What about the banks?
In part, bank cards have been disappearing. I saw that as early as 2022 in India, where Worldline is quite big: 600 million card payments a month, against a staggering 6 billion mobile payments. Yet today, in 2030, banks still have a unique value, which in fact they have always had.
When payments are real-time, money is everywhere. The risk of fraud increases, so we need to monitor more. Moreover, the number of payments by consumers has increased dramatically. To check that all these payments are made correctly, you must process a lot of data and be able to decide on them in the blink of an eye. This is possible, thanks to AI.
At the same time, this mass of payments is creating an enormous KYC (know your customer) challenge. We have to move to high frequency KYC, when no consumer likes those checks. So we automated KYC. All that risk management does still happen (for the better) at the banks themselves. For that, they also still enjoy a unique position, with customers trusting them enormously. That is their unique asset, which they must keep.
What do banks use that asset for?
They use it to offer the number one app. Because only with that can they still make a difference. However, this is no longer an app for easy payments because – remember – payments are invisible. So what added value does a banking app offer today in 2030?
Point of sales today know very well who you are as a customer, how often you visit, what you buy, etc. This is all based on data. Data, which banks have a lot of. They know a lot about their customers. With that knowledge, banks can create value, for buyers and sellers, if they share their data with merchants. But that then requires new collaboration in an ecosystem, where banks and merchants are also partners for data, for example between banking and shopping apps. Even merchants among themselves give discounts for each other‘s offerings, for example, if they have common customers. Google could have made this happen, but banks made it happen faster; with more customer trust.
By sharing data, banks now walk a fine line between profit and privacy. After all, banks gained their asset – trust – just because they maintained confidentiality about payments. And do we, as citizens, want our bank to reduce this confidentiality in exchange for benefits? Perhaps young people today, in 2030, have less resistance to this.
In addition, security remains a challenge because security is at the heart of every transaction. In the past decade, security was a religion. We regularly looked at how to make payments even more secure, according to standards set by the financial industry. We were in control. But today, if we rely solely on security through our smartphone, we don‘t know how good or bad it is. We often don‘t even ask ourselves anymore. But what if things go wrong and payment fraud occurs, in times of massive instant peer-to-peer payments? Then how do we resolve that, by what rules, from whom? The banks? Europe? Big tech? And if the latter set the rules, do they also manage the identities? Payment security is the biggest challenge for me in the years to come.
