Open Payments Require Collaboration for Successful Innovation
There are a few things in my life I enjoy more than the serenity of a garden. There is nothing more fulfilling than starting off with something as innocuous as a planted seed, only to watch it bloom during the course of the spring and summer, and end its journey in a bounty of produce. As anyone with a green thumb would tell you, it’s not just the quality of the thing you start with, but the care and watchful eye you give it along the way; when to water, when not to, when to weed, when the seedlings may need cover from a pending cold snap, and when you just need to let nature take its course.
Applying this analogy to the business of payments may seem unconventional, but if you were to sit back and think about what is happening in the ecosystem today, you will note the similarities. We are witnessing the initial planting of seeds in the first steps toward opening up access to the banking and payment services; and these have the potential to turn into a bumper harvest, not just for payments innovation, but banking innovation at large.
Partnerships are Crucial to Navigate the New Payments Ecosystem
PSD2 has ushered in a willingness to cooperate and partner the likes of which we have never seen in our industry. This is partially because it has been dictated to the institutions from the markets’ governing authorities. But I believe most of us view this shift as a seasonal change, providing the opportunity to survive, but also necessary for long-term survival. The comfortable borders we all enjoyed in the ‘old’ ecosystem were well defined and each participant, either by a gentleman’s agreement or lack of desire or ability, stayed more or less within their patch, with minimal threat to their business models. As we transition to the New Payments Ecosystem, those borders have suddenly disappeared, and the tidy garden has become a wildflower meadow, with new varieties and species competing for space.
Rethinking Payments in an Open Ecosystem
What we have seen in response to this change is the exposure of APIs for business services, data access, and endpoints. Banks, processors, merchant service providers, financial service firms and startups are all working in this garden together to grow new solutions that will solve emerging consumer needs and pain points. The ability to completely rethink banking and payments, from the services and products to the way in which we send and receive payments (either from friends and family, or our employers), is in play. Imagine getting paid hourly for your salary job, every hour on the hour, or being able to pay your utility bills every night as you turn off your light. You could reduce the rate you pay on that service with prompt payment. In the past, these ideas were held back by technical limitations, but now the brightest minds in our world can start to play with the new tools, thanks to payments technology evolution.
We are just starting to see the first seeds sown in our garden. The exposure of APIs and the growth of this market has to be carefully watched, nurtured and maintained by the watchful green thumbs all around us. I, for one, can’t wait to see what we reap at harvest time!
Want to find out more about making the most of the opportunities the Open ecosystem holds? Download our eBook: OPEN! Open payments and their impact.
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