Are we falling into silos yet again? Much of the new payments technology we are creating — whether it’s AI-driven anti-fraud technology, instant-payment solutions or blockchain-based automation — is designed to solve a specific problem.
And we know what happens when we address problems one by one. We end up with solutions that are great at addressing the problems but don’t talk to each other well. And that’s the opposite of what we need, if we want the digital payments sector to expand as fast as it has the potential to.
So how do we avoid it?
An Integrated Standards-Led Approach To Innovation
To avoid the creating of new silos, we should ask ourselves now if the different systems we’re creating — principally, those that power banking, commerce and digital payments — are all designed from the ground up to work seamlessly together to give the customer an experience that is secure, simple to use and personalized.
Only if we take our interdependence seriously will all three sectors be able to take the best advantage of the opportunities created by changing technology and consumer demands. In practice, this means we need consistent standards, something the development of the API economy is already pushing us towards. And teams internally and across value chains need to work together.
We need a whole-industry conversion about standards.
With the development of the open-API (Application Programming Interface) economy, the customer experience we offer will no longer depend solely on the quality of our own systems and staff. Imagine an e-Commerce merchant with the instant-payment platform from a leading PSP integrated into their product pages.
If everything works as it should, the customer who is already logged into the payment provider on their device can buy whatever they want with a single click. If they need to arrange higher purchase or credit, that’s easy — because the payment provider already has their data and has a relationship with them — maybe two or three clicks and it’s done.
This is good for the consumer, who enjoys an improved customer experience, and for the merchant that benefits from lower barriers to conversion. But what happens when even this simple integration is handled badly?
Imagine that instead of a click or two to reach the result she wants, the consumer finds that the payment system logs her out as she tries to click on ‘buy.’ Or the payment provider doesn’t generate a notification to tell the consumer that the payment has been completed and acknowledged as such by the merchant, leaving her unsure whether her purchase will ship on time or at all.
And that’s a relatively simple transaction chain. As open banking and the open-API economy become more and more part of our business operations and our daily lives, the operations of merchants, payment providers, banks and fintechs will become ever more tightly intertwined.
How To Sustain An Interconnected Economy
To sustain that level of interconnectivity, particularly as the volume and speed of transactions grows exponentially, the systems of all the different providers in the chain must mesh seamlessly. That’s why as well as breaking down barriers within companies, it’s more important than ever that the industry as a whole works together on common standards. The work my colleague Ralf Ohlhausen has done on PSD2 Regulatory Technical Standard (RTS) is a great example of this.
This is an exciting time to work in finance, particularly in payments. And yes — there’s a lot of complex, heavy-lifting work to be done, building a truly integrated and consumer-friendly digital economy. But the rewards if we get it right, for the industry and for the public, are huge. I look forward to working with my colleagues at PPRO and my peers across the industry to find the best solutions to the challenges we have today, so that we’re in the right place to grasp the opportunities that come our way tomorrow.
Stefan Merz is the COO of PPRO. He is a visionary and results-oriented technology Executive with broad international experience and a proven track record of transforming company cultures. His extensive career includes experience in technology strategy, mergers and acquisitions, sales and marketing, operations and business reinvention. Merz consistently exceeds targets, captures market share and builds the foundation for long-term value creation.