The Hub online series – top insights
29 Oct 2020
We wrapped up our The Hub online series – Navigating the new normal for payments – last week after an insightful five sessions across five weeks. Over the series we examined the impact of COVID-19 on the payments industry, and the challenges and opportunities that lie ahead. Our sessions each looked at a topic we believe will become increasingly important for the industry to consider in our new normal.
All our speakers had interesting outlooks, with evidence, figures, and case studies to share. There were some insights which particularly stood out for us too, so here’s our selection of the top takeaways, in no particular order.
If you missed the series, or would just like a recap, videos of each session along with the presentation slides are now available on our website.
- The most disruptive technology in the world is based around "first principles design"
In our first session, futurist, author, and founder of Moven, Brett King joined us from the USA and talked about how first principles design has disrupted industries over the years. First principles thinking looks at breaking down complex problems into basic elements, then starting again to build something from scratch, rather than modifying something that already exists. So, if you had to start over again with your product or service now, how would you build it differently?
Brett gave the example of when smartphones became ubiquitous. At the time, it was a chance for the payments industry to apply first principles theory and think outside the box. China really seized that opportunity by using QR code technology, bypassing even the traditional payment cards, and because of this Chinese payment companies are now at a point where they’re looking seriously at facial recognition and biometrics. He said the scalability of these solutions has led to much more rapid consumer adoption than seen in the west and, by that measure, has also been much more successful.
- COVID has offered the industry an opportunity to re-think customer relationships
Our speakers all spoke to some degree of the need to re-define customer relationships in the new normal. In session two, Miles Cheetham, Shared Data Lead at Icebreaker One and previously Head of Propositions at the UK’s Open Banking Implementation Entity in the UK said third party organisations are using open banking to connect to younger generations, who are beginning to think of them in the same way older generations think of their banks.
Miles said the customer journey is still crucial, particularly to digital natives who expect their transactions to be increasingly frictionless, safe, and secure. Then in session four, SWIFT’s Head of Payments Markets Oceania, Julie Bolan talked about how the future of payments was fast evolving to be instant, frictionless and transparent, with global interoperability.
Organisations operating in the new normal should also be mindful of new customer expectations and behaviours and remember to cater for diversity e.g. different age brackets and their changing needs. In our first session, Group Chief Executive of SBS Bank Shaun Drylie said the challenge for the industry in New Zealand is how we can lean into these changing consumer behaviours while continuing to add value along the payments chain.
Also in session one, Brett King said in New Zealand, the industry should take the opportunity to build payment networks cooperatively, rather than try to win at them individually. If, as an industry, we can agree on those networks then create products that were supported by all the banks and regulators, this would remove the fragmentation that often proves to be a big barrier to consumer adoption, he said.
- The notion that these are unprecedented times is just not true
In session three, Tom Goodwin threw out the challenge to the audience that though the environment we’re operating in is different to what we’re all used to, many of the trends we see coming up in payments are things the global industry has seen coming for a long time. The pandemic has just accelerated the timeline for these changes. So, saying we are in unprecedented times is not strictly true.
For example, the decline of cash in New Zealand and elsewhere has long been predicted, and the rise of digital payments has been a continuing trend too, he said. Businesses now needed to be mindful of new customer expectations and behaviours, which doesn’t just apply to the young, and adapt their products and services to meet those needs.
Tom said while we’re living in “weird times” where everything can feel a little strange, it also means all the assumptions we’ve made in the past has been subverted. That can be quite exciting because “when everything is uncertain, anything is possible”. The industry should seize the opportunity in these times of chaos and turbulence to be bolder and more creative, he said.
- Financial wellbeing affects mental health and general wellbeing
There are key stressors that keep coming up in discussions around wellbeing during the pandemic, said Managing Director of Xero New Zealand and the Pacific Islands, Craig Hudson in session five. Small-to-medium enterprises (SMEs), which form the backbone of New Zealand’s economy, are worried about cashflow and afraid of losing customers. Households are worried about the vulnerability of their personal incomes and having to juggle both work and home in the same space. Craig said leading with empathy in the workplace and community was now more important than ever, as financial stresses can take a heavy toll on mental health and wellbeing.
The good news is there are tools and resources available for both businesses and individuals. Xero offers a resource centre for SMEs called The Check-In which helps them get started with simple actions on how to introduce wellbeing into the workplace. Kiwibank’s Sustainability Lead Julia Jackson said the bank offers a way for financially vulnerable customers, such as those on low incomes who also have high debt, to access safe credit options. The bank has partnered with Ngā Tāngata Microfinance Trust since 2012 to offer interest-free and fee-free micro loans which eligible customers can access to help with debt relief and asset building.
- The regulatory space continues to evolve, both locally and globally
In session two, Senior Policy Advisor Glen Hildreth from the Ministry of Business, Innovation and Employment (MBIE) spoke of the need to ensure that any regulatory settings are not acting as a barrier to innovation. He said we can take lessons from what other jurisdictions have done, for example from Australia and the UK in the consumer data right space.
Icebreaker One’s Miles Cheetham said with open banking in the UK, the regulators have been very helpful and willing to “roll up their sleeves” and work with industry to enable innovation.
And in session four, Reserve Bank of New Zealand (RBNZ) deputy governor Geoff Bascand said the Bank was taking a “stepping up and moving forward approach” to payment systems regulation. The RBNZ will look to strengthen its regulatory approach and increase its leadership role, but without standing in the way of innovation.
Ultimately, the speakers all agreed that a balance needed to be found between regulation and innovation, and the beneficiary of this process should be the consumer.
Thank you to everyone
We would again like to thank our sponsors, speakers, and everyone who attended The Hub online series. We had a great response to this free series with more than 570 people registered from across the industry.
We hope you all found the content thought-provoking, and that it has opened up further avenues for conversation and discussion within your organisations and across the industry as New Zealand and the world continues to settle into the new normal.