Review of the 2019 Nextgen Payments Forum

NPF 2019 — the Nextgen Payments Forum — brought together national banks, payment companies, Fintech startups, and consulting firms for a jam-packed 2-day event. Held in beautiful Limassol, Cyprus, at the recently renovated Parklane Resort and Spa, NPF was simply excellent and a lot more than I expected. Robert Courtneidge MC’d the event, taking questions from the audience, making the event a highly interactive one.

A 20-year career spent in Financial Services, and what we now call Fintech, has exposed to me a lot of knowledge about traditional Finance, so I didn’t expect to learn anything too ground-breaking. I was wrong. Knowing how much has changed and how much will continue to evolve, I was all too happy to learn more than a few things.

So here, I give you some of the top takeaways from NPF 2019:

Technology is Driving Open Banking Worldwide

The term “open banking” refers to the use of third-party software applications, most notably APIs (Application Programming Interfaces) that allow different computer software programs to work together securely and intelligently.

Open banking lets account holders (average joe’s like you and me) choose how much of our personal data we share and with whom we share it.

Take P2P (Peer-to-Peer payments), for example. I can use PayBox to send/receive money on my smartphone, which securely links my credit card info. to the app. When the parents in my daughter’s 4th grade class want to buy a gift for the teacher, I can simply send $10 via PayBox and the money that’s pooled together from all the parents via PayBox will be used to buy the gift. No more sending cash to school in an envelope.

A Whole Lotta Money is Moving Around

Mastercard’s Jason Lane, Executive VP of Market Development Europe, shared his insights on international payments. $153T — yup, that’s TRILLION — US Dollars is exchanged in cross-border payments. A whopping 31% of this amount is not from banks. The exchange of financial data is happening at a rapid pace globally and the opportunity for innovation is wide open.

The European Central Bank’s Maria Teresa Arráez González, Directorate General of Market Infrastructure and Payments, showcased the TIPS instant payment process.

Less than 10 seconds processing time with settlement in 5 seconds — a truly instant process from originator to beneficiary.

Customer Experience is #1

It really is all about the customer. After all, we can create some incredible technologies that have the capacity to change the world, but if customers don’t like them, they won’t use them, and then what?

European Banking Federation’s Head of Digital and Retail, Noemie Papp, explained that customers need to be heard by their banks while banks understand the importance of customer relationships. Their main priority is to keep customer data secure, while innovating in a safe, digital environment.

Ajwad Hashim, Barclays Innovation and Emerging Technology VP, showcased Barclays’ new Relationship Manager tool. This in-app feature allows new customers to choose their bank rep. by swiping on their phones, almost like a dating app. Have a question about a mortgage payment or other account need? Get on your smartphone and video chat with your Barclays Relationship Manager.

And this bring us to…

Sharing is Caring

It’s the age of social sharing. It used to be that when you wanted to buy a new shirt, you’d go to the store, try something on, then decide whether to buy it. Today, shoppers use fashion apps to snap a photo the new shirt and use AR-based beauty apps to virtually “try on” makeup, then share it with friends and family to ask, “Do I look good in this?”. Their responses are THE deciding factor in purchasing behavior.

The same concept is changing Fintech. Consumers are sharing what they buy, how they buy it, where they bought it, and inviting the people in their network to follow suit. (*see WeChat below for more on this)

WeChat is the New Market

Living in China? WeChat hasn’t taken over the market, it IS the market. Amin Lalani, CIO of Finance Vertical Solutions at Huawei Technologies, gave the audience unique insights into the unique capabilities of WeChat and the overall Chinese Fintech industry.

WeChat began in 2011 as a messaging app, similar to WhatsApp, but has grown into a multi-platform product. People can use it not only to communicate, but to send/receive money to other users, play games, order a taxi, buy food, and pay for virtually anything. Users can order dog grooming services, order dinner at a restaurant and invite friends to join, pay for both purchases, share the experience on social media, all without ever leaving the app.

In addition to all this, WeChat has become a new method of ID verification.

Potential employers and banks can use it to authenticate a user’s identity. Banks have been able to reduce fraud by 25% by using WeChat to confirm that a potential account holder is who they say they are. Not bad for what started as a fun way to talk to friends.

More on Chinese Fintech

Despite the rise in digital payments, cash is still a primary payment method in China. 65% of Chinese consumers use mobile payments, but for a country with almost 1.4 billion people, that leaves around 490 million people using non-digital payments.

According to Mr. Lalani, 90% of Chinese consumers use cash when they travel abroad, and 91% of these would spend more money if other payment options (like WeChat and Alipay) were available overseas. This isn’t currently the case.

People want microloans (small sums of borrowed money) and they no longer get them from their bank. Whereas banks are often too costly — around $40 — Fintechs charge less than $1.

Competition over!

Mr. Lalani explained that while in the US, consumers go online to compare pricing before buying, in China, product placement in livestreaming is driving retail purchasing. For example, Chinese consumers watch a livestream of a concert on a smartphone and buy products used in the concert (ie. t-shirts, food and beverages, new music, etc.).

Humans vs. Machines

There’s a lot of worrisome data out there about how automation is taking over human jobs and negatively impacting the workforce. A panel discussion on “The Future of Fintech and Regtech”, moderated by Peter Oakes, Founder of Fintech Ireland, touched upon this topic.

Most of the panelists seemed to agree that we shouldn’t worry too much about AI replacing jobs. Rather, this presents an opportunity to transform human talent to do other things. Or as one speaker said, AI does the grunt work, freeing people up to take on other responsibilities.

According to a new report from McKinsey, by 2030, 47% of jobs will become automated. At the same time, this will create new jobs and new opportunities for the human workforce. Just a few decades ago, when ATMs began distributing cash, people worried that bank tellers would lose their jobs and become irrelevant. Instead, bank workers learned new tasks and created new positions.

Something else to keep in mind: machines don’t create themselves, a human does.

Clea Evagorou, Deloitte’s Risk Advisory Director, spoke about tech trends in the payments industry.

Voice activation is changing the way we interact with technology. You can order a pizza with Alexa, completely negating the use of credit cards or online orders. Cognitive, AR, VR, AI, and ML tech — we are only at the beginning of what technology can do.

Vivek Bajaj, Global VP of Watson Financial Services at IBM, had a different take on AI. He spoke about “Beyond the Hype of Blockchain”, giving the audience real use cases.

He explained that 98% of bank fraud alerts are actually false positives, with only a tiny 2% accuracy. How can this change? According to Mr. Bajaj, the real benefit of AI and blockchain technology isn’t in robots, but in regulatory compliance. It can authenticate data in ways that cannot be altered or impersonated, resulting in far higher rates of accuracy and more financial inclusion for unbanked or underrepresented people.

Banks vs. Startups

There’s an unfortunate reputation out there: banks hate startups and startups hate banks. This is far from the reality. As Julian Sawyer, COO of Starling Bank explained, it’s not really a case of competition or collaboration, but of recognizing each other’s benefits:

· Banks have close relationships with regulators, while startups don’t

· Startups move fast and banks don’t

· Startups can get to market without bureaucracy and red tape, but banks can’t

Banks want startups to innovate and partner with them, because in the end, customers win.

My Final Thoughts

My personal favorite thing about this year’s NPF? The female attendees.

Those who’ve been in the Financial industry for more than a year or 2 know that women in the industry are typically in the minority. I’ve personally walked into a Fintech networking event of 50 people and have been the only woman there. That’s right — 49 men, 1 woman. But things are changing. About 1/2 of the conference participants were women, both in the audience and up on stage. How empowering to see positive change.

The future looks bright, indeed.