March 7, 2017
Mobile World Congress (MWC) was historically set up to serve mainly the Telco industry, after which mobile became a strong focus as has the B2B business. Given the background with Telco, it's only fitting that the event in Barcelona embraces new digital trends that shape markets and accelerate the shifts in established positions in the market. This includes the world of finance, where one possible future for established organizations is the position of bit-pipes already well known in the world of Telcos.
The GSM Association (GSMA) released a report called State of the Industry Report on Mobile Money where the association reported 277 active payment services available by end of 2016 with 35 with an average of a million active users or more. The total amount of mobile money accounts was also reported to have reached the half a billion milestone. It seems appropriate that MWC was dominated by payments services of various offering types, those serving a whole transaction and those in a more enabling capacity, such as services focused on NFC or mobile payments. Payments are continuing to make their way to devices we carry with us and that trend shows no slowing down, making them a mainstream and universal force.
A growing number of services are being pushed into the limelight, given the rising volumes of online transactions with offerings in retail, investment banking and asset management. These are critical services such as those assisting in client onboarding, user identification and data validation, authentication, and Know Your Customer (KYC) requirements. Among these services were new hardware, such as retinal technology, biometrics and fingerprinting as an added layer of security and verification. New software applications included technology to verify and compare ID Cards and photographic documentation against databases and solutions similar or comparable to what the Estonian e-Residency team has established.
These services fit directly into compliance processes and serve as a foundation to build trust for novel digital first greenfield applications, by being able to authenticate transactions and onboard users securely and guarantee high security and integrity in the process, as well as demonstrate this to dependency groups such as financial regulators and policy makers. Despite the more or less universal requirements in place, the field is still very fragmented, with services such as Thomson Reuters World-Check, IDology, GB Group, Contego, often providing different data sets at different levels around the world, still with notable gaps on a global level in less established regions.
Given the universal requirements in FinTech applications for compliance processes around KYC and AML, it’s natural to see service providers as offering building blocks rather that full solutions. It’s also commonplace for digital finance operators to combine data sources and complement them with different perspectives and areas of strength, in order to form a holistic view and robust data set. If one data set doesn’t provide a sufficient data set, adding one or two others should yield a better perspective and data driven decision. In these processes, one bad apple can truly spoil the party.
Proprietary data silos also play a role, wherein traditional financial institutions will have large swaths of data yet getting access to them may be less than desirable a process. The Payment Services Directive 2 (PSD2) will accelerate a shift toward access to banking APIs, information and services, yet how that fits into the landscape and positions remains to be seen. The banking community has embraced APIs and continues to innovate in internal processes in that area, yet I can’t help feeling like APIs aren’t exactly new in 2017.
Building blocks are important and as specialization continues, the need for standardization and accessibility becomes important for the creation of online webhooks that link services together in a holistic fashion. With our work at Crowd Valley, we also expect to be able to present new takes on standardization of services and functions in this domain to make technology and services adoption smoother and more secure.
German automobile company Daimler recently acquired bitcoin operator PayCash to ‘launch mobility services Mercedes Pay.’ This opens up a world of interesting scenarios where FinTech and IoT overlap, not to mention a wide range of questions related to ethics, liability and decision-making with AI. Should your car be able to make payments on your behalf? I for one already have an integrated device that pays toll charges on my behalf, and arguably that is fairly vanilla of an application if not market standard. Should the car be able to pay for fuel? How about groceries? Combine the notion of a self-paying car, with the concept of a self-driving car – what do you get? Sounds like the setup of a joke, with an almost certainty of a knockout punch line.
An interesting observation my colleagues and I made was that blockchain was very underrepresented from what we’ve grown accustomed with and used to expect at events around the world. We had speculated that maybe the focus on tech made the crowd more cognizant of the immaturity of the technology and its applications, than touting it as the solution to the world's largest problems like human trafficking and poverty (often similar to how the hammer is the solution to the world's housing problem). Whatever the reason, Blockchain was notably absent at the event and in discussions.
The conference has unveiled plans to broaden the programming around FinTech at future events. This seems only natural – how it has pushed its way into the main programming already with the plethora of overlapping and competing services at various stages in the value chains. Of course, at this stage, the event is dominated by the corporate agenda, where Samsung, VISA and Mastercard dominated the FinTech arena with their respective innovations and solutions. It remains to be seen what the programming leaves space for in future iterations and what innovation we will showcase: tried and tested technologies or cutting-edge applications.