Few sectors in finance have experienced the same amount of innovation and new players challenging incumbents as the payment industry. From mobile to wearables to biometrics, a variety of technological innovation have contributed to making payments in both the B2C and the B2B spheres faster, cheaper and smoother.
While these may be exciting times for the sector, there is still room for improvement, and collaboration is key to achieve this. For instance, the payments infrastructure is still far too complex – something that Paul Smith, head of policy at the Payment Systems Regulator, pointed out in his keynote address at PayExpo in London this week.
The regulator is one of the financial authorities overseeing the UK payment strategy forum and, according to Smith, it is keen to work with industry stakeholders to simplify and standardise infrastructure. Rather than making rules dictating how technology works, Smith is adamant in sending across a message of collaboration and openness. “We have done a lot of outreaching to understand what the stakeholders need in terms of innovation. If there are barriers or problems, talk to us and we can see how to address and tackle those issues.”
The spirit of openness and collaboration was also noted by other speakers at the event. “It is increasingly clear to us that no company can do it all, and companies have come to work together in new ways,” said Rob Harper, director for mobile commerce at PayPal UK. PayPal partnered with Vodafone in February, a collaboration enabling PayPal users in Europe to use the Vodafone Wallet to pay for goods and services.
One of the most significant areas of collaboration in payments is that driven by banks working with start-ups. “We see all heads of innovation making serious efforts to work with start-ups, because it makes sense to work with fintech entrepreneurs to develop cutting-edge new solutions that can be brought into a bigger group and achieve scale,” said Susanne Chishti, a former banker and founder and CEO of The Fintech Circle, a network of angel investors. “To compete with tech giants you need fintech start-ups on your side,” she added.
Yet working together is not necessarily an easy process, as cultural differences and legacy systems between incumbents and challengers slow down, if not altogether hinder, collaboration. According to Fiona Ghosh, partner at Addleshaw Goddard, one common point of contention is around intellectual property, as the two parties tend to think differently about it. “Culturally, it is difficult to manage that, and it may be challenging for banks to include start-up culture in their processes,” she said.