It’s universally agreed that the coronavirus pandemic delivered new opportunities for innovation and evolution in the payment technology space. But which of the proclaimed ‘industry’s hottest trends’ are worth learning more about?
The Fintech Times has turned to some of our community’s leading players to see what they see as the industry’s most overhyped trends and services, as well as those promising innovations or topics we don’t talk about enough.
OVERHYPED
“Despite being first introduced in the 1950s, we still see new debit/credit cards being launched. They all have their unique selling points. Maybe they’ve switched the cold black titanium for a biodegradable natural material or provide bespoke travel insurance for the generation which values experiences over mortgages. Forget what they look like on the outside, on the inside they’re the same Mastercard and Visa products your grandparents used. Like a new expensive gin, another luxury clothing label and other premium consumer goods, marketing and packaging will be key to their success, not technology.”
Ralph Rogge, CEO and founder of Crezco, the open banking account-to-account solution for B2B payments
Ralph Rogge
“Hype in startups and especially fintech is nothing new. For some, it has been deserved and in many ways, it helped create the buzz we have in London for the industry. As the founder of a fintech startup myself, that hype has been helpful. Of course, we have seen many over-hyped startups in fintech and our subsection of payments is no exception. Many fail to bring real innovation to their customers, they succeed in driving hype to the investors with the end-game being driving valuations instead of addressing customer needs. In the end, the truth shines through, good marketing is useful but ultimately doesn’thelp scale startups if it lacks solid product-market-fit.”
Simone Martinelli, co-founder & CEO of Volume, a provider of open banking services for e-commerce merchants
Simone Martinelli
“The most overhyped and, in my opinion, most overrated topic in the payments industry is machine learning (ML). On the one hand, ML is great for largescale indicative processes like know your customer (KYC) and anti-money laundering (AML). But on the other hand, it requires vast amounts of data to draw inferences about demographic preferences or an individual’s decision-making. Payments can certainly provide the data, but the data is too disparate to be useful for that purpose. Simply put, taking full advantage of ML is a huge assignment, much larger than can presently be handled.”
Moshe Teren, CTO of MyChargeBack, a specialist in forensic cryptocurrency investigations and card-not-present transaction disputes
Moshe Teren
“In our view, one of the most overhyped trends is Web3. It’s been going on for nearly 10 years – previously under the blockchain or Bitcoin labels – but there isn’t much to show for it. Dozens of blockchain startups have failed in this space, the only ones succeeding being those that set up trading exchanges, indices or some other piece of scaffolding. It’s very much like the old days of the Gold Rush. The only ones making a profit are the ones selling shovels and pickaxes. All in all, Web 3 / blockchain feels a bit like a hammer looking for a nail. It’s an intellectually stimulating piece of technology looking for an appropriate use case. Our take on this is that the need for decentralisation is not the major pain point in today’s economy. Many companies struggle with customer research, cost efficiency, complexity reduction. Very few of them voice a need for immutability, traceability and anonymity as their top priority. Add to this the environmental impact of this technology, which is anything but sustainable, and you have the ingredients for an overhyped trend, which hasn’t yet reached maturity.”
Louis Carbonnier, co-founder and co-CEO of Hokodo, a B2B buy now, pay later provider
Louis Carbonnier
“I think the ease of payments is overhyped. The general idea is that payments flow easily, including cross border payments, and that the structure is there to allow this. I don’t think that’s the case for regular banks, but as non-financial entities, fintech platforms can act with greater agility. Fintech platforms now act as a marketplace for SMEs to access trade receivables financing, raise big money, and step into the role previously occupied by banks in extending credit lines to small businesses and providing a valuable alternative income source.”
Morgan Terigi, CEO and co-founder of Incomlend, an invoice financing platform
Morgan Terigi
UNDERHYPED
“Loyalty or rewards points are a form of fiat currency that most of us have at our disposal and represent one of the most ‘underhyped’ payment options available today. Points can be used just like cash or a credit card and offer similar liquidity and less volatility than other alternative payment vehicles. Points are a stable and funded form of currency with limited risk. Retailers that allow their customers to ‘pay with points’ at checkout are providing a better checkout experience, while offering a consumer touchpoint that promotes long-term loyalty, repeat business and brand advocacy. By powering pay with points, retailers, brands and loyalty programme sponsors offer greater purchasing power, allowing consumers to spend points on everyday items rather than saving points for future purchases, like travel or travel-related items.”
Len Covello, CTO at Engage People, a firm offering loyalty and rewards programmes
Len Covello
“One of the biggest areas that has been underhyped, overlooked and underappreciated in the payments landscape is the back office. This is especially true with the current, continued growth and adoption of P2P payments and faster payments networks. While today’s businesses recognise the need and benefits they can offer, most are unaware (and unprepared) for the significant changes and investments they really need to make to their back end systems before the benefits can be fully realised. It’s easy to focus on having a sleek, attractive, user-friendly front-end interface or app that starts the payment process, but far too few really stop to consider how those payments are ultimately processed after the button is clicked. The truth is that the back office has a huge impact on the entire transaction’s flow. No matter how quickly a payment moves through a front-end app or network, it must be processed in the back office to complete it, and it’s this that truly determines how ‘fast’ a faster payment really is.”
Casey Scheer, director of BHMI, the payments software applications provider
Casey Scheer
“One of the most promising yet underrated trends in this space is the impact of banking-as-a-service (BaaS) on B2B payments. Thanks to the inception of BaaS and the budding embedded finance opportunity, non-banking businesses can easily integrate white-labelled financial products into their offering, including innovative tools for sending and receiving payments. At a time when payment friction and high card fees abound, SMEs are increasingly exploring how they can tap into the plug-and-play API economy to offer convenient payment options to suppliers and other key business partners – and ultimately avoid cash flow problems. BaaS providers enable these firms to leverage their ecosystem of pre-integrated payment networks and turn the tide on inefficient payments. Embedded finance is setting a new gold standard for B2B payments. No doubt, the proliferation of BaaS spells good news for fast, cheap and favourable payment processing.”
Julia McColl, chief product officer at digital bank Chetwood Financial
Julia McColl
“The payments industry has seen an explosion in improvements on the consumer side, with BNPL, digital, and contactless payments taking over by storm. On the B2B front, small businesses, in particular, are still struggling with collaborative innovation. It’s crucial for the payments industry to take advantage of the B2B market and improve the needs of merchants still reliant on checks and wire transfers. The B2B market is 10-times larger and more profitable than the consumer market and implementing new technologies that help businesses pay and get paid faster will lead companies to outperform their business goals. Advancing B2B payments will help companies meet their needs in real-time with more efficiency and less friction.”
Marwan Forzley, CEO of Veem, the online global payments platform
Marwan Forzley
“The humble QR code: developed in 1994, the QR code is a machine-readable matrix barcode. With the exponential growth in smart phones adoption over the past 15 years and the adoption of QR codes for payments, you had a near-perfect solution for the customer. You have a contactless, cashless, secure, and quick payment method. What more is needed when it comes to modern-day payments? Technology by nature keeps evolving. This adds pressure to keep re-imagining payment methods, yet we already have something that works well!”
Trevor Goott, director Africa & India at Unlimint, the alternative payments firm
Trevor Goott
“The importance of trust has always been paramount in payments, and the digitisation of the industry has put an even greater emphasis on this in recent years. One of the ways that fintechs are helping to increase trust is by utilising the full arsenal of security measures they have to hand, including virtual credit cards. Instantly generated cards, codes and details that can be disposed of just as easily as they are made is one sure way to help protect a customer’s details, but as it stands it is an underappreciated and undervalued attribute that most of the fintechs offer. Shouting about this could help garner more customers’ trust going forward!”
Quentin Ellis, managing director of mobile marketing firm ConsultMyApp
