The Importance of Partnerships and Collaboration in Payments

By Tsuyoshi Notani, Managing Director, JCB International (Europe) Ltd.

The UK-JPN Economic Partnership Agreement (EPA), which was signed on 23 October last year, marks one of 2020’s many cutting-edge alliances. Although the pandemic created more room for collaborative mindsets to move to centre stage, the evolution of ‘association’ has unified regions and businesses for generations. Organisational partnerships are not a new phenomenon, but much like the UK-JPN EPA, payments companies should recognise that they can strengthen their offering with merged know-how if they want to stay ahead.

The UK-JPN EPA pledges to promote the mutual exchange of finance, data and digital services between Europe and the Asia-Pacific, through Japan, from a payment industry perspective. We can expect further joint efforts in cross-border mobile commerce and advanced financial technology. The union is estimated to boost holistic trade by more than £15 billion, and interestingly, financial services, at present, are the biggest export from the UK to Japan, accounting for 28% of all UK exports. Japan will also support the UK in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to cement trade ties between the UK and countries and regions including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. This free trade zone is estimated to account for approximately 13% of world GDP.

Collaborations come in all shapes and sizes. International banks and payment institutions are increasingly working with financial technology (and investing in them in many cases) to tap into fresh thinking and creative concepts around products, services, marketing, operations, data, finance – and, most importantly, the journey of their patrons. For example, in 2020 we diversified our ecommerce portfolio with Banco Santander in Spain, worked with Nexi in Italy to tighten security for online spend, and expanded our partnership in Asia with Paymentwall for digital media and home entertainment sectors. Other JCB alliances included a Tap on Mobile Solution with Soft Space, and an ecommerce marketing relationship with Shopee, as well as enhanced networks in Blockchain, Data Analysis and Digital Identification.

As further examples of contemporary cooperation – HSBC signed a multi-year partnership earlier this month with Silent Eight which will aim to automate alerts to tackle money laundering and other fraudulent activity. While in 2020, Deutsche Bank and Google announced their plans to co-innovate toward new lending products, a retail bank interface, and enhancements to the Autobahn. The year 2020 also saw a handshake between Klarna and the Commonwealth Bank as they partnered to meet the growing demand for multiple payment options in Australia.

In Europe especially, the opportunity for forward-thinking joint ventures is ripe and those in the payments sector who are open to developing these relationships are more likely to foster future profits and happy customers. Start-ups in Europe have seats at the table for international conferences and are heavily governed by reputable authorities. By sharing experience and insight, start-ups, payment partners, issuers, acquirers, and retailers can all majorly benefit from this cross-pollination of information. As a payment brand, being able to do what you do well, and allowing your partner to run with their skillset, enables a lower cost of doing business, wider technological landscapes, detailed data to inform decision-making, minimised upfront expenses, potential access to new customers and, ultimately, broader horizons for exposure.

If we were to look through a global lens, it is notable that there are movements to disintermediate card networks and to introduce direct peer-to-peer payments on bank rails. While no player in the payment sector owns the ecosystem entirely, we can understand that a range of stakeholders may each be able to provide a piece of the solution to deliver an exceptional customer experience. Disruption will be a constant and businesses need to adopt an appropriate mindset. Investment in research and development for security and customer convenience should be a priority. Technology that helps enable a frictionless and secure transaction will further result in a healthy landscape, allowing a global flow of goods and services.

The age of interconnectedness to best serve the end-user is certainly upon us and as a leading organisation within the global payments network, with a proud Japanese heritage, we embrace this way of working and thinking. The principle of ‘Omotenashi’ – Japanese hospitality – pioneers every decision we make and guides us in positioning the customer front and centre. And this is reflected in our partnerships as well.

To conclude, the question is not – “how important are partnerships in the world of payments?” – but rather – “which partnerships will leverage the most smiles for customers and contribute to mutual growth in 2021 and beyond?” Now, as we all seek to recover from 2020’s uncertainty, co-creation could be the platform to provide the silver lining that we all hope for to reach a brighter future.