1 | Future of Payments – QED Conference| 27th January 2016

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The Future of Payments

Alan AinsworthJanuary 2016

2 | Future of Payments – QED Conference| 27th January 2016

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The Digital Industrial Revolution� Our lives have changed so much already; payments and banking are not

immuneParenthood v 1.0 (2001)• A few photos, printed

• Advice from friends, family

• High Street clothes, friends

• VHS videos and BBC

• Limited music on CD players

• Paper school registration

• School noticeboards, playground

• Payment by cheque, cash, POS

Parenthood v 2.0 (2016)• Photos on Facebook

• Online advice overload

• Online , eBay and reviews

• Netflix, YouTube and BBC

• Near-unlimited online music

• Online school admissions

• School emails, Facebook

• Payment online – variety of ways

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Barclaycard Contactless MobileUnique, first to market payment experience on Android, exclusively for Barclaycard customers launching in 2016

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4 | Future of Payments – QED Conference| 27th January 2016

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Today we see a number of key payments trends

1 Mobile Payments

2 Electronic Wallets

3 Convergence of Physical & Online

4 Biometrics

5 Alternative Networks

6 Alternative Currencies

Consumers Merchants

Devices& soft-ware

Devices & apps

Processor Network Processor Acquiring bank

Issuing bank

However, just looking at today’s trends may not be the best way to consider what the future looks like….

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• Digital evolution • Intangible, more abstract and more ubiquitous

The evolving payment FORM FACTOR

Trend Key Themes & Evolutions to 2025

The evolving payment CHANNEL

• Channel agnostic payment layer• Convergence, with less human interaction

The evolving payment JOURNEY

• Purchase journey not payment journey• Payee ubiquity

£ The evolving REVENUE MODEL

• Evolving; all about service more than product

Within consumer payments, there are four broad characteristics that have evolved over time

Historical Development

9000bcBarter

1600sCoins

1950Cards

TodayMobile

1890sTill

1960sPoS

2000se-com

TodayOmni

400Market

1400Stores

1900sOnline

TodaySocial

pre1400sExchange

1970sI/C

1980sFunding

TodayData

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7 Global Megatrends

Exponential Innovation

Continued Urbanisation

Rise of the Individual

A Global Society

Constrained Resources

Environmental Challenges

Form Factor

Payment Channel

PaymentJourney

RevenueModel£

Shifting Demographics

Consumer Payment

Characteristics

Increasingly Digital

Increasingly Intangible

Channel Agnostic

Less Human Interaction

Part of Purchase

PayeeUbiquity

Less Flow, Fees From Services

Influenced by global megatrends, changes in these characteristics will shape consumer payments in 2025

High impact

Medium impact

Lowimpact

7 | Future of Payments – QED Conference| 27th January 2016

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7 Global Megatrends

Exponential Innovation

Continued Urbanisation

Rise of the Individual

A Global Society

Constrained Resources

Environmental Challenges

Form Factor

Payment Channel

PaymentJourney

RevenueModel£

Shifting Demographics

Increasingly Digital

Increasingly Intangible

Channel Agnostic

Less Human Interaction

Part of Purchase

PayeeUbiquity

Less Flow, Fees From Services

Influenced by global megatrends, changes in these characteristics will shape consumer payments in 2025

High impact

Medium impact

Lowimpact

5 Just Buyers and Sellers

1Multi-source data for AI

3Sharing economy

2

Buyer payments

layer

4Purchasing replaces paying

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Influenced by global megatrends, changes in these characteristics will shape consumer payments in 2025

Payment is no longer distinguished as aseparate activity

• Payment customer relationship lost

• Payment becomes just a transfer of data

• Increasingly consistent payment experience

• Standardised payment data for all

Everyone acting as a merchant, look and feel of C2C and C2B converges

Choice of payment method moves from the seller to the buyer

• Deferred decisions on payment timeframe

• Data control switches from Seller to Buyer

Society becomes more open to sharing of assets and information

• Increased prevalence of leasing & renting

• Enabled by increased access to data

Real-time, smart decision based on internal and external data

• Greater customization of products & services

• Increased requirement for data

Smart and invisible data use is the common theme of the different elements

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Implications for legislators and politicians

1 Innovation needs certainty

2 Consumer, not product, regulatory focus

3 Importance of trust

4 Safety and security

5 Sandbox approach aligned to consistency

6 Think global, think standards, not solutions

A different world requires a different approach

7 Accessibility and inclusion

Seven Point Plan

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And finally…

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