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  • @fintechna 3:35 am on October 28, 2017 Permalink | Reply
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    The atomization of payments: Part two 

    In one of my blog on atomizing , I explained how payments volumes are likely to expand 25 times or more in the future, resulting in trillions of new payments. In part two, I explain a precedent for this and its implications, and how the payments industry needs to prepare.

    Precedent and Implications

    Atomization of communication is a precedent. Nowadays, communication is dominated by e-mail, texts and social media posts in volumes that dwarf those of the past using paper. Individuals typically send and receive hundreds of texts and e-mails each week, compared to a few letters in the past. It has taken about 20 years to reach this state, and volumes are still growing.

    If atomization of communications is replicated in the payments industry, trillions of payments can become a realistic prospect. The implications are far-reaching.

    • Firstly, cards have no role to play. They may endure for many more years, but as an innovation of the 1960s, they are inefficient, expensive and fraud-prone, unsuited to the atomized payments landscape.
    • Secondly, merchant acquiring may disappear over time. Necessary in the past to connect merchants with the banking system and enable commerce, (for example open APIs) is superseding their role.
    • Thirdly, payment revenue will drop towards zero. Merchant fees are not sustainable and will simply be bypassed if maintained. Instead, new business models will emerge, based on the security, resilience and reach of transactions.
    • Fourthly, new account-to-account payment infrastructures and controls will be required to support the volume and bandwidth needed for atomized payments.
    • Lastly, the payment industry needs foresight to plan for this change.

    Sleepwalking towards the future

    Kevin Hanley at RBS recently gave a great Finextra interview in which he talked about the divergence between technology changing exponentially and industries, organizations and individuals thinking linearly. Payments is an industry changing exponentially, however, much of it remains in a linear mode, underestimating the impact of this change. For example, earlier this year, at a conference I was rebuked for forecasting UK contactless card volumes would rise from three billion in 2016 to six to nine billion transactions this year. A member of the ATM industry, passionate about cash, described my forecast as irresponsible. However, UK Finance figures already show the country is clearly on track to exceed six billion contactless transactions in 2017.

    My point at the time was that no one is predicting these volumes, or planning for them, yet they are happening. The payments industry is sleepwalking towards its future. The industry needs to think and act exponentially, and it needs a vision. A 25-times increase in volumes over 30 years is only an 11 percent per year compound growth rate—a rate that the world-leading UK Faster Payments system has exceeded consistently for many years.

    We are already in an exponential payments world. The good news is that innovation and change in payments will be sustained for many years and the responsible action to take is to embrace it now.

    My thanks to Nick Caplan, Chairman of Faster Payments Scheme Ltd for the inspiration behind this blog.

     

    The post The atomization of payments: Part two appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 3:35 pm on September 26, 2017 Permalink | Reply
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    THE ATOMIZATION OF PAYMENTS: PART ONE 

    In my view, electronic will accelerate dramatically over the next decade, driven by the “ of payments.” New business models are emerging, enabled by , resulting in increased transactions that will scale and scale. We are fast moving from batch to real-time transactions, with payments made continuously from bank accounts.

    Examples may include shopping: in-aisle buying with an instant payment for every item picked off the shelf; self-driving cars, where ownership will diminish, replaced by on-demand rides, and payment for every journey; salaries, typically paid monthly to be paid daily, even hourly; company dividends paid daily (already evident in the BnkToTheFuture investment platform); smart meters will pay electricity daily and so on.

    Benefits to expect from this transformation

    The benefits will be broad: new products and services, improved cash flows, financial efficiency, improved certainty for businesses and individuals, better fraud prevention, reduced or eliminated reconciliations and errors. Changes will be driven by technology and new business models, and will be pervasive and profound. For example, payroll, billing systems and processes will be very different, and often unnecessary, and personal and business cash management will be largely automated.

    Quantifying the impact of atomization

    While it will take years for payments to atomize fully, let’s put some figures to quantify the impact using the UK as an example.

    The UK has 19 million households. Assuming they buy 50 items a week (mainly groceries), which translates to 49 billion payments and items purchased. The UK has 37 million vehicles. Let’s assume each averages 10 trips per week—which is 19 billion annual trips and payments. Around 31 million people are employed in the UK—adjusting this for -time workers, daily salary payments would amount to 7 billion payments annually. About 10 million people own UK shares, assuming they average 5 shares each—which is potentially 18 billion daily dividend payments annually. Finally, if the 19m UK households have smart meters making daily electricity payments, that is 7bn payments annually.

    So, with some very basic analysis, we have identified around 100 billion future UK payments, and have barely scratched the surface. Add in other utilities, daily mortgage and other interest payments, on-demand music, phone calls, TV/video, media and new business models that are yet to be invented, and it is easy to see UK payments reaching up to one trillion transactions per year in the future, and multiplying by relative GDP factors, seven trillion in the US, six trillion in Europe and 30 trillion globally.

    There are currently about 38 billion payments in the UK (including cash, cards and electronic) according to Payments UK (now part of UK Finance), so payment volume in the UK could rise 25 times or more.

    When this will happen is anyone’s guess—10 years? 20 years? 40 years? But we need to plan for it!

    In part two I will explain a precedent for this atomization and its implications, and what the payments industry needs to do.

    My thanks to Nick Caplan, Chairman of Faster Payments Scheme Ltd, for the inspiration behind this blog.

     

    The post THE ATOMIZATION OF PAYMENTS: PART ONE appeared first on Accenture Banking Blog.

    Accenture Banking Blog

     
  • @fintechna 2:53 am on September 8, 2017 Permalink | Reply
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    Merchants Find Payments Are A Key Part Of Branding 

    Speed and ease of are increasingly important to a merchant brand, according to Bank of America.
    Financial Technology

     
  • @fintechna 1:52 am on September 7, 2017 Permalink | Reply
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    Merchants Find Payments Are A Key Part Of Branding 

    Speed and ease of are increasingly important to a merchant brand, according to Bank of America.
    Financial Technology

     
  • @fintechna 12:18 am on April 23, 2017 Permalink | Reply
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    Capital Is the ‘Least Important’ Part of VC Rounds [Video] 

    Raising is a crucial step for any startup trying to build its way up the ladder. However, when it comes to VC funding, the actual capital is the “least of the transaction,” according to Bruce Wallace, chief digital officer at Silicon Valley Bank. “I think there is a real misunderstanding sometimes [&;]
    Bank Innovation

     
  • @fintechna 12:18 pm on March 21, 2017 Permalink | Reply
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    Enterprise Blockchain Consortiums — Part 2 

    This is the second of my article about , focusing on the market. In Part 1, I covered Linux Foundation’s HyperLedger Project, which acts as an umbrella for Fabric, Intel Sawtooth Lake, and Iroha. I also touched on R3’s Corda, and Digital Asset Holdings&; offerings. Learn more here. In this part, I will cover the following three [&;]
    Bank Innovation

     
  • @fintechna 12:18 pm on January 8, 2017 Permalink | Reply
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    Solving the conflict of interest in General Insurance; The state of the industry (Part I) 

    In my previous role at Barclays Investment Bank, I got to work with leading insurers and companies, shaping their future strategy&;

    Continue reading on hackingfinance &187;

    Bank Innovation

     
  • @fintechna 12:18 pm on July 1, 2016 Permalink | Reply
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    Life insurance innovation Part II: Startups and carriers in pursuit 

    This is a guest post by Amy Radin. It is a two-parter. The first was yesterday. We have also posted it onto the Genome to stimulate discussion there. In yesterday&;s post, I provided categories within which to organize the players within . &; Both and legacy businesses are pursuing solutions&;Read more Life insurance innovation Part II: Startups and in&160;
    Bank Innovation

     
  • @fintechna 12:18 pm on June 30, 2016 Permalink | Reply
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    Life insurance #insurtech innovation Part I: No longer an oxymoron, expect an uphill climb 

    Photo Credit This is a guest post by Amy Radin. It is a two-parter. The second is tomorrow. We have also posted it onto the Genome to stimulate discussion there. You can find Amy&;s profile on the Fintech Genome here. While most startup activity in the US is concentrated in health&;Read more insurance Part I: No an , an &;
    Bank Innovation

     
  • @fintechna 3:35 am on June 19, 2016 Permalink | Reply
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    Blockchain to Optimize and Secure Client Data Information – Part 3 

    Blockchain-based Enigma system

    Researchers from the Massachusetts Institute of , therefore, have developed a guaranteed privacy system based on , in which can be stored, verified and shared without ever being revealed to any of the network’s parties. ‘Enigma’, which is powered by the blockchain, is essentially “different computers that are talking to each other, but they don&;t do mining, they just provide resources to the network, bandwidth, some of their hard drives, some of their CPU power&;, according to co-founder Oz Nathan, a technology entrepreneur with experience working with the Counter Terror Unit of the Israeli Defence Forces. This will purportedly allow , for instance, to confidently sign up to private blockchains, knowing that sensitive data will remain private.

    Enigma’s founders are also speaking to medical companies, particularly those who are unable to put huge swathes of client medical onto the blockchain. As a solution, Enigma breaks down data into smaller pieces, and rather than performing conventional encryption, a “secret sharing” method is used, according to co-founder Guy Zyskind where the system “guarantees mathematically that each of these pieces are completely masked, completely random and completely &8221;.

     

    Blockchain is to prevent industrial data breaches

    Moreover, there does not appear to be a limitation to the magnitude of projects that can be put onto the blockchain. The UK government is now looking to blockchain technology to protect itself against data breaches within some of its biggest industries. Guardtime, which provides cyber-security services and uses blockchain to secure sensitive data, recently announced it will be in charge of protecting the UK’s nuclear power stations, flood defence systems and electricity grids from cyberattacks.

    According to a recent report by think tank Chatham House, a ‘culture of denial’ currently exists in the UK’s nuclear power industry with regards to the risk of cyberattacks. Blockchain’s permitted ledger, however, can be used by Guardtime to boost the security of some of the largest systems of UK infrastructure. The system uses hash-function cryptography that is based on ‘signature’ authorization, known as Keyless Signature Infrastructure (KSI). Ultimately, the technology allows all data across the system to be securely authorized, while allowing for independent verification of the records, without the need for centralized authorities.

    Although blockchain’s technology has been synonymous with the rise of , Guardtime has been using similar technology for the purpose of security prior to Bitcoin’s emergence. The company employs cybersecurity experts who have experience in the US military, as well as state-level digital security experts from Estonia, who resolutely defended the country from a comprehensive cyberattack by Russia in 2007. Indeed, Estonian innovations in addressing confidentiality and data integrity have been deemed by the US as cutting-edge, which has in turn led to the formation of the partnership.

    Defence systems, telecommunications companies and financial-services firms are all looking at the technology, according to CTO Matt Johnson, who also believes that Guardtime&8217;s permitted blockchain can provide proof of time, identity and authenticity, while preserving confidentiality of the data, on an industrial scale.

    The post Blockchain to Optimize and Secure Client Data Information &8211; Part 3 appeared first on Fintech Schweiz Digital Finance News – FintechNewsCH.

    Fintech Schweiz Digital Finance News – FintechNewsCH

     
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