud POS devices
Majority of retailers will adopt cloud POS solutions due to propositions other than payments savings namely value-added services such as analytics and retail/inventory management
Cloud POS-based app stores will represent a significant source of revenue for your business within 3 years.
Between a Rock and a Hard Place – Mobile Payments & Digital Wallets: Dealing Regulatory and Media Scrutiny
Payments will be the key driver to adoption of the mobile (or digital) wallet.
Mobile wallets face a tough regulatory road with financial institution regulators.
Mobile industry participants should act now to establish the PR framework for mobile wallets—including building bridges with consumers, consumer advocates and regulators/legislators.
Mobile-Centric Banking Startups
The bank branch is dead.
“The greatest improvement in automation is not about technology, nor cool interfaces, but simply about anticipating the needs of customers?”
You need to demonstrate ROI before leaping into the mobile channel.
Fraud: A Very Real Threat
Criminals are targeting emerging payments in a different fashion than more traditional payments
First party fraud does differ in emerging payments vs traditional payments products
"Organized crime" has become much more organized and sophisticated in recent years. In response, it's important that industry also organize, collaborate, and share information across industry and with law enforcement.
The Lurking Menace: Cybercrime, Data Security and Privacy Rights
Mobile payments create greater risk of cybercrime and security breaches than the traditional credit/debit card payments infrastructure.
Current state and federal data security and privacy laws and regulations are hindering companies from maximizing the value of payments innovations.
As more technology companies enter the payments space and new products are launched, determining who is responsible for safeguards consumer data is no more difficult than in the legacy payments world.
The Future of ACH
The ACH payment system will remain a prominent clearing and settlement system into the foreseeable future (or could say over the next 10 years or another timeframe.)
The ACH payment system is positioned well to support emerging payment needs.
There is no electronic payment solution that is a perfect substitute for the paper check.
Alternative Payments & Loyalty Using Gift Card Rails
Gift cards will be used for alternative payments more than for gift cards within the next 5 years
Gift cards are an effective reward to drive the way consumers behave
Gift cards will be the primary driver of loyalty innovation over the next three years
International Transfers & FX: Enablers
In three years more than half of remittances will be originated electronically (internet, mobile) rather than through agents.
Compliance regulation is appropriate considering the risk involved in remittances.
The price for consumers to send remittances will continue to fall.
The Latest in Latam
Non-branch will continue to be the prevalent channel for selling financial services to low income consumers in 3-5 years
Digital will grow as a main payments method for consumers in Latam in the next 5 years
New players (attackers) with innovative technologies will take significant payments market share from incumbents
The Devil You Know: What are YOUR Third Party Service Providers Doing that Can Get YOU into Trouble
Financial Institutions are experiencing increased regulatory focus and scrutiny of third party relationships
Financial Institutions will be held accountable for actions of their third party service providers
The cost of compliance and oversight of third party service providers is increasing dramatically
The Impact of Global Criminal Organizations
Within 3 years, new payments systems will be a critical component of organized crime operations.
Current laws and regulations are effective in managing threats posed by new payment systems.
Anonymous payment systems will be the highest priority for my organization in 5 years.
Order Ahead & Pay in Advance
Order-ahead apps will be at the core of most restaurant loyalty programs within 3 years.
Within 3-years, more than 30% of your revenues will come from partnering companies rather than the restaurants.
Within 2-years, a new restaurant category leader will emerge driven by order-ahead technology.
Bank Views
Mobile payment pose a significant threat of disintermediation for banks
Banks must pursue less conventional MA&A to acquire and scale key digital capabilities
Customers prefer different channels for different tasks (e.g., account opening, service, problem resolution)
Mobile: Emerging Markets Success Stories
By 2020 in emerging markets there will be more accounts with non-traditional financial service providers (telcos, payment companies, etc.) than with banks.
By 2020 the power of e-payment companies or similar platforms to sway customers towards specific financial service providers will be overwhelming (alternatively, ask: By 2020 traditional banks will have embraced innovation to a point where we do not expect any market shift towards new service providers).
By 2020, given the efficiency of the operations of new payment companies, the deposit taking landscape will be highly concentrated among few players.
Math Based & Virtual Currencies: Legal and Regulatory Frontiers
Virtual currencies will not only survive but prosper in the US despite the onslaught of regulation and the seeming inability of regulators to act (e.g. state licensing)?
Virtual currencies that will thrive are those backed by recognizable reserves like gold, silver or platinum or a basket of commodities; currencies whose price is set solely by consumer demand will flourish with irrational exuberance.
Anonymity is not essential to acceptance of virtual currencies; privacy is critical.
Merchant Funded Rewards & Card Linked Offers
Within 5 years, consumers will use and value card-linked offers more than they do card-based miles and loyalty programs today.
Within 5 years, retailers/advertisers will utilize card-linked offers as a primary driver of sales and loyalty.
Within 5 years, card-linked offers will evolve to be mobile wallet-linked offers that are dynamically generated, contextually relevant and highly personalized.
Tomorrow’s Bank
The central role of banks in the next ten years will shift to that of a data broker for their customers in terms of consumer authentication, payments processing, and consumer data.
The key challenge facing the banking industry in the next five years will be IT expenditure with respect to regulatory requirements and their impact on the customer data security model.
The revenue models of banks will shift as consumers will demand frictionless engagement.
A Great Future in Plastics
In 10 years’ time, how likely do you think it is that we will be dealing with form factors that are not currently on our radar (ie not plastic, phones or tablets)
Do you believe that consumers will expect to be able to use every new form factor for payment?
On a scale from 1 to 5, how confident are you that plastic will still be used for payment and loyalty in 10 year’s time?