24 April 2014


Alexander Peschkoff - TEDIPAY

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Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.

Rising tide trends in 2014

16 December 2013  |  1967 views  |  0

Last year, my magic crystal balls helped me get 6 out of 7 predictions right. Let's see if I can do even better this year.

As a quick summary, my predictions for 2014 are based on proliferation of alternative form factors (wearables and uber-wallets) that combine several interfaces (BLE, NFC and GSM) to disrupt major use cases (mobile payments in physical retail, e-commerce payments, mass transit, user authentication).

Key players will be Apple (kickstarting several major trends, based on secure user authentication) and start-ups, in partnership with the card networks, issuers and TSMs. Key losers will be mobile operators and mPOS companies. My question marks are PayPal (strategy), MCX (user experience) and Google (ability to respond to Apple). There we go.

1. Wearables will proliferate
Wearables will displace smartphones as the preferred form factor for mobile payments and transit. There are several reasons for that: convenience, security, user experience, flexibility, battery life, cost, ubiquity, interoperability. These days, smartphones are used less than 5% of the time for making calls - they are, essentially, pocket PCs. From that perspective, there are many tasks where wearables make more sense than smartphones.

2. Digital currencies will enter mainstream
Canada is testing one already. Apple and JP Morgan applied for some patents that cover digital currencies. If they follow my advice, PayPal may be entering that field too. Bitcoin bubble will be blown even bigger by the Silicon Valley gang. For any digital currency to take off, we need secure storage. Enter embedded secure elements. And uber-wallets...

3. BLE + NFC will gain further momentum
They are here. Now. Things will only get better. That is a killer combo, for numerous use cases. Apple will finally bring out NFC-enabled devices in 2014... Which leads us to the next point.

4. Apple will enter the payments game
Big way. Apple will disrupt the payment industry in the same way they did with music and mobile ones. They will not conquer it (especially outside the USA), but will show the way. Card networks will play along, so will some merchants. When Apple devices become payment terminals, VeriFone's stock could plummet. And not just VeriFone's...

5. Current mPOS players will lose market share
Dongles will start dying, displaced by Apple and disruptive newcomers...

6. "Card present" e-commerce will become a hot buzzword
As will "PIN verified" online payments. In many cases, PIN will be replaced by biometrics. (Where will the payment fraud migrate to next?..)

How does one implement "card present" e-commerce? Using wearables and uber-wallets, of course...

7. Uber-wallets enter mainstream
Uber-wallets - a subset of the wearables category - acts as a familiar bridge between digital and physical worlds. We all know how to use wallets and cards; yet, many of us will initially struggle with, say, smartwatches. It's easier to make cards and wallets interoperable. They offer consistent user experience. Also, wallets are less personal - consumers are likely to have stronger design preferences when it comes to such form factors as smartwatches. Last but not least: affordable cost of uber-wallets will lead to a wider adoption.

As for the last point above, were Apple to introduce an "iWallet" electronic device (think of iPod Nano) to hold all your cards and dedicated to mobile payments, tickets, access control, two-factor authentication, "card present" e-commerce etc, we would have marvelled at their genius decision and praise their grand visionary thinking. Can you see the same big picture without Apple's help?..


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