Since I think of myself as more of an informed opinionated person than a thought leader, I thought instead of giving you a few items to mull over in this ‘back to work’ special, I’d give you a full dose of opinion over a tasting course of trends. This year, our topics don’t actually come from me, or my Rantings partner Dan, or ACI at all actually. We’ll be offering up thoughts on the trends emanating from the SIBOS 2018 conference, and shared to the gazillions of verified and unverified accounts on Twitter by my close friend and wonderful colleague, Lu Zurawski.
So without further delay, a 19 course tour de force trend readout for 2019:
- APIs – In an industry (and from a company) that loves three-letter acronyms (TLAs), no three letters are seen as more strategic than A-P-I. Every RFI and RFP asks about them, every board room is discussing them and every player wants to talk about them. From a trend perspective, I think the conversation around APIs will actually focus more on another three letter acronym: POC. The ultimate enablement tool will lead to more POCs (proof of concept) and what I hope will be an acceleration of innovation.
- Real Time – We noted in our Money20/20 recap that real time was at the epicenter of the trend world. Everything we are seeing is being driven by a need to be real time. In the payments space, we talk a lot about the new real-time payment schemes coming online globally, but this trend is way more than just the payment moving from point A to point B in real time—it’s the data that comes along with the payment, or even when the payment is not moving in real time and having an ability to know in real time where the payment is or what is next on the payment value chain. In 2019, real time will continue to shape the discussion in payment circles, however I think the discussion will actually go beyond real time to predictive… boom we just went into light speed payments… anyone think we can get a payment to do the Kessel Run in under 12 parsecs?
- Payment Controls – As more and more functionality moves to the mobile device, the logical next step is more control over the experience, including controls over payment mechanisms themselves; whether it’s who, what, where or when (and maybe most importantly how much). Payment controls have morphed from an on/off debit card discussion into how can I control my total payment experience in a centralized way, no matter how or where I am transacting. This conversation goes into our hyperdrive discussion when you pair it with a few other trends we regularly discuss like Alternative Payment Methods and Machine to Machine payments, but more to come on that as we get going in 2019!
- Cyber – Funny to see this in the theme category so I’ll alter it to fit my talk track… let’s use cyber’s alter ego of Digital to talk about this trend. The march out of the analog payments ecosystem into the new payments ecosystem we have covered ad nauseam on these pages, but we don’t regularly talk about the fact that the new payments ecosystem is digitally native. Digital payments are near and dear to our hearts at ACI, and the full shift to the digitally-native ecosystem moves us to true real time across the board. Whether you want to say Cyber or Digital, the point is we have left the analog physical world of payments we all knew and loved, and dropped in as Player One in the New (Digital) Payments Ecosystem.
- Open Banking – I was surprised to see this all the way down at number 5 on the list; Amara’s Law is right! Open Banking is/was the dynamite charges laid at the foundations of the old banking ecosystem. The new value propositions and new entrants will reshape the banking landscape in the coming decade, and when we do this piece in 2029, every single one of us will say how much we underestimated the power of this single trend. But in 2019, I believe the first signs of the power of Open Banking will appear and business cases will start flowing in based on value propositions that weren’t available before Open Banking opened the door.
- Identity – In the Digital Payments ecosystem, there is a new imperative to be able to validate that you are who you say you are, without having to go to YOU in the analog world. As I touched on briefly in the Money20/20 debrief, the floor was covered with identity-related solutions. My aforementioned colleague Lu has a saying I borrow (read: steal) regularly, that the trends in our industry are dropping a letter each year; in 2016, the trend of the year was API; in 2017, the trend was AI; in 2018, it was I…. he may have been onto something!
- Data – Again, surprised at how far down the list it is, but I didn’t make the rules that I’m playing by today. I said this a few years ago and it still holds true—he who owns the data will own the New Payments ecosystem. Data is where all value of the payments ecosystem will come from; it’s the primary fuel that will drive all other value propositions, especially as the race to zero in payments continues. There are some crazy stats out there on the amount of data we are creating as a human society, and that trend will only continue as the Internet of Things and connected cities come online. As the pools of data become richer, the ability to create more meaningful insights becomes (in theory) more attainable, and thankfully ACI’s data scientists are way ahead of me on this one!
- Trust – How many different ways could you take this discussion! The choices are almost as endless as the potential of our first trend, but without trust, many of the already mentioned trends won’t amount to anything. Trust is the ultimate customer-centricity measure, and without it, you can’t have loyalty, and without loyalty, you don’t have customers – you just have folks who transacted with you. Trust: 2019’s Jack Handey Deep Thought!
- Blockchain – Oh how the mighty have fallen, the 2017 buzzword of the year recipient and the best it could muster on my 2019 list was number 9! Another Amara’s Law case study, Blockchain may have been the most overhyped technology since the Betamax (sorry not sorry). I will say this for distributed ledger technology and blockchain; if we were to create a new ecosystem from scratch today without any heritage infrastructure, I truly believe we’d build it on a chain of blocks. But that’s the problem – it’s the problem many of the use cases try to solve already being worked around using another technology. Is that perfect? Of course not, but again just calling it like I see it. Blockchain is on a much better trajectory than Betamax, and may still have its place in the digital payments ecosystem in proving what is truth or the above-mentioned identity question, but until the perfect use case pops up, this hammer will remain searching for its nail!
- Goodies – Interesting to see Goodies listed, but I will concede this is usually one of the things I am keeping an eye out for. Looking at the booths around any event hall, the eye usually wanders from the word clouds and images to what types of tchotchkes the companies are giving away. My personal favorites are the useful traveler items (e.g. multiplugs, battery packs, dongle chargers or collar stays). If I had to make a call on what the number one item we’ll see next year is, I’ll say socks, and we can set the odds at 30×1.
- Open – How open is too open? That’s the question I think we’ll hear more of in 2019. If you were to take the discussion around Open Banking or Open APIs, it has to move at some point to discussing the level of openness that an institution is looking for. Having flexibility to evolve is key, and how open you are externally doesn’t necessarily answer how open you want to be internally or if you’ll have permissioned access to something in between. So, you’ll be asking yourself this next year; how open is open for me?
- Fintech – Fintech or Techfin, no matter which way you come at this trend, the discussion needs to be how you work with – and not against – the tide. Having strategies in place to work both with newly introduced ideas from your (potential) incubator program, or how to get your financial institution connected to or included in a tech giant’s mobile wallet, is imperative to success. Partnerships was my theme for 2018, and I don’t see that changing in 2019. If anything, I think that discussion grows in importance. The question we’ll see more of in 2019 is “do I want to be the platform, or join multiple platforms?”
- Disruption – In 2012, ACI talked about the disruption opportunity, knowing as we did at the time that the foundations of our ecosystem were beginning to change. That disruption is finally hitting tipping points, with new Immediate Payment initiatives coming online every day; the overlaying services that are based on the older batch-based processes are nearing their expiry and will need to adapt to survive. Who will join the FinTech graveyard in 2019… only time will tell?
- Standards – Whether we’re talking ISO 20022 or Berlin Group, the standards discussion has gone into overdrive in the last few years. Standards will remain a key theme over the next 3-5 years as more and more regions introduce PSD2-like regulations. Making sure you have flexibility to adapt to standards as they change is now table stakes.
- JSON – Speaking the language of your audience makes sense in any situation. So why would that be any different when we are talking about the developer communities that financial institutions are looking to interact with in newly emerging Open API channels? JSON is the native tongue of the startup crowds and developers we see in the market today—to get the most reach, making sure you are speaking JSON is key.
- Talent – The search for good help never ends, but the ability to attract and retain talent in today’s market will prove to have a measurable impact on financial institutions’ future success. With how quickly the payments world we live in is changing from its third industrial revolution past, to its fourth industrial revolution future, attracting and retaining talent is more important than ever. Factor in the changing demographics of our industry and it’s not hard to see why this is a top-of-mind item for 2019.
- Machine Learning – Some of my favorite conversations of 2018 have occurred between the concentric circles of two trends; Machine Learning and Artificial Intelligence. This is where the full potential of Machine to Machine payments lives; where learning, adapting, and – finally – autonomous vehicles live. Lu has talked a few times this past year on a wonderful use case where two self-driving cars approach a parking/charge station at the same time, and a bidding war ensues on who will actually get the last spot. It illustrates the potential of machine to machine payments, but throw in some machine learning and AI and, all of a sudden, you take this conversation about these autonomous vehicles not only parking themselves, but driving for Uber and earning money, or doing deliveries for that last mile need of retail. This trend opens Pandora’s box, and I believe we’ll see plenty from the box in 2019.
- Risk – There are so many sides to risk it’s hard to know where to take this. For me the risk of inactivity will be front and center in 2019. The global trends and change that are opening up opportunities all around us will start to be capitalized on by early movers in 2019. The first value propositions from PSD2 will make their way to market and new payment types will start to flow in newly opened real time channels. Not rolling up your sleeves and playing in the New Payments Ecosystem sandbox opens up a certain level of risk, and we’ll start to see that risk materialize in 2019.
- Regulation – Probably my favorite topic… I truly, sincerely mean that. Without it, who knows how quickly certain regions would move forward, and with it, who knows how slowly others will? Regulation can be a much-needed push, or seen as an impediment. I can tell you this about the current state of regulation; it’s putting a lot of funding and spend into the market, and from my point of view, that is a wonderful thing. I think the ripple effect we are seeing globally from the ‘stone in the water’ event of PSD2 and Open Banking is only going to grow wider and stronger. And who knows, maybe 2019 will see the beginnings of fintech-related regulation start to sprout in the halls of congress (though I think that is still a longshot call for 2019…)
What’s in store for cross-border payments in 2019? Join payments experts from ACI and SWIFT to hear first-hand how banking are creating and monetizing new customer propositions, rapidly launching new products and gaining market share with a combined real-time and open payments strategy. Register for our February 5 webinar ‘SWIFT gpi – Leveraging Cross-Border Payments for the Real-Time World’