2016 in Payments: What will last us through 2017?
2016 has been an exciting year for the financial industry. Constant buzz surrounded the ONPEX team on their payment and banking travels from Copenhagen and London to Las Vegas and all the way to Dubai. New headlines and trends were delivered to our inboxes multiple times daily by keen-eyed (and -eared) journalists from all over the financial world. But which topics were the most talked-about and persistent? Which developments should we keep an eye on into 2017 and possibly beyond?
The much-discussed update on 2007’s PSD, which aimed at creating a Pan-European payments market, is meant to level the field across all industry sectors. The main targets of the update are1:
- Improved consumer protection and security
- Driving innovation
- Integrate and standardise payments
- Increased transparency regarding new payment methods (e.g. online or mobile) and their use
- Market access for new providers
Established payment businesses and start-ups, banks and technology companies all have to adapt to the new situation. The way towards an updated banking infrastructure will definitely require high efforts and investments, but it seems that in the end the benefits outweigh the concerns. This is particularly relevant for consumers who will benefit from easier, faster, more secure and cost-efficient financial transactions. One thing is sure, though: It will also take some time to implement the changes and the topic will surely follow us all through 2017.
The UK’s decision to leave the European Union will have far-reaching consequences that affect nearly every part of life. For the financial sector, massive restructurings will ensue, as we detailed in an earlier blog2. They include re-working European and global taxing and trade agreements, shaping new banking legislation, and re-thinking one of the financial sector’s biggest USPs, namely, EU-passporting. It will also be interesting to see if and how the UK will follow the cross-EU evolutions PSD2 is certain to set in motion.
Banking as a Service
One of the most interesting topics that gained traction in 2016 is Banking as a Service (BaaS). With new regulation such as PSD2 and an increasingly global consumer environment, creative new payment solutions seem to pop up every day. The expectations that consumers and businesses have of their banking services are changing rapidly – security, speed, and ease of use are becoming increasingly important, while costs for services have to be reduced significantly. New technologies are required to change traditional banking structures and to connect the worlds of banking and payments. Such solutions that modernize the core banking technology and connect it to payment infrastructures through APIs are summarized under the term BaaS3. They have the potential to usher in a new age of finance and it will be exciting to participate in this evolution in 2017 and beyond.
These topics do certainly not cover all the exciting things that happened in payments this year, but they are surely among the most impactful and we can be certain to see more of them over the next years. ONPEX is ready to meet all challenges that come with them head-on. The modular BaaS technology already meets PSD2 requirements and customers from Europe and all over the world can expand their offers, streamline processes, and offer new API-based payment services.