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The PAYMENTS Model An Overview of Eight Key
Dimensions of Change in Payments
Vilnius, November, 2017
BANKING REPORTS
2
David Gyori: FinTech and Banking Innovation
• Financial Technology Trainer
• Banking Innovation Trainer
• Consultant, Writer, Researcher
• CEO of Banking Reports
• Co-Author of The FinTech Book
• Member of Panel of Judges of the European FinTech Awards
• Member of Judging Panel of UK National Technology Awards
• Member of the Advisory Board of multiple FinTech companies
• Founding Member of the World FinTech Association
• Mentor of SuperCharger Alliance
BANKING REPORTS
3
David Gyori: FinTech and Banking Innovation
The Driving Forces of FinTech: GPT What is holding FinTech back?
REGULATORY PATCHWORK
COMPLIANCE
DIGITAL FINITY
TECH: GAFA
ICT is GPT
Writing 3500 BC
Printing 1500 AD
Steam Engine 1790 AD
Electricity 1890 AD
30 AREAS OF FINTECH IN
COMPETITIVE/COOPERATIVE VIEW
RiskTech
Digital Currencies
Others
RegTech
Compliance
COOPERATION Video Banking
Interbank Blockchain
ATM Innovation
Neo-Banks
Back-Office Blockchain
APIs
IoT
P2P Lending
Virtual Reality
Crowdfunding
Biometric Identification
Digital Identity
Micropayments
Wearables
Augmented Reality
Personal Finance Dashboards Roboadvisors
Social Trading
Big Data
Back-Office Artificial Intelligence
Wallets
Phone-Related-Solutions
Remittances
Card Substitutes COMPETITION
15 000 Companies
USD 150 bn Invested InsureTech
30 AREAS OF FINTECH IN
COMPETITIVE/COOPERATIVE VIEW
RiskTech
Digital Currencies
Others
RegTech
Compliance
COOPERATION Video Banking
Interbank Blockchain
ATM Innovation
Neo-Banks
Back-Office Blockchain
APIs
IoT
P2P Lending
Virtual Reality
Crowdfunding
Biometric Identification
Digital Identity
Micropayments
Wearables
Augmented Reality
Personal Finance Dashboards Roboadvisors
Social Trading
Big Data
Back-Office Artificial Intelligence
Wallets
Phone-Related-Solutions
Remittances
Card Substitutes COMPETITION
15 000 Companies
USD 150 bn Invested InsureTech
I
I
I
D
D
N
D D
D N
D I I
I
D D
N I
D N
D N
N
N N
I I
N
N
I
1st DIMENSION: -> Physical to Digital
-> Access to Account Regulated
-> Yes to Competition and Cooperation
-> Millennial Focused
-> E-Wallet Oriented
-> New Security Challenges and Solutions
-> Tied to Commerce
-> Smartphone Centered
1
35 DIGITAL-ONLY BANKS IN THE UK:
PERFECT COMPETITION vs OLIGOPOLY
The Services Family Bank
(UK Military Personnel)
Charter Savings Bank
Hampden & Co Bank
(Private Banking)
Tide Bank (SME)
Thinkmoney Bank
(Money Worries) SCOPE
Secco Aura Bank
(Message Banking)
Monzo Bank
(Formerly Mondo)
BFC Bank
British Business
Bank (SME)
OakNorth Bank Together Money Bank
(Mortgages)
Civilised Bank
(SME)
Cambridge & Counties
Bank (SME)
Copernicus Bank
(Corporate)
Aldermore Bank (SME)
Monese
(Pan-European)
Tandem Bank
(Call Center)
Loot Bank
(Students)
Paragon Bank
Axis Bank
ICBC UK (Wholesale Banking)
Starling Bank
FCMB UK
Atom Bank
Ffrees Bank
(No Credit)
OneSavings Bank
Fidor Bank SIZE
Abacus Bank
Lintel Bank
(Migrant Workers & Students)
Monizo Bank (Freelancers, Tax)
Masthaven Bank
(Mortgages)
Private and
Commercial Finance
Group (loans)
Shawbrook Bank
(SME)
Templewood Bank
(Merchant Banking)
The VR Payment Technology means people using virtual
reality goggles to browse virtual reality shopping malls will be
able pay for purchases without taking off the goggles. They can
just nod or look instead. (VR Pay by Alibaba)
Alibaba is currently beyond the stage of initial piloting of the VR Payment Technology. VR Pay means
people using virtual reality goggles to browse virtual reality shopping malls and paying for purchases
without taking the goggles off. They can just nod or look in a focused way (specifically by staring at a point
on the virtual display for longer than 1.5 seconds) to initiate the payment. “VR Pay” by Alibaba is in a
nascent stage but it combines three key areas beautifully: online purchases, virtual reality and biometric
payments. VR Pay already has a logo and a publicly available beta application. Alibaba recently created a
separate, dedicated, focused VR Pay Team within its financial subsidiary Ant-Financial. It is now clear that
VR industry is branching out to be more than just an entertainment device (it is becoming a ‘tool’ not just a
‘toy’) and most early adopters of VR Pay use it not to be interrupted in their online VR gaming experience or
VR live broadcast session. One barrier to the spread of VR technology is that current Hardware and
Software capabilities are typically limited in VR capacity or basically too expensive for the average
consumers.
BANKING REPORTS
NUMBER OF COMMERCIAL BANK BRANCHES
PER 100 000 ADULTS: DENMARK
BANKING REPORTS
14
Why Old People Buy / Not Buy Digital Services
BANKING REPORTS
The Holy Grail:
On-Demand Transactional Video Banking
FUNCTIONAL
ON-DEMAND
TRANSACTIONAL
SCHEDULED
CALLS
TO DISCUSS
THINGS
SCHEDULED
TRANSACTIONAL
INSTANT
ON-DEMAND TO
DISCUSS THINGS
BANKING REPORTS
16 ACCOUNT OPENING and INSTANT CARD
ISSUING machine by Bank of Beijing
This is an
ACCOUNT
OPENING and
INSTANT CARD
ISSUING
machine by Bank
of Beijing.
You have to push
your ID Card in
and provide
Fingerprint to get
identified. (Bank
of Beijing has
total assets of cca
USD 300 bn, it is
a State Owned
Enterprise.)
2nd DIMENSION: -> Physical to Digital
-> Access to Account Regulated
-> Yes to Competition and Cooperation
-> Millennial Focused
-> E-Wallet Oriented
-> New Security Challenges and Solutions
-> Tied to Commerce
-> Smartphone Centered
2
• MNOs
• GAFA
• BAT
• Chat Giants
• Large FinTech: Moven /
PayPal / TransferWise
• IT Companies
• Small FinTech: Social
Trading, ForEx, etc.
• Gaming
• Retailers
• Card Schemes, Prepaid
• Digital Wallets
• Challenger Banks
• THE SMART BANKS
BANKING REPORTS
19
Key Dates of PSD2: IN FORCE but 0 effect
• Euro Created by Maastricht Treaty: February 1992
• Euro Banknotes and Coins: January 2002
• PSD1 Enters into Force: December 2007
• PSD1 Transposed into National Law: November 2009
• PSD2 Consultations, Preparations Begin: June 2010
• PSD2 Formal Official Proposal by EC: July 2013
• PSD2 Approved, EU Parliament, Council: November 2015
• PSD2 Enters into Force: 12th of January 2016
The main goal of PSD2 is to create a more
uniform, transparent and open EU payment
market that keeps innovation, competition and
security to the fore.
BANKING REPORTS
20
Key Dates of PSD2: IN FORCE but 0 effect
• PSD2 Enters into Force: 12th of January 2016
• PSD2 EC Publishes Formal RTSs: June 2017 -> Dec 2017
• PSD2 Transposed to National Law: 13th of January 2018
• PSD2 RTSs Enter into Force: December 2018 -> June 2019
At least 3 major rounds of postponements have already
occurred. How many more will?
PSD2 will enable individuals and businesses to give Third Parties
access to their payment accounts. These players will facilitate
payments by accessing the customer’s payment account (with their
prior consent) and initiating transfers in their name. Third Parties may
also propose other services, such as aggregating information from all
of the customer’s payment accounts in one place to help them better
manage their finances.
117 Articles, 25th of December 2015 Published in the Official Journal of the EU
3 key types of API BANKING
Front to Back PSD 2 Platformification
BANK
INTERFACE
PROVIDER
BANK BANK BANK
INTERFACE
PROVIDER
BANK
INTER-
FACE
PROVI-
DER
INTER-
FACE
PROVI-
DER
INTER-
FACE
PROVI-
DER
INTER-
FACE
PROVI-
DER
BANKING REPORTS
Accenture: Data Black Holes, Negative Spirals 22
“With less customer data, the
legacy banks would enter a
negative feedback loop in which
their ability to compete would
steadily decline, eroding a key
competitive advantage that banks
currently enjoy through their
wealth of customer data and
insight.”
2 Paradigms of Openness
3 key types of API BANKING
3rd DIMENSION: -> Physical to Digital
-> Access to Account Regulated
-> Yes to Competition and Cooperation
-> Millennial Focused
-> E-Wallet Oriented
-> New Security Challenges and Solutions
-> Tied to Commerce
-> Smartphone Centered
3
BANKING REPORTS
JAMIE DIMON: CEO of J.P. Morgan
26
“When I go to Silicon
Valley…they all want to
eat our dinner. Every
single one of them is
going to try. That’s
capitalism and I think
that’s a good thing.”
BANKING REPORTS
27
Competition vs Cooperation
• COOPETITION: banks and
FinTech companies, tech
companies with each-other
• FRENEMIES: banks and
FinTech companies, tech
companies with each-other
• CO-MARKETING: cafes,
payments opportunities,
FinTech companies are doing
it much more openly, banks
have been reluctant... to
share distribution channels
• ... communicate in a
FinTech dress
4th DIMENSION: -> Physical to Digital
-> Access to Account Regulated
-> Yes to Competition and Cooperation
-> Millennial Focused
-> E-Wallet Oriented
-> New Security Challenges and Solutions
-> Tied to Commerce
-> Smartphone Centered
4
BANKING REPORTS
29
Moven from New York -> from 1 to 5 mn clients
BANKING REPORTS
30
The Computer Gaming DASHBOARD
BANKING REPORTS
31
USA -> Canada -> Australia -> UK
Banks like the
Moven app
because it
reduces
attrition and
develops
stronger ties
between
customers
and the bank.
Amazon Web Services: AWS is a huge enabler for
Moven and the fact that Amazon has data centers in
Ireland, the UK and Frankfurt means Moven can meet
whatever regulatory regimes it needs to after Brexit.
Westpac runs Moven on AWS in Sydney, and by using
the ASW cloud Moven can stand up a new instance
almost anywhere in the world within half a day.
Moven was
founded in 2011
BANKING REPORTS
32
Generations: 5 SECONDS vs 5 MINUTES
The iPad VIDEO
BANKING REPORTS
33
Loyalty of Millennials: the problem for banks
Digital Loyalty: The Lock-In Effect
Do you want to transfer
money?
Just say it out loud!
5th DIMENSION: -> Physical to Digital
-> Access to Account Regulated
-> Yes to Competition and Cooperation
-> Millennial Focused
-> E-Wallet Oriented
-> New Security Challenges and Solutions
-> Tied to Commerce
-> Smartphone Centered
5
6th DIMENSION: -> Physical to Digital
-> Access to Account Regulated
-> Yes to Competition and Cooperation
-> Millennial Focused
-> E-Wallet Oriented
-> New Security Challenges and Solutions
-> Tied to Commerce
-> Smartphone Centered
6
ID Now Explained
https://www.miteksystems.com/mobile-verify
Digital Onboarding via
Smartphone
ID NOW
Secure & legal personal identification and electronic signatures for the digital age.
Video-Ident: Verify customers online - reliable and optimized for conversion
Integrate IDnow into your offering within a few hours: IDnow verifies your customers
via web browser or smart phone EU-wide. Fast and reliable. IDnow eSign: Bring
your customer acquisition into the digital age with legally binding, digital
contract signing.
The final element for your digital customer experience: Digital signatures in your
customer acquisition channels cut process costs and optimize your customer
experience.
BEHAVIOSEC
Continuous Authentication
Continuous Authentication
BehavioSec analyzes activity from login to logout, looking at behaviors like keystroke
dynamics, touch and mouse motion, and compares it to previous interactions from
the same user. It creates a session ticket and a score, using the full score from the
session. That score is fed into your risk engine, so you can automatically step up
security if you need to. You can also use BehavioView dashboard to see the score
breakdown, and identify behaviors or anomalies BehavioSec has flagged.
Adaptive Security
The algorithm stays up to date with user behaviors and skills, so that as they change
and improve, so does the security layer — reducing false positives. The core
algorithm is continually improved for session-based intelligence and enhanced role-
based management. Machine learning algorithm to spot individual anomalies in real
time.
Voice Intelligence LLOYDS BANK
Lloyds Banking Group has collaborated with security firm, Pindrop, to roll out the
latest telephone fraud prevention technology, which creates an ‘audio footprint’ of
each call by analysing 147 unique call features such as location, background
noise, number history and call type.
The Phoneprinting technology highlights any unusual activity, identifies potential
fraud cases and flags up any potential criminal activity – without the need for
customers to provide any additional information.
+ USA, UK, India
7th DIMENSION: -> Physical to Digital
-> Access to Account Regulated
-> Yes to Competition and Cooperation
-> Millennial Focused
-> E-Wallet Oriented
-> New Security Challenges and Solutions
-> Tied to Commerce
-> Smartphone Centered
7
BANKING REPORTS
44
ApplePay: COMING SOON!
2014. October: USA
2015. September: UK
2016. February China
BANKING REPORTS
45
SelfPay from Toronto + Even Beyond
http://digitalretailapps.com/
BANKING REPORTS
46
Korea: The Answer to ApplePay and beyond...
BANKING REPORTS
And Taking Payments Even One Step Further:
The New Amazon Stores COMING in 2017
8th DIMENSION: -> Physical to Digital
-> Access to Account Regulated
-> Yes to Competition and Cooperation
-> Millennial Focused
-> E-Wallet Oriented
-> New Security Challenges and Solutions
-> Tied to Commerce
-> Smartphone Centered
8
BANKING REPORTS
Smartphone: Multifunctional Touch-Point
BANKING REPORTS
50
Smartphone: Multifunctional Touch-Point
KEY APPLEPAY ROLLOUT DATES
USA: October, 2014
UK: September, 2015
China: February, 2016
Canada: May, 2016
Singapore: May, 2016
Switzerland: July, 2016
France: July, 2016
Hong Kong: July, 2016
New Zealand: October, 2016
Spain: December, 2016
Ireland: March, 2017
1. Use Your Online Bank With It
2. Use Your Online Bank Through an
Application With It = Mobile Banking
3. Pay With It
4. Withdraw Money With It
5. Use it for Identification
6. Use it for Text Message Transactions
7. Sales Platform for Banking Services
8. Cross-Sell Platform
9. Advertisement Platform
10. Social Media Platform
11. Turn it into a POS
12. Turn it into a P2P ATM
13. M-Commerce Platform
14. Call Your Bank with It
15. Retrieve Data for Credit Score
16. Deposit a Check
17. Video Banking
18. Use it for AR
19. Use it for VR
20. Education, Gamification
+ Australia, Russia, Japan, Taiwan already happened. Next is: ITALY.
BANKING REPORTS
51
Smartphone: Sub-Categories in Main Areas
THANK YOU FOR
YOUR ATTENTION!