Future of Payments 2012 - David Birch, Director, Consult Hyperion (UK)

Keynote: Drivers for Change in Europe

Dave Birch

Consult Hyperion

Future of Payments

Sydney, October 2012

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Agenda

Technology drivers

■ If you don’t have a mobile strategy, you don’t have a strategy

Business drivers

■ New business models are on the horizon

Social drivers

■ The most important, the most unpredictable

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Baseline

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Drivers for Change

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Taken from the

Centre for the Study of Financial Innovation

Research Fellowship on

Innovation in Payments

Sponsored by Visa Europe (2010/11)

Technology Drivers

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The technology roadmap for the short- to medium-

term is actually pretty well-known and doesn’t

contain too many surprises

Key Technology Drivers

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Moore’s Law will continue for the foreseeable future

The mobile ecosystem will take longer to assemble

(and is more complicated) than we thought

ID and authentication technologies, such as

biometrics, will change the mass market

Social networks and virtual worlds make the whole

real/virtual boundary a little fuzzy

Business Drivers

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The business pressures are intense because of

downward pressure on interchange and new, non-

bank competitors exploiting new technology

Key Business Drivers

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Adding value instead of reducing costs (like Google)

The entry of non-bank competitors (like Square)

The demands of retailers will reshape products and

services

Pan-European consolidation (the SEPA effect) will

begin to bite

Social Drivers

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Social changes are the most unpredictable because

they depend on human nature. Fashions, laws and

trends are all out of our control!

Key Social Drivers

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Balkanization and interconnection

Worsening identity theft and fraud means regulation

Falling tax revenues and economic efficiency mean

that European governments will have to take action

against cash

Consumers will be more open to considering

complementary and alternative money and payment

systems

Balkanisation

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Every shopping mall, every transit system, every web property to have its

own payment system? That can’t be right, can it?

Identity Issues

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Apart from the cost, if identity theft and account fraud gets worse, then “knee jerk” regulatory

responses could (eg, on KYC) will impair the development of new payment solutions.

Economic Crisis

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Perhaps people are more prepared to consider alternatives to the

“conventional” money and payment systems

War on Cash

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Perhaps European governments, driven by the need for revenues, will get

serious in the war on cash

Some Predictions

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What can we see going on around Europe right now

that tells us something about the future of cards, the

future of payments andF the future of money?

Example: Sweden

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A broad alliance of labour unions and other groups is working together to

remove cash from certain commercial areas

Example: Netherlands

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Cash-free streets in Amsterdam, supermarkets hoping to be cash free soon (some already won’t

accept cash in the evening), bundled pricing for low-value payments, universal debit

Example: Italy

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New laws mean that the maximum size of cash transactions is now €450

Example: UK

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Well, we’ve decided to make some new coins and keep cheques but we’ve also started the Faster

Payment Service (FPS) and ban wholesaling of €500

Comparison: USA

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The wallet wars have already started! Google, Square, MCX, Apple Passbook, PayPal/Discover,

ISIS and others are starting the transaction to cloud!

Conclusions

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It’s not a bad time to be in payments as

competition means innovation

Tomorrow’s Transactions:

thought leadership from Consult Hyperion

Read www.chyp.com/media/blog

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Thank You

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Dave Birch

dave.birch@chyp.com (and @dgwbirch)