FinTech Forum: 5 Predictions for 2018, with Neira Jones
The buzz around the payments space is at an all-time high, with incumbent FS organisations and regulatory bodies alike rushing to catch up with the speed of emergent FinTechs. We engaged one of the industry’s most distinguished heavyweights, Neira Jones, in a forum with La Fosse Associate’s FinTech specialist Louis Rado and Private Equity specialist Emma Roderick, to discuss payments from both sides of the table. In the first of these two articles, Louis and Neira discuss her predictions for the future of the payments space.
Neira Jones is a NED, independent advisor and international speaker with more than twenty years’ experience in financial services and technology. Amongst other places, you will find her in Thomson Reuters UK’s top 30 social influencers in risk, compliance and RegTech and Richtopia’s Top 100 Most Influential People in Fintech. She has worked extensively in global banking, from Banco Santander to Barclaycard, where she served as Director of Payments, Security and Fraud. She was a partner at the payment consulting service Accourt, FSTech/ Retail Systems’ “Payments Team of the Year,” and until recently was Chairman of payments software developer Comcarde. Currently she is a partner at Global Cyber Alliance, Chairman for The Centre for Strategic Cyberspace + Security Science, as well as serving on the board for GiveADay, Emerging Payments Association, Ensygnia andCognosec.
1. Tech giants will continue to democratise FinTech technology, but not takeover FS.
Tech giants have penetrated the payments space, differentiating themselves from the incumbent FS organisations by appealing to tech natives. Often, they have simply made existing technology commonplace, from Apple’s democratisation of biometrics with face-ID, to Amazon infiltrating our homes with AI in the form of the Echo. Meanwhile, emergent FinTechs are appealing to millennial styles of communication by adding payment to messaging systems like WeChat and building crowdfunding platforms.
Future disruption will be a continuation of the technological and regulatory trends we have already seen, with big tech continuing to drive change in the payments and FS space. However, headlines decrying the advent of an Amazon or a Google bank are unfounded: the entry of the tech giants into the payments space is indicative of the commercialisation of technologies which have been in existence for a long time, rather than of those same giants taking over.
2. We needn’t scaremonger about GDPR.
GDPR is in fact not a massive advance on existing regulations: if you are worried about not being compliant from January 2018, you are likely not compliant with current legislation.
We should avoid scare-mongering about non-compliance. Everything in business, but most especially in financial services, is about risk management, something which traditionally has been one of FS’s strong points. There is risk you mitigate, risk you avoid, risk you insure against. No-one has infinite funds, and you can’t be 100% secure all the time. Cyber-risk needs to be an inclusive part of traditional risk management practices.
3. The FCA will work with FS organisations on PSD2, not against them.
One of the most high-profile debates is that on ‘screen-scraping’: which PSD2 proposes to ban. This move which could put some mature FinTechs such as Intuit, who rely on screen-scraping, out of business, and so has been campaigned against extensively.
The EBA are listening to the industry, showing a willingness to work with organisations and help them adapt. Although they have not revoked the decree, they are delaying the enforcement of the legislation until September 2018, in order to allow time to adjust to businesses who rely on the practice.
The past few years have also seen the rise of regulatory sandboxes, which allow organisations a ‘safe space’ in which businesses can test innovative products, services, business models and delivery mechanisms without immediately incurring all the normal regulatory consequences of engaging in the activity in question.
4. New regulations will be an opportunity for start-ups and incumbents alike.
The regulations will of course mandate the fulfilment of certain obligations, including capital requirements.
However, not only will the regulation be hugely beneficial to the consumer, but it will drive competition and innovation in both small and large companies. Competition and market authority has already been mandated by the CMA, with the 9 largest current account providers being instructed to share information about specific current accounts through open APIs. This comes into full effect in January 2018. The move towards open APIs is a massive opportunity for FinTechs because this is mostly how their architecture stack is built, and there will be many partnership opportunities with incumbent FS organisations.
It is also a key opportunity for incumbents, because suddenly they have access to the services of their competitors: some well-established FS organisations are already doing a lot in the digital space.
5. The CISO will need to drive cyber-security from the top-down.
Cyber-security has always been important in the payments space. The Payment Card Industry Data Security Standard was established in 2004, which was an industry-led movement to protect cardholder data, whilst the EMV standard has been around forever. Now cybercrime is making even more headlines – just look at Uber.
The CISO should therefore sit not just on the payments exec board, but on the exec board full stop. It is the CISOs who are ousted when major breaches occur, so they need to have the power to prioritise security from the top rather than just being an advocate.
In our second payments forum, Neira discusses the 6 most important questions to ask before investing in FinTech with La Fosse’s Private Equity specialist Emma Roderick.
Neira Jones | LinkedIn