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NFC and the evolution of payments

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Bernhard-Lachenmeier

Bernhard-LachenmeierBernhard Lachenmeier, Head of Products and Marketing, SIX Payment Services

60 years ago debit cards were the face of payment innovation. The first online payment was made 20 years ago. Even mobile payments are 16 years old – in 1997, Coca Cola built vending machines which accepted payment by text message. It is understandable then that industry commentators are now searching for The Next Big Thing in payments. For many, this looks set to be payments via Near-Field Communication or NFC.

It’s easy to see why contactless is an attractive payment option – the ability to simply ‘tap and go’ would both simplify and speed-up the payment process. Good news for increasingly busy consumers, great news for retailers – the less consumers have to think about the payment process, the less likely they are to question the payment value. Quicker payments equal more payments.

Many retailers have already realised the great potential of contactless payments. The Co-Operative Group recently became the latest retail chain to announce a roll-out of contactless payment terminals across the UK, following the likes of Boots and Superdrug. There are even retailers already experiencing a customer transition towards ‘tap and go’ – Pret A Manger recently announced a 15% rise in contactless payment transactions made in their stores over the past 12 months.

Yet the area where contactless payments are set to really make a difference is in the transport sector. Transport for London has been a keen advocate of NFC technology, introducing the contactless Oyster Card payment system on the London Underground in July 2003. By June 2012, over 43 million Oyster cards had been issued and more than 80% of all journeys on public transport in London were made using the card. Transport for London recently made another bold move in the NFC payment space, introducing NFC bank card payment capability across the London bus network at the end of 2012. This month it was revealed that Londoners have paid for more than 700,000 bus fares using their contactless bank cards since the option for contactless payment was introduced just three months ago.

The contactless Age

The support for contactless payments in the retail and transport markets, not to mention the clear consumer demand as illustrated by the pick-up across London, suggests that the age of the ‘tap and go’ payment is upon us. Yet still many question whether NFC will ever really take off. The London Olympics were heralded as ‘the first contactless Olympic Games’, yet Visa’s figures show that just 15% of those with contactless cards opted to use them at the London 2012 Games.

Visa’s figures reflect a wider pattern in consumer attitudes towards contactless. According to the UK Cards Association, as of January 2013 there were 31.3 million contactless cards in the UK. What’s more, according to ICM Research, the awareness level of contactless cards is 80% – this means that most consumers are fully aware of the contactless payments capabilities of their cards. Yet the same research tells us that just one-third of contactless card holders have ever actually made a ‘tap and go’ payment.

Mind the gap

The numbers clearly show that a high percentage of consumers not only have NFC-enabled payment cards, but they also are aware of contactless payments and understand their ability to make such payments. That’s not all. There are currently over 143,800 contactless terminals in the UK – so there is suitable opportunity for consumers to try out this new-found payment technology.

It is clear then that questions need to be asked around what will persuade consumers to make the jump from understanding contactless, to actually being comfortable using contactless.

Dispelling the NFC myths

Firstly we need to accept that while innovation and technology often aim to simplify our lives, in reality any change to the way we handle our money will always be met with a level of suspicion. It is unsurprising then that a number of urban myths have come to dominate the discourse of contactless payments – tales of ‘electronic pickpockets’ and the potential to steal card details simply by walking past someone with an NFC-enabled card are enough to put many off the technology. The fact remains, however, that these rumours are, as yet, unfounded. This is why it is essential that retailers, card issuers and payment processors alike join forces to run a dedicated education campaign to dispel these negative claims.

One of the greatest barriers to contactless uptake lies in the current retailer experience. Cashiers are the people on the front-line of this new payment technology, so a large part of the campaign must focus on ensuring that they understand and actively encourage customers to make use of their new ‘tap and go’ capability. Few things are more embarrassing to the British customer than getting to the front of a queue in a shop and being unable to pay – even if it is just while they become accustomed to the new technology! Improving the customer service at contactless terminals will help overcome this nervousness of the unknown.

The future is digital

The payment ecosystem is in a constant state of flux – from cattle to coins to cards, payments, much like humans, have evolved. The modern day consumer demands convenience and speed in their day-to-day payments. We live in a world in which we rely ever more on our plastic payment cards – according to the UK Cards Association, UK consumers spent £3.3 billion more using plastic in December 2012 than in December 2011 – so it stands to reason that using these cards in a contactless capacity will be the natural next step.

Card schemes, banks and merchants need to work together on an education programme, dispelling the NFC myths and encouraging greater customer service at contactless payment points. Consider this final point: contactless payment cards were introduced in the same year as the iPhone was launched. The payment technology has moved on – now it’s the turn of us humans to do some evolving.

 

 

 

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Study: 1 in 10 fintechs’ main priority for 2021 is survival

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Study: 1 in 10 fintechs’ main priority for 2021 is survival 1
  • FinTech Connect reveals that many fintechs simply want to survive the next year
  • 44% of fintechs are focused on optimising business processes to improve efficiencies
  • Over a third said they had launched new services addressing new demands

FinTech Connect, the trade show that connects the global fintech ecosystem, today revealed the priority for one in ten fintech firms over the next year is survival. The findings from FinTech Connect’s FinTech State of Play Benchmarking Report, which is based on a survey of 144 fintech professionals, explores the biggest industry issues of 2020 and looks forward to what 2021 has in store.

Impact of Covid-19

As remote working and living remains a priority to keep customers safe, fintechs have adapted their offerings. Although a number of other sectors including hospitality and travel have suffered as a result of the Coronavirus pandemic, fintechs remain confident that business will survive and even thrive.

  • 40% said Covid-19 had accelerated their digital transformation model
  • 36% said they had launched new services addressing new demand
  • 34% said their growth had accelerated as a result of the pandemic
  • 65% said that the remote working had driven innovation

The Wake of Wirecard

Despite the Wirecard scandal prompting industry soul searching and a review of regulation and governance practices, 83% of fintechs said the collapse had no impact on their own business. However, when fintechs are asked about the wider impact on the industry:

  • 59% said it will result in overcorrection from regulatory bodies
  • 42% said it will result in declining trust from customers
  • 25% said it will lead to declining investment into the sector

Brexit Uncertainty

Despite the uncertainty caused by Brexit, fintechs remain confident in their ability to manage Brexit:

  • 40% of respondents believe London will remain the European capital of fintech after Brexit
  • 30% of fintechs admit they haven’t made significant headway preparing for Brexit

“The spread of COVID-19 has brought the sector’s profitability and long-term business model sustainability into sharp focus—to a point where I believe the path to profitable scale for challenger banks has been structurally altered. But it is not at all to write off the sector,” said Abhijit Akerkar, Non-Executive Director, TBC Bank Group PLC. “Challenger banks have several long-term advantages—they are native to the digital arena, with more efficient cost structures, organizational agility, and, most importantly, higher customer loyalty. These advantages will help challenger banks weather the storm.”

“Whether we look forwards or backwards, Covid-19 is defining a new status-quo for the industry. From regulation to innovation to funding and culture, it is impossible to step out of the shadow cast by the pandemic,” Laurence Coldicott, Content Director, FinTech Connect “In response, fintech’s are prioritising digital transformation to meet customers where they are, and improving operational processes to ensure they are as efficient as possible.”

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How to Build an AI Strategy that Works

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How to Build an AI Strategy that Works 2

By Michael Chalmers, MD EMEA at Contino

Six steps to boosting digital transformation through AI

In the age of artificial intelligence, the way we interact with brands and go about our work and daily lives has changed. No longer blithe buzzwords, AI tools and algorithms are solving real business problems, streamlining operations, boosting productivity, improving customer experience, and creating opportunities for advantage in a competitive marketplace.

However, many businesses struggle to unlock the full benefits that come with its adoption across the whole organisation. Making the most of AI requires a strategic focus, alignment with the specific operating model of the business, and a plan to implement it in a way that delivers real value.

Not all AI strategies are equal. To be successful, businesses need to set out how the technology will achieve objectives and identify the specific assets and case uses that will set them apart from competitors. The process of creating and delivering a successful AI strategy includes the following six essential elements that will help to bake in business success.

  1. Start with your vision and objective

One slip-up companies often make when developing an AI strategy is a failure to match the vision to the execution. Almost inevitably, this results in disjointed and complicated AI programmes that can take years to consolidate. Choosing an AI solution based on defined business objectives established at the start of a project reduces the risk of delay and failure.

As with any project or initiative, it’s crucial to align your corporate strategy with measurable goals and objectives to guide your AI deployment. Once a strategy is set and proven, its much quicker and easier to roll it out across divisions and product teams, maximising its benefits.

  1. Build a multi-disciplinary team 

AI is not an island. Multi-disciplinary teams are best placed to assess how the AI strategy can optimally serve their individual needs. Insights and inputs from web design, R&D and engineering will together ensure your plan hits objectives for key internal stakeholders.

It’s also important to recognise that with the best will and effort, the strategy might not be the perfect one first time around. Being prepared to iterate and flex the approach is a significant success factor. By fostering a culture of experimentation, your team will locate the right AI assets to form your unique competitive edge.

  1. Be selective about the problems you fix first

Selecting ‘lighthouse’ projects based on their overall goals and importance, size, likely duration, and data quality allow you to demonstrate the tangible benefits in a relatively short space of time. Not all problems can be fixed by AI, of course. But by identifying and addressing issues quickly and effectively, you can create beacons of AI capability that inspire others across the organisation.

Lighthouse projects should aim to be delivered in under eight weeks, instead of eight months. They will provide an immediate and tangible benefit for the business and your customers to be replicated elsewhere. These small wins sow the seeds of transformation that swell from the ground up, empowering small teams to grow in competency, autonomy and relatedness.

  1. Put the customer first, and measure accordingly

Customer-centricity is one of the most popular topics among today’s business leaders. Traditionally, businesses were much more product-centric than customer-centric. Somebody built products and then customers were found. Now, the customer is, and should be, at the heart of everything businesses do.

By taking a customer-centric approach, you will find that business drivers determine many technology decisions.  When creating your AI strategy, create customer centric KPIs that align with the overall corporate objectives and continually measure product execution backwards through the value chain.

  1. Share skills and expertise at scale through an ‘AI community of practice’

The journey to business-wide AI adoption is iterative and continuous. Upon successful completion of a product, the team should evolve into what’s known as an ‘AI community of practice’, which will foster AI innovation and upskill future AI teams.

In the world of rapid AI product iterations, best practices and automation are more relevant than ever. Data science is about repeatable experimentation and measured results. Suppose your AI processes can’t be repeated, and production is being done manually. In that case, data science has been reduced to a data hobby.

  1. Don’t fear failure: deploying AI is a continuous journey 

The formula for successful enterprise-wide AI adoption is nurture the idea, plan, prove, improve and then scale. Mistakes will be made, and lessons learned. This is a completely normal – and valuable – part of the process.

Lighthouse projects need to be proven to work, processes need to be streamlined and teams need to upskill. Businesses need a culture of learning and continuous improvement with people at the centre, through shorter cycles, to drive real transformation.

An experimental culture and continuous improvement, through shorter cycles, can drive real transformation. A successful AI strategy acts as a continually evolving roadmap across the different business functions (people, processes and technology) to ensure your chosen solutions are working towards your business objectives. In short, let your business goals guide your AI transformation, not the other way around.

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Iron Mountain releases 7-steps to ensure digitisation delivers long-term benefits

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Iron Mountain releases 7-steps to ensure digitisation delivers long-term benefits 3

Iron Mountain has released practical guidance to help businesses future-proof their digital journeys. The guidance is part of new research that found that 57% of European enterprise plan to revert new digital processes back to manual solutions post-pandemic.

The research revealed that 93% of respondents have accelerated digitisation during COVID-19 and 86% believe this gives them a competitive edge. However, the majority (57%) fear these changes will be short-lived and their companies will revert to original means of access post-pandemic.

“With 80% still reliant on physical data to do their job, now is a critical time to implement more robust, digital methods of accessing physical storage,” said Stuart Bernard, VP of Digital Solutions at Iron Mountain. “Doing so can enhance efficiency and deliver ROI by unlocking new value in stored data through the use of technology to mine, review and extract insight.”

Why revert?

When COVID-19 hit, companies had to think fast and adapt. Digital solutions were often taken as off-the-shelf, quick fixes – rarely the most economical or effective. But they are delivering benefits – those surveyed reported productivity gains (27%), saving time (20%), enhancing data quality (13%) and cutting costs (12%).

So what now?

The Iron Mountain study includes guidance for how to turn quick-fixes into sustained, long-term solutions. The seven-steps are designed to help businesses future-proof their digital journeys and maximize value from physical storage:

1)     Gather insights: The COVID-19 pandemic allowed organisations to test and learn. Companies should ensure these insights are fed into developing more robust solutions.

2)     Use governance as intelligence: Information governance and compliance are fundamental to data handling. But frameworks aren’t just a set of rules, they hold valuable insights that can be turned into actionable intelligence. Explore your framework to extract learnings.

3)     Understand your risk profile: A key early step is to analyse where you are most vulnerable. With data in motion and people working remotely, which records are at risk? What could be moved into the cloud? Are your vendors resilient?

4)     Focus where you will achieve greatest impact: To prioritise successfully, you need to know where you will achieve the largest impact. This involves looking beyond initial set-up costs towards the holistic benefits of digitisation, including reducing time spent on manual scanning, and the risk of compliance violations.

5)     Reach out and collaborate: We are all in this together. Your IT, security, compliance and facility management teams are all facing the same challenges. Ensure you collaborate across functions to develop robust, integrated solutions.

6)     Find a provider who can relate to your digital journey: For companies that still rely heavily on analogue solutions, digitisation can be daunting and risky. It pays to find a vendor who has been on the same journey, understands your paper processes and can guide you through the digital world.

7)     Prioritise and evolve communication and training programmes: To reap the full rewards from any digitisation initiative, thorough and continuous communication and training is critical. Encouragingly, our survey found that 81% of data handlers have received training to work digitally which is an excellent step in the right direction, but consider teams beyond data handling to truly succeed.

The research was commissioned by Iron Mountain in collaboration with Censuswide. It surveyed 1,000 data handlers among the EMEA region. It found that the departments that have digitised more due to COVID-19 include IT support (40%), customer relationship management (36%), and team resource planning (34%).

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