Tech companies are realising that it is money that makes the world go around and are seeking to get a piece of the action. Amazon, Facebook and Apple are all trying to get into money.
Tech companies are realising that it is money that makes the world go around and are seeking to get a piece of the action. Amazon, Facebook and Apple are all trying to get into money. In China Alipay dominates ‘money’ with about 54% of the market (in transactions). Nowadays in China it is even possible to donate to a homeless person with your phone via their QR code.
To show the relative market development in the West versus in China we can look at payment processing. Currently, the payments processed per second by PayPal are 250, Visa processes 2,000 and Alipay processes 250,000. Alipay’s strategy for growth was to go after the ‘unbanked.’
There is a huge amount of financial innovation in China and some examples follow. ‘Tail’ uses Open Banking to give regular customers automatic cashback and loyalty rewards, based on their spending data – no extra cards required. ‘Moneybox’ rounds up purchases to make saving accessible to all customers. ‘Bumped’ gives customers fractional shares of stock in the brands they shop with the most.
In the UK we are a long way behind China. Legacy systems are a problem that slow development and it is important that financial organisations go through the painful process of dropping their legacy systems and launching on new platforms. Bank and building society branches are becoming out-dated and are primarily used by older customers. Any face-to-face contact needs to be highly differentiated from services available online in order to survive. Both Virgin and Santander are experimenting with turning branches into cafes with free working spaces, and banking as an incidental.
Digital disrupters already exist in the UK, such as Monzo Bank, and they help to move the industry along. Alibaba is already making inroads in Europe.
The big prediction for the future is that wearable technology will grow significantly. The less pleasant prediction is that we may go down China’s route of the ‘Social Credit System’ where individuals are constantly scored on various criteria which measure a ‘good citizen.’ For example, it is intended to standardize the assessment of citizens’ and businesses' economic and social reputation, or 'Social Credit’. Terrifying!!
Expert: Alex Sbardella – GDR Creative Intelligence
Facilitator: Colette Dunn – Milliman UK