I’m starting a weekly summary of interesting stories from the intersection of payments and banking, with artificial intelligence, augmented reality, blockchain, cryptocurrencies, cloud, big data, and mobile on the agenda.
Swift’s annual conference, Sibos, was held last week in Toronto. I didn’t attend this year, but here’s a sample of the major topics I picked up.
- Swift gpi (global payment innovation) is aiming to be the next-generation Swift network with better tracking, transparency and funds availability. I’m sceptical that they can innovate quickly enough to hold off the challengers, but it must be remembered that banks jointly own Swift, so it would require some powerful incentives to move away from it.
- Nacha introduces same-day ACH credits and debits. Increased competition among other real-time payments providers in the US is evident, with announcements from Zelle and The Clearing House. It seems to me that one of the problems in the US is an overreliance on pure market-based solutions, and this comes at the cost of standardisation and availability. Can the Fed really steer all US FIs towards a set of standard interfaces and operating models, or will they end up with a faster version of the balkanised (i.e. limited interoperability) ACH system they have today?
- Bernanke: love blockchain, hate bitcoin.
- On Swift’s Facebook page, it lists a relationship with blockchain as “It’s complicated”. OK, I just made that up, but it has more than a ring of truth. Not to be outdone, JPMC was touting Quorum, which is being developed with ANZ and RBC.
- Swell conference. In a piece of clever guerrilla marketing, Ripple held up a kind of anti-Swift conference just a few blocks from Sibos. RippleNet is gaining some traction among early adopters, but global transaction volume is still minute in comparison to Swift.
Another Swift hack. In a piece of brilliant timing (or terrible luck), news came out just before Sibos of yet another hack of the Swift network. Most of the stolen $60m has been recovered, but with 11,000 members, Swift clearly has a lot more work to do to secure its network. Although it should be stated that the entry point in each case seems to be malware carried into the target banks probably by persons associated with the local banks. Last year, a similar attack netted about $81m, though the hackers actually attempted to heist $951m.
Facebook and PayPal expand their partnership into P2P payments. Facebook is expanding its partnership with PayPal, enabling users to use Messenger to send money to each other (currently only available to US users). There are several competing options: Square Cash, PayPal’s Venmo, Snapchat payments, and Apple’s Pay Cash, which is expected to launch soon (it missed the iOS 11 release, but is in testing). Similar services are already available in many other countries around the world, and I think these services are attractive to US customers because the antiquated payments system there makes it so difficult to transfer money quickly. But the future battleground for P2P will really be about the platform. Will consumers decide to use one of the big Apple/Facebook/PayPal platforms, or their bank app, or another third party app, to do P2P transfers?
Australia’s NPP is expected to launch on Australia Day (26 January 2018). Faster payment initiatives continue to sweep the world. Even though intra-day settlement is already available in Australia, it’s only available weekdays between business hours (except for some same-day bank transfers). True innovation will be unlocked by the 15-second transfer window of NPP and full 24×7 operations. This is a good move by the Australian regulators and follows similar moves in other countries. One of the key innovations is the addressing service, which removes the necessity to exchange bank account numbers and will underpin multiple other initiatives.
Unfortunately, every country has implemented a different model of real-time credit transfers, so this isn’t yet the dawn of cheap and fast international transfers, although there are plenty of startups such as TransferWise, Ripple and others rushing to fill the space. The big losers will be the card networks, as the low or zero fees for this service will create some serious competition. On the back of regulations designed to drive down interchange fees in most countries (not the US yet), the card networks will have to diversify and add more value. Mastercard’s purchase of Vocalink is a pointer to how it’s thinking about this challenge.
Alipay partners with Poynt to increase Alipay acceptance in the US. Follows on from Alipay’s announcement that its partnership with Adyen was extended a few weeks ago, giving a big footprint in the rest of the world. At the moment, this just targets Chinese tourists with mobile devices using Alipay.
DeepMind releases Alpha Go Zero, which learnt Go from first principles and beat AlphaGo 100:0. remember that Alpha Go beat 18-time world champion Lee Sedol 4:1 in March 2016, a feat that was expected by some experts not to occur until 2050.
Magic Leap raises another $500m. If you’ve never seen the Magic Leap demo on YouTube, be prepared to be amazed (see below). If they can pull off this level of technical sophistication in near consumer-grade mobile hardware (i.e. next-generation smartphones) that will truly inject some life into the augmented reality market because the current level of AR content remains underwhelming. Let’s hope this isn’t another 3D TV bust.
Bitcoin reaches new ATH, crossing $6,000 for the first time. I don’t know how far it will go, but the world is splitting between those who believe in fiat currencies and those who believe in cryptocurrencies.
Jamie Dimon goes on the bitcoin attack. “If you’re stupid enough to buy it, you’ll pay the price for it one day.”
Ethereum’s Byzantium hard fork seems to be running smoothly.
ICO funny business. Tezos’ founders and the Tezos Foundation are at odds, and there’s now an official investigation. Not the first and won’t be the last.
– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here. Image by robuart, Shutterstock.com