Winners and Losers in the Regulation Vs Competition Debate? How About New Business Models?
As Summer has abruptly turned to Fall, I have found myself daydreaming of a European vacation (and yes, I realize it’s Fall there too… or rather, Autumn). Maybe it’s the Instagram feed full of friends on a summer sojourn to Italy, France, or Germany, or the constant barrage of Premier League kickoff commercials on the NBC Networks (Let’s Go Gunners!), but yesterday it was something else entirely that had me drifting off into a memory-induced Nutella-crepe state of euphoria.
The US Treasury Department released what can only be called a “canary in a coal mine” report; it makes a slew of recommendations to basically overhaul the entire US financial technology sector and to move the US back to the top of the innovation discussion (at least in terms of financial services).
You may be saying to yourself, “Mark, you are certifiably crazy; 1) chèvre (goat cheese) crepes are where the crepe pyramid of tasty hits its apex and 2) we have been talking about a lot of these things for years - this is just someone in Washington catching up to the rest of us because we are a competition-driven economy and sector.
While we all have our differences on the sweet vs savory crepe discussion, Nutella is a gift, and while your logic is sound on point number 2, it misses the point. In the US, we are being driven by competition to a certain extent, but what we have learned in the aftermath of PSD2 and Open Banking is that competition can only get us so far. There is a very high barrier to entry that must be overcome. And for the flaws in those regulations, the overall intent has become clear; get more ideas into the market to drive us all forward. In the US, that bar was artificially lowered by the large amount of investment into FinTech startups, but at the end of the day, more than 75 percent of our accounts are held with just five institutions. So while innovation can happen, it hasn’t spread as quickly as it potentially could.
The interesting thing to me, in the whole discussion on regulations vs competition pushing innovation, is the discussion on who “wins” and who “loses” in each model. This argument misses the point of where the “Open” discussion is leading. Claiming someone will win, while someone else will lose, assumes that the current business models that are at play remain unchanged. At the end of the day, they can’t – the current business models have to change to unlock the potential windfall that is sitting on the other side of this debate. We have overused this saying over the past 5 years when discussing the New Payments Ecosystem, however it still bears repeating here; a rising tide raises all boats. And the US just let us know that they are readying the harbor for the incoming tide – I just hope it’s not too late!
Download our whitepaper “Open APIs: Seize the Opportunity”[pdf] to find out more.
Related Blog Posts
European Banks Have the Right Tools to Stay Ahead – But Will Big Tech Overtake?
Open banking and immediate payments have come a long way, according to the panellists who joined me during the ‘Open Banking in an Instant World’ session at EBAday in Stockholm recently. The building blocks are now falling into place through the introduction of national and regional schemes, open banking initiatives, regulations such as PSD2 and the acceptance and use of APIs.
Checkout Optimization Challenges: Top Tips for Online Merchants
As the current conference season draws to a close, it’s time to reflect on one of the key topics topping the agenda for many online merchants: checkout optimization.
How Banks and Acquirers Can Deliver on the Benefits of PSD2 SCA Exemptions and Differentiate Their Merchant Services
PSD2 is an opportunity for acquirers to differentiate themselves by delivering improved services to their merchants, if they implement modern solutions to manage SCA exemptions. This will drive the best customer experience in combination with regulatory compliance.
How UPI is Driving India's Shift from Cash to Digital Payments
The Indian economy has traditionally been heavily dominated by cash, while experiencing low adoption of various online payment systems including National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS) and inter-bank mobile payments. The dominance of cash is evidenced by the ratio of cash withdrawals at ATMs vs debit card usage at Point of Sale (POS)—ATM transaction volume is more than 2x greater than POS.
Cooperation, Consultation and Collaboration Are the Keys to Countering CNP Fraud in Australia
As Europe, and other parts of the world ramp up for regulatory changes around PSD2, Australia is about to launch its own strategy to combat Card Not Present (CNP) fraud.
PSD2 and Strong Customer Authentication – What's in Store for Merchants?
With the final pieces of the Payment Services Directive (PSD2) puzzle coming together, payments businesses are highly focused on meeting their compliance obligations. But the forthcoming changes will affect everyone in the payments chain – and it’s important for merchants and PSPs to understand the practical implications for their businesses and customer relationships.
Transforming Telecom Companies in a Retail World
The recent MVNO World Congress in Amsterdam brought fascinating insights into the changing telecom industry, particularly around the opportunities that lie ahead for Mobile Virtual Network Operators (MVNOs) and how they can they can cement their position in today’s fast-paced climate.
Success Speaks: Surprising New Ways Students Want to Pay
Colleges and universities are facing the dual tasks of accommodating not only new payment methods, but also a new generation of students, Gen Z, whose expectations differ greatly from even millennials. How can higher education institutions meet these demands?
In our latest Success Speaks webinar, experts from Temple University, FutureCast, ACI and MTFX Group of Companies explored today’s payments landscape for colleges and universities, payment desires of Gen Z, innovations the higher education sector is already implementing and how schools can better assist with international payments.
Women Must Choose to Rise Up Despite Past, Current and Future Circumstances
Money20/20, Europe’s biggest payments and fintech event, was recently held in Amsterdam and featured Rise Up Money20/20, a global program designed to address the gender imbalance in leadership positions within the financial services and fintech industries. A cohort of 30 female professionals was selected to take part in an exclusive curated agenda, complete with a series of bespoke content sessions, one-to-one mentoring and unique networking opportunities.
Beyond Borders: Navigating the Challenges of eCommerce Expansion
eCommerce continues to flourish, with impressive growth figures year after year. In 2018, global online sales reached almost $3 trillion, and are expected to hit $4 trillion by the end of 2020.
Despite eCommerce taking an increasing slice of the retail pie (which could now be as high as 15 percent according to recent figures), it is increasingly challenging, with competition and cost pressures creating significant issues for merchants of all sizes.