I was invited by Euro Banking Association to participate in a panel at their yearly event on Tuesday June 10: EBAday in Helsinki, Finland. This inivitation was the outcome of a presentation I gave earlier for their working group on alternative payments. The line of that presentation was: for the creation of the right alternative or new payment systems, banks need to look bottom-up instead of top-down.
The consumer will decide which payment infrastructure is going to be used (in the near future). There could be a place for banks in this regard, as long as their products fulfill the needs of the consumers. In order to do that, and to make sure that the product stays useful, banks should add extra services such as online identification. Domination will be the product that is the easiest to implement and offers the most.
This will lead towards the one-click buy. The consumer does not care whether it is provided by a bank or by another provider, as long as it has the right balance between convenience and security.
In short, I was asked to explain to a few hundred bankers that banks are lacking innovation, partly due to the fact that their perspective is too much top-down instead of bottum up. In fact, they should be willing to innovate! After all, we are in need of innovation in the area of ‘consumer not present’ solutions for e-commerce transactions. More successful pan-European e-payment methods are crucial for growth of the e-commerce market. These alternative or new payment methods will be judged on the three universal principles for merchants: Reach, Conversion and Fair Costs. Lately, there was not that much to be judged…
At the opening of the event one speaker stated that bankers are caveman, due to the fact that they are lacking innovation. That was definitely the boldest remark, but the tone was set. Almost all speakers said that banks have to be more innovative. That is a good sign, but also a lot of words. Now it is time to set out to work and catch up with the market. Because, if banks do not catch up with market developments, they will be hauled over by developments outside the existing payments infrastructure.
In order to help the banks along in this regard, I repeated my conviction that the perspective has to be adjusted (from top-down to bottom-up). An example of a succesful adjusted perspective is PayPal. Their success lies in filling gaps. One argument is that innovation by the banks is often hindered by regulators as they do not always understand bankers.
However, regulators do know customers and can be helpfull by changing the perspective. Therefore, I would like to say to bankers: “Use the consumers’ point of view and find points for added services. First thing I am thinking of is online identification. Then find a partner for logistics, and a potential successful wallet is created. By then, the caveman becomes the trendsetter.
Blog by: Paul Alfing