Lesson Learned. Open systems are good! Benefit to IT economy Benefit to IBM. Salmony - Open Payments - Singapore. June

Transcription

1 Europe s Leapfrog Open your mind Open Payments Global Payment Summit, 7 th June 2013 Michael Salmony Michael Salmony - Personal Background Computer Science PhD in Computer + Networks = New Media International Business Transformation of Industries through Technology Banking New Services / New Processes Payments Innovations Scale of Scary-ness IBM Experience Hosts, Communication Controllers, Establishment Controllers, SNA, Token Ring, 3270 Terminals Lesson Learned Deutsche Telekom s Experience - Resisted liberalisation tooth & claw Open systems are good! Benefit to IT economy Benefit to IBM - Now have 50% of a HUGELY bigger market June

2 Apple had to learn too General Lessons Learned Open systems are good! Benefit to telco/music/ economy Most benefit to incumbent (if he gets it right) Maybe he has to be forced into his luck (regulator, jailbreak, ) Would Banks Benefit? Paypal in Germany recent Evolution Open Payment Systems!? Benefit to payment/banking/economy? Most benefit to banks? (if they get it right) Will they be forced into it? Paypal in Perspective after 15 years The fight in online is lost? source: RPGC Group, 2009 June

3 Overlay Services Paypal is an Overlay Service - Uses bank infrastructure (cards, ACH, network, debit, ) without paying - Provides serious convenience and added value over pure bank services - World-wide service (pay anyone in any currency with my local account/card) - Regulated (Luxemburg) POLi, mazooma, Payment Network AG/Sofortüberweisung/DIRECTeBanking, T-Pay OnlineÜberweisung, PinTanGo, Glue Finance, ebank2pay, Citadel, Przelew, mazooma, yodlee, Trustly, ebank2pay, UseMyServices, UseMyBank/UseMyFunds An overlay of overlays! Rise of new Overlay Services - Also use bank infrastructures, most without paying, mostly without contracts - Add serious convenience and added value to merchants and users - Typically national, beginning European-wide service - Mostly not regulated Application Plattforms Non-Bank - VAS Non-bank Overlay of overlay Non-bank - Overlay Bank - basic payment instruments Zynga credits Facebook credits Buxter mpaypal/bump Banks are being disintermediated in Online App Store CT Debit Card DD Cash e-purse Bank Account Voucher Bank - VAS OBeP Credit Card Biometrics web/m banking Boku 888/WoW Click&Buy PayPal Voucher Mobile Prepaid/Bill UseMyFunds Sofort Bank Answers? Clone Paypal e.g. V.me Or: Online-banking based payment (maybe with guarantee) to merchant by bank transfer examples today: ideal, giropay, eps, post finance, Currently national schemes only, most with limited success European (SEPA) vision: buyer to buy at on online webshop anywhere in Europe, regardless where he is located, pay using his own internet banking and his usual local account EPC e-payment Framework for European interoperability of bankbased schemes (stopped June 2012) EBA MyBank initiative (pilot launched EBA day 2012, commercial launch March 2013, mainly Italian participation) Rise of Overlay services EPC Access to Account proposal in discussion with stakeholders (March 2013) for standardised access to account services Controlled Access to Payment Services (CAPS) One possibility: Currently over 300 e-payment Mechanisms in Europe - Innovation and competition will explode! June

4 Controlled Access to Payment Services (CAPS) Extended possibility: Account aggregation services E- Mandate/sign ing services Data Mining services, E-Id, E- Authent, services Prerequisites for CAPS Fair contribution to value and provision of service Third parties - Are regulated (PSD)/certified - Are contracted (with bank, merchant incl. liabilities ) - Are secure (cf SeCurePay), preserve privacy, - Are fully under user control (allow who to see what) - Pay fee (use of infrastructure, new service development) As in any other industry: Recompense fairly for use of infrastructure, new service development Basic services cost based Merchants agree: Banks could charge a reasonable fee for the yes/no service [EuroCommerce Basic Payment Paper 8/12] Advanced services value based Forcing banks to provide service for free would be major tactical mistake: - Banks will resist (their card payment revenues are at risk!) - We all lose System needs to ensure - Security - Clarification of liabilities - Level playing field - Legal/regulatory oversight framework - Consumer protection (rights, incl data protection) - No impersonation (incl no passing on of secure credentials safer and makes (regulation) life easier for third parties!) - Fair share of revenues/investments - Structured conflict resolution (incl having a contact point) - Joint fraud defence & resolution - Clear roles and responsibilities - Standardisation - All interdependent and each dependent on context (e.g. different rules depending on service (yes/no vs payment) volumes (few Tx/day vs heavy merchant/user etc) Some have been trying for a while German FinTS (ex HBCI) supported by 2000 banks used by Datev, Quicken, S-Banking etc US: IFX/OFX Over 360 financial API suites: Bloomberg, Amex, IBAN conversion, Crdeit Agricole (40 APIs for card), ABN etc June

5 Many others opening up Some are already very mature: Paypal APIs It s the App Store Model! Demanded by Merchants new non-banking providers must have secure access to account data web merchants encourage banks to open up their accounts for third party merchant services, fostering innovation and competition Drive by Regulators : Green Paper, Alumnia, - ECB SeCurePay consultation - PSD Revision - DG Competition/DG Market - National, e.g. - Bundeskartellamt - UK NL community Openingup the payment accountto new parties supportsinnovation and leadsto even more efficientmeans of payment ECB 27 Feb 2012 CPSS World Bank Forum Nondiscriminatory access How will this move? This will happen! - Market demand/pressure - Regulator - Open systems always win in the end The body for agreement on payment services between banks and stakeholders Regulator Coalition of the willing? June

6 Opportunity for Banks & Everybody Business Switching services, autotransfer, tax consolidation, 54 vending solutions, corporate accounts, fitness apps, charity sponsorship, subscription management, mobile, CAPS SEPA Payments Data Mining Acct Aggregation Funds info, Payment, Data CT DD Cards Payment Infrastructure Clearing & Settlement 3.5x10-4 Summary History of success of Open systems vs closed It s now the banks /payments turn Better to disrupt yourself rather than let others disrupt you Pressure is rising: third parties, regulator, market, Open API for Controlled Payment Services Prerequisites (regulation/legality/security/control/value share of access) Incentivise banks they will resist if core payment business is threatened REVOLUTION IS A PROCESS, NOT AN EVENT Will likely lead to explosion of innovation, competition, new services New revenues for new players Maybe biggest winners will again be the incumbents (banks) George Orwell Contact Michael Salmony Executive Adviser BoD Equens SE michael.salmony@de.equens.com June