Like Clockwork: The Steady March of Change in Banking and Payments
Chris Hill, Managing Director, Pacific, ACI Worldwide
Chris Hill, Managing Director, Pacific, ACI Worldwide
I've often heard it said that nothing changes quickly in the world of banking and payments. I think inherent in such commentary is the belief that we in the industry are unimaginative, risk-averse and slow-moving dinosaurs who think money can only change hands in so many ways. It's not a particularly flattering portrayal of what we do, and this notion runs counter to the passion and devotion I see daily among my peers.
"As the need for innovation grows more urgent, banks, payments processors and retailers are rising to meet that challenge"
Instead, I see an industry of deep resources for invention, change and renewal—one that is often ahead of the curve.
I've recently begun considering how best to tell this story, to find an analogue that clearly demonstrates the value of our work. Ultimately, I settled upon a watch, an elegant and deceptively complex contraption.
If you look at a watch, the first impulse might be to say that not much is going on.The hands all move relatively slowly, with only the second hand appearing to operate with any sense of urgency. And yet, behind the face is a complex ecosystem of interlocking and in-motion parts working non-stop to make sure everything keeps moving, well, like clockwork.
I've found this to be a good way to look at banking and payments. From a distance, change may appear slow—perhaps even nonexistent. However, the reality is that change within our industry has been both steady and massive. Very few industries can claim to have introduced new offerings every decade or so for the past half century—and at a scale that has directly touched billions of people.
Indeed, if we look back only a half-century, our accomplishments stand out in dramatic relief. In the 60s, we saw the rise of the credit card. The 70s gave us the ATM, the 80s gave us the debit card and the 90s gave us online banking. Innovation has accelerated in the past decade into the worlds of mobile and real-time payments. Change has led to the creation of massive new companies collectively worth hundreds of billions of dollars.
When viewed this way, we see that our story is vibrant and innovative. We may not always know what's waiting on the horizon, but our history shows that we are always ready to embrace change and capitalize on each new opportunity.
Today, we are at a new inflection point in the world of payments. The current economic model of payments is being challenged on every front. Interchange compression is real. ACH-type systems and their newer variants are becoming faster and cheaper. Technological innovations have made the choices and designs of yesterday less relevant, and together this is leading to immense stresses in the maintenance of the status quo. In fact, the world of payments has proven to be quite the proving ground of late, with a whole host of innovators outside the industry seeing the opportunity and attacking the incumbents. Already we've seen many interesting and innovative attempts to bring new services and technologies to the marketplace. In the face of a sea change, it will be exciting to see how stakeholders choose to redesign—even reimagine—the processes and technology necessary to meet the demands of the new paradigm. And we are seeing every indication that as the need for innovation grows more urgent, banks, payments processors and retailers are rising to meet that challenge.Systems such as Apple Pay, PayPal, mPesa or UK Faster Payments have captured imaginations and dominated conversations. Some of these innovations are true game changers, while others are stepping-stones to a more sophisticated system.
Our lasting legacy in these moments is how we choose to respond to the opportunities placed before us. And we can start by mastering our story, by showing that decades of constant progress have brought us to this point and that we are ready to continue propelling the world forward.
Over a decade ago in a piece for ,MIT Sloan Clark Gilbert wrote, "The real story behind disruptive innovation is not one of destruction, but of its opposite: In every industry changed by disruption, the net effect has been total market growth." In this way, to embrace our industry's long history of change is to embrace this new opportunity for growth—much as we see the ongoing growth in the electronification of payments and the participation of more and more people in the formal banking system.
More than that, it is to embrace the passion that drives us to create payment solutions that meet real societal and business needs today and help the industry continue to renew and reinvent itself in the future.
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