The changes we are facing in payments with the increasing pace of technology development

"It’s our job to enable change by working with industry to focus on the right things, making sure policy settings are right, and welcoming in new players."

By Leila Fourie, CEO at AusPayNet - 20 April 2018

As the NPP starts to embed a new way to pay and we start to look ahead at the next big and exciting development, I’m struck by the increasing pace of technology development. William Gibson, the Science fiction writer of Neuromancer says that “The future is already here, it’s just unevenly distributed”. And this couldn’t be more relevant for technology. 

It’s our job to enable change by working with industry to focus on the right things, making sure policy settings are right, and welcoming in new players.  As we embrace this change, and with the Winter Olympics not long behind us, I am reminded of Wayne Gretzky’s perhaps overused advice that we need to “skate to where the puck is going, not where it has been”. 

But in this technologically advancing world, this is easier said than done. Development cycles are increasing. Keeping your eye on the puck is getting harder and harder, and trying to move an industry to where it needs to be, is increasingly challenging.

Many of the changes we are facing are exponential – the puck is moving faster and faster. The problem with exponential technology is that it creeps up on us because it looks flat for a long time. Our brains are not wired for it – most of us are linear and continue to predict linear. Experts continue to predict linear outcomes. Any exponential technology starts off expensive and needs early adopters that are willing to pay a premium. It’s difficult to pre-empt which of these ideas will win and create a network effect for payments. Three trends in technology indicating where the puck might be going are worth noting:

1. Mobile is winning – especially in global markets where there is minimal legacy infrastructure. The Money20/20 Asia race was won by a mobile wallet, indicating that mobile wallets are the most readily accepted form of payment across Asia.
2. Tech networks are changing how markets develop – this brings new meaning to “network effects” as we start to see what happens when networks combine. We need look no further than India to see how big tech companies like Google are bringing their existing customer base and effectively creating a payment infrastructure with their network. Google’s mobile payments app Tez’s ‘Cash Mode’ allows secure proximity payment to other Tez users, without sharing personal details. Across Asia, the ride-hailing app operator Grab launched a payments platform, followed by a financial services platform and then, in March 2018, acquired Uber’s Southeast Asia operations. And in return, Uber gained a 27.5% stake in Grab’s combined business. 
3. Data is power – but there is change underway in the way data is managed – already we are seeing shifts in the way the 4 horsemen (Apple, Amazon, Google, Facebook) are perceived. Rogoff recently said that “data is the heart and soul of the monopoly power” of big tech companies. It’s here that the puck is moving particularly fast. The power construct is different and its changing by the day. We are moving to a world where we need to make sure a broader set of participants benefit from the power of data. Data-smithing is a relatively new profession that will evolve from big data like engineering did from the industrial revolution. It is likely that we will need slightly different infrastructure to support this. There are signs that Blockchain, AI – or a combination of both – will support a different kind of infrastructure and this will create a different form of power. 

While the technology developments currently underway are the source of big and exciting developments, technology is not enough. We need a new way of thinking, a new approach to collaboration, as we sharpen our ice skates and become better at skating to where the puck is going.

This blog first appeared in the CEOs Corner of our newsletter, entitled Payments Monitor, for the first Quarter of 2018.