The gloves are off - payments punch up

The gloves are off

03 Apr 2019

The payments arena is fast becoming one of the most competitive sub-sectors of the banking industry, full of companies with vastly different backgrounds. We asked four industry experts who they thought would come out on top.


“What type of organisation will dominate the payments sector in 10 years?”


Marko Sjoblom
Founder & CEO, Fiinu 

I believe it will be smaller, nimbler, players that dominate. The larger ones, the incumbents, will still be operating in the market in one way or another. They may choose to invest in these smaller players, but we will have to see. If they do, that’s where things could get very interesting. They would have to allow these firms to run their own operations and not get sucked into the larger corporations.

GAFA (Google, Amazon, Facebook and Apple) will continue to invest in this space. If you look at what Chinese online payments provider Ant Financial is doing, it is already incredibly innovative and quick. We will likely see something similar coming towards Europe. Amazon is also very active in this space.

Plug-in banking is going to be the transformative model. In the payments landscape, you could think of the TransferWise, PayPal, and Revoluts of this world as forms of plug-in banking. They are effectively using the infrastructure to their advantage. The current banking industry is turning into more of a utility for these specialist players.

They have a much lighter infrastructure compared to legacy players and they have unbundled basic services. For example, we may think of a personal current account as one product, but it has many different features embedded.

These features include a facility for local payments, international payments, foreign exchange and an overdraft. In the context of payments, we have already started to see the transformation play out. If you need to transfer money abroad, there is no point paying £30 or £40 for your bank to do it, when you can get a cheaper, faster service through Revolut or TransferWise. Consumers are starting to think in those terms.

Changes to the payments sector are part of what I see as a fintech evolution, with people joining from all walks of life. Fundamentally, you must have a technology background and you will need to understand finance.

Fiinu is a challenger bank in the pre-application phase of the Bank of England authorisation process.


Bertrand Lavayssière
Partner, Managing Director (UK)

It is very hard to say. There are banks that are extremely active in this environment, such as BBVA or BNPP. These banks have said they know they need to be proactive as well as compliant. They have recognised the risk of losing revenues and market share and have prioritised a digital strategy for payments.

With fintechs, there is a question mark for me. Yes, they are very technology-driven, but sometimes they lack understanding of banking processes; regulatory reporting; and the complexities that come with the composition of existing bank systems.

When it comes to the global technology companies, I don’t believe Google will be dominant. It has tried three or four times to put together a payment wallet, but so far has tested and stopped several times over. It is a bit confusing where it is heading. It is refining its strategy, but the outcome is not yet clear.

Of course, there are other players, such as Visa, Mastercard and Swift. Swift is a big machine. It has already gone through a big transformation, launching several major payments projects. Most recently, there was the launch of the New Payments Platform in Australia. It is moving slowly because of governance requirements but is now in a very strong strategic position for the long-term. It has also embraced blockchain technology, which some of the global banks, such as JP Morgan and Goldman Sachs, have signalled they are also keen on.

Mastercard has become much more of a technology player. In Open Banking it is extending its businesses to value-added services and has very deep pockets. Visa, meanwhile, is a bit behind but is potentially more innovative than Mastercard. It has a larger client base, for starters, and is more focused on servicing for banks. I perceive Mastercard to be a little bit more technology-driven. Visa is innovative, but historically, more US-focused. The payment systems in the US is very behind in terms of infrastructure and innovation compared to the European market and some Asian markets.

Zeb is a strategy and management consultancy in the financial services industry.


Tony Craddock
Director General
Emerging Payments Association

What happens when you see a combination of rapid technological change, a competitive investment climate with too much money chasing too few opportunities, a benign regulator supporting competition and consumers eager to adopt new products rapidly?

You’ll get a flood of innovative products, lots of new entrants, multiple fast-growing companies competing for share, an explosion of adoption and attention, followed by a smattering of unicorns, mergers and acquisitions and some painful failures. That’s payments. Here are six qualities organisations will need to be successful.

A scalable business model

This is not necessarily about processing transacting worth trillions of dollars. It’s about thinking about margin at the outset. Many prepaid providers have struggled to make it to scale.

Adept at leveraging proven technologies

How many true Distribute Ledger Technology winners have there been, excluding the currency speculators and those on the dark side? We looked at the application of blockchain technology for payments four years ago and decided to come back and look again in five years. Next year we will give it another five. It’s not always the trailblazers in tech who hit the jackpot – think Intel and Nokia.

Globally-oriented but not necessarily global

Payments is a global business that relies on local adoption. It’s rare to be able to replicate a winning formula in different countries, let alone regions. M-Pesa only really works in Kenya – in nearby Tanzania, it bombed. So, keep an eye on what is working elsewhere, but always be looking at how to adapt and apply this at home.

Operating in B2B not B2C

If you want scale, surely you want consumers? Not necessarily. Everyone you sell to in B2B has their own customers. And there are lots of businesses – 9,500 new businesses are registered every week in the UK. Companies that get someone else to do the difficult job of dealing with end users are more likely to be winners.

A two-tone leadership style

Successful firms will be open, collaborative, creative and flexible on the one hand. On the other hand, they need to be ruthless with validating business cases, manically protective of culture, obsessive about reporting processes, and masters at selecting the right people and delegating well to them. Technology is opportunity-rich but risky. Companies that adopt a two-tone leadership style will dominate in payments in the years to come.

Acceptance that data is often the secret sauce

Data, data, everywhere. Hard to see, so hard to copy. This needs to be built into the fabric of the business.


The Emerging Payments Association (EPA) is a commercial membership association of payments industry influencers.