Dumbing Down Payments and Fintech Jargon… Just in Time for the Holidays!
Mark, is there a slightly less insulting phrase for “dumbing down” something? I ask because there are some terms and topics making bigly waves today and many/most consumers outside of payments/banking/fintech/tech might not understand their significance and why they should care. With that, can we take a moment to simplify these terms and topics, while also conveying their importance to the masses—from your mother-in-law to your daughter’s daycare provider to “the old man sitting next to me making love to his tonic and gin” (I’m a sucker for Billy Joel).
Mark Ranta: Can’t wait to see him at the Garden in two weeks! So I can sing you a song, Mr. Payments Man!
Dan Ring: AI – In simple terms, what is AI and why should consumers care?
MR: Artificial Intelligence has been scarred into many folks memories from 2001: A Space Odyssey and other sci-fi books, where machines turn on their masters and go on to run the world/universe as it may be. Thankfully, the above really hardens into the fiction part of that two-word phrase, but the science is very much real and becoming more robust every day. The ability for a computer to “think,” and by think, I am saying crunch massive amounts of data (and by massive, I mean as much as was created from the caveman to the Apollo space mission in nanoseconds) and then make a decision. When you start applying this to financial services, the ramifications are huge. Think about a home loan: the former process of having a human track down financial history, pull accounts and records, review those and then make a credit decision, could (and sometimes does) take weeks.
When you apply AI, not only is that decision made in seconds (or sub seconds), it could also find gaps in the financial picture and create tailored offerings to fill those gaps in a way that makes sense to the customer in context. That’s an example of what’s already in market today. We don’t need to talk about driverless cars, but those are cool too!
DR: APIs – In simple terms, what are APIs and why should consumers care?
MR: APIs are just software speak for hooks that allow one software package talk to another. Think of it as really strong epoxy that can stick and unstick as needed (no more of the fingers being stuck together forever). Consumers already use APIs regularly today if they are signing onto apps using Facebook; that ability is delivered by an API to the Facebook login that returns information on you (which Facebook keeps on your behalf per the T’s and C’s you signed without reading) to the new app. When you start to expand upon what this could do in finance, it really opens the door to paying for things in new ways, as well as taking advantage of another trend; the vaunted Internet of Things (IoT). APIs are really just techy speak for making functionality available in new applications!
DR: Blockchain – In simple terms, what is a blockchain and why should consumers care?
MR: While not a chain of blocks… it is an interesting thing. Really, it is a distributed database so all information gets validated by the other databases and entered. The power is that it gives us a way of looking at data differently, and validating that the data is correct, so there is less dispute over ownership. Consumers at this point don’t really need to care, though Bitcoin is something that folks likely see or hear about regularly given its exploding value. The coin is backed by the technology, so they are related, but more like a square and rectangle situation.
DR: GDPR – In simple terms, what is GDPR and why should consumers care?
MR: GDPR is the General Data Protection Regulation; it’s an EU regulation that applies to ALL individuals (in the EU). It’s a massive event, and one that everyone (well in Europe at least) will come to know about in a very quick fashion. At its core is the fact that each individual has the right to be anonymous, or have their information/data excluded from data sets. It establishes the individual as the owner of the all data that concerns them, and putting any holder of data (Google, Amazon, Banks, Schools, etc.) on notice that they have to put mechanisms in place to allow individuals to remove themselves, if they choose, from all data stores that those companies have. It’s going to be a pretty big ball of yarn to unwind, and you will hear much more on this (from us and others) as we move forward… and we have the world-renowned Lu Zurawski who’ll help start pulling that aforementioned yarn apart for us!
DR: PSD2 – In simple terms, what is PSD2 and why should consumers care?
MR: PSD2, or update to the payment services directive (a la 2), is regulation going into place across the EU in 2018 (January to be exact). Again, this is an EU topic, however it will have more of a global impact in how financial service institutions work with the larger technology communities. PSD2 mandates banks “opening up access” to systems and client data so that the competitive playing field is leveled. How the consumer will start to see this is through new services or extensions of products that the bank already offers, something as simple as a new “checkout” button on their favorite app, or something more complex like a new investment app that maximizes your contributions through micro deposits from a dormant savings account. Really, this will start and spark an evolution of financial services. It will be felt globally as both competition heats up and ideas/use cases start percolating, and as global financial service competition heats up as the delivery channels move more and more in favor of digital versus physical.
DR: Virtual Currencies – in simple terms, what are virtual currencies and why should consumers care?
MR: We already talked about the technology – blockchain – that is underpinning the push into virtual currencies, but I think it’s worth a note on this in general. The biggest part of the picture here is that the virtual currency is not backed by the full faith of a government, like the collection of Uncle George’s in your wallet (I assume you only have ones in your wallet Dan). The draw and allure is the stateless nature of Bitcoin; along with that comes some of the nefarious aspects of Bitcoin, but to be able to store value in a currency that can’t be affected by fiscal policy is intriguing, and it becomes a lot more intriguing when you think about this from a non-stable currency state perspective (think hyperinflation or government-controlled regions of the world)—the draw of something that has “stability” in comparison is quite intriguing, not to mention it’s been on an insane run of late ($7,000 at last check), which makes me feel vindicated for procuring the tossed out .1 BTC gift cards from the inaugural Money2020 Europe… not saying, just saying!
DR: Any other terms you wanna include?
MR: IoT – The Internet of Things is a good one to discuss going into the holiday shopping season, since many of you will be buying a device from Amazon or Google that brings this into picture. But the IoT really is all about connected devices. Taking a speaker and connecting it to the world via the internet allows for some pretty magical things to happen. It also starts us on a path where the device itself could work without human interaction, that is to carry on something on my behalf. Think about this, if you have an IoT fridge that has the ability to notice your milk has expired, the next logical step beyond informing you that your milk is expired is to go ahead and ask if you want it to order you milk (likely with a delivery service in this scenario). And then what’s to stop you from setting this up to not even ASK, just order once milk is expired?!? At that point, the machine/fridge is talking to another machine/the computer at the delivery service. Humans have been removed, especially if the drone delivers it to your doorstep! We have now started to merge into what feels like a fictional story than a science reality… oh boy this is going to be fun!
DR: Talk about distilling some meaty topics. And speaking of meat (or more specifically in this case, turkey), there’s quite a bit to digest in the leadup to Thanksgiving and that fintech discussion I can envision you having with your in-laws… but in the meantime, enjoy the Piano Man!
Related blog posts
How 'Mega Trends' Are Shaping Payments in India
In a previous blog post, I wrote about the impact of demonetization in India and the staggering growth of new digital payment types. Building further on this, I want explore some of the “mega trends” in payments, and how India is embracing the opportunities presented by these trends.
One Year Later: How Demonetization Has Impacted India
This month marks the first anniversary of demonetization in India, and it has undoubtedly changed the country forever. When I visit India, I increasingly see micro-transactions conducted via mobile phones. Cash is still used, but I see less and less of it with each visit. We are in the middle of a true paradigm shift – and India is poised to become a global leader in new types of payment acceptance.
Security, the New Payments Ecosystem and the Need to Educate the Consumer (Or Ask Them to Unclog Your Sewer!)
When it comes to any payments ecosystem, you must remember that we are talking about MONEY. More importantly, people’s money (like yours and mine). In any conversation in this space, secure is something that is assumed. A consumer simply won’t use a new system if they don’t believe it is secure. Unless of course it’s free Wi-Fi. As we have seen, folks are willing to do almost anything to get free access on their devices, even agreeing to clean toilets! (This was a real thing… one hotspot operator added it to their Terms of Service fine print). When we talk secure, it’s important that we keep this in mind: secure is not just a piece of the Hierarchy of Payment Needs, it’s an integral part of it, which is why it sits directly on top of the foundations. Without this layer, the whole ecosystem collapses.
How to Deliver on Customer Experience
Don’t Break the Bank – Building for the New Payments Ecosystem.
How to Protect the Foundations of Transaction Banking
Scalable, Available, Reliable – #SleepAtNightability for Corporate Banking
Pairing Payments Innovation with Security Needs in Southeast Asia
Many Asian governments – most notably those of Singapore and Hong Kong – have launched well-received initiatives to encourage collaboration rather than competition between the fintech start-up world and banks. This has enabled traditional banks to tap into the innovative solutions that fintechs offer, while the banks themselves bring to the table considerable experience with data, resilience, reliability and customer protection.
What’s Your Small Business Banking Bacon?
Every hip recipe has bacon in it these days. So why shouldn’t your digital banking experience be the same? After all, it’s a yummy addition that gives a standard dish that extra flair.
Small business banking has been a prodigious untapped market for over a decade. Banks desperately strive to make revenue from this market, but in most cases, they have struggled to do so.
The Constant of Change and the Future of Commercial Banking
Let’s clarify this before I lose anyone; the self-proclaimed “pioneer of wisdom,” noted Greek philosopher Heraclitus, is credited with the saying Panta rhei, "everything flows." More commonly, you have probably heard this as “the only constant is change,” but either way, this teaching has withstood the test of time, as it is not only applicable, but feels like a worldly truth when I find myself talking about today’s transaction banking landscape. A robust time of change is upon us; one that has brought us to the precipice of a new era in banking. Understanding the driving forces behind this change as well as embracing new business models will be a key to success, or even to survival.
The Hidden Risk of Complacency
Available in Spanish and English
As a professional in Latin American electronic payments, I often forget how it is to live not knowing what’s going on backstage every time I use my cards. My specialization makes me aware of trends worldwide, so while traveling, I’m able to analyze different technologies in action. My consumer side, also known as my ‘shopaholic’ side, exposes me to multiple situations, since any trip—be it business or leisure—always provides a good opportunity to shop. On a recent trip, I had the chance to experiment with my Argentinian cards during a semi-long-term stay. While out of country for 40 days, I experienced first-hand the challenges that consumers encounter with the EMV payments barrier.
Driving Toward Innovation in Digital Banking User Experience
The need for delivering on a user experience strategy necessitates the use of common and sometimes confusing lingo like CX, UX, information architecture, UX design and UI design. It introduces ways to gain deeper understanding of customers through methods like personas, journey mapping and Kano analysis. It commands phrases like customer-centric, experience-driven, and ideation/visioning. In the past 4 months, I have interviewed more than half a dozen agencies to engage one that could go beyond the buzzwords and the methods described above. I want to be convinced that great and meaningful changes can happen to UI’s. After all, talk is cheap.