24 November 2017
Lu Zurawski

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Lu Zurawski - ACI Worldwide

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I predict that payment predictions will be wrong

19 December 2014  |  3071 views  |  0

Having read many over-ambitious “Next year will be the year of X” statements, I avoid prediction precision myself.  The game of replacing “X” with this year’s, nearly-there technology, and caveating the prediction formula with a few extra parameters is fun, but not risk free.  

As the Danish quantum physicist Nils Bohr said, “Prediction is very difficult – particularly if it’s about the future”. No amount of caveats will save the sage if this year’s X turns out to be next year’s Mondex, Beenz, or a mobile operator’s payment scheme.  

So rather than predicting a jump in mobile payments volume, I predict that mobile next year will continue to be an interesting subject on which to make predictions.  In fact I predict the subject of the dominant payments prediction in December 2015 will be mobile.

There is no point being too analytical though, because I predict that all quantitative predictions about payments will continue to have 0% accuracy.

I hope you will forgive me this abstract approach. It is partly a coping mechanism to make sitting on the wobbly fence of prediction more comfortable.  But it is also a protest statement of how payment predictions seem to diverge from year-to-year reality.

I have a two part theory for why payment predictions are generally useless. Firstly, X is invariably selected through a Darwinian process, fuelled by an investor infested ecosystem that does not always keep in step (deliberately) with the real world. Secondly, qualitative plans invariably involve economists, and classical models of predictive demand.  These assume that new consumers will behave rationally, accepting the clear economic benefits of X. But in reality consumers are often confused, irrational and operate according to biases and heuristics. This means they continue with default, inefficient behaviours and the take-up of X is much slower than predicted.

So my prediction for 2015 is a 100% improvement in prediction accuracy, driven by the emergence of two new types of executive roles within the world's leading payment organisations:

1. Chief Behavioural Economist – exploiting a deep understanding of User Experience, how people relate to banking services, recognising that we live in an era when it is OK to disregard instruction books.  This is not just about designing web interfaces with pretty pictures.  It’s about launching personalised products that improve the lives of individual customer segments.

2. Chief of Plumbing – any organisation that has a successful CBE will fail unless they recognise the importance of a well maintained pipework and plumbing system to support the growing array of product options and access mechanisms requested by consumers.

There is already an interesting debate brewed up by Forrester, Gartner and IDC, regarding the rise of the Chief Digital Officer – often an external hire brought in - to work alongside a CIO.

My prediction is that successful CIOs in 2015 will not only need to learn how to manage digital products. They will now also need to master behavioural economics and plumbing too. Good luck to them.

 

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job title Practice Lead, Consumer Payments, EMEA
location London
member since 2014
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ACI. Bipolar payments expert: Curious/optimist & Realist/skeptic. Still playing with Mondex wallet.

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