The Digital Kibisis: Global Go-To Digital Wallet is Holy Grail of Payment Industry

2) New entrants: then we have the emergence of new entrants. New entrants that by focusing on a niche and removing the friction that their customers faced when dealing with payments, in 6 years have become able to process over $4 billion a year in mobile payments and being valued $800 million: Braintree. New entrants that in 3 years have the international reach that very few retail banks have: Stripe (Stripe operates in Canada, US, UK, Ireland and it is in Beta in Australia, Belgium, France, Germany, Luxembourg, Netherlands and Spain). New entrants like Square that started changing the business model by making it easy for small businesses to accept credit card payments using just a smart-phone or tablet, and are progressing very firmly in the development of their own ecosystem for SMEs. That is just to name a few known start-ups that are shaping the future of payments; others are probably developing while you read this article.

3) New business use cases: every day we see new uses cases for our smart-phones that are making our lives easier and that in that awesome experience the mobile payment is perfectly embedded. There are the cases for example of Mytaxi and Hailo apps. In Spain we are witnessing the battle of these two new start ups that at the end will squeeze contactless cards and the likes of izettle in taxi use. Why use a card if you can use the app to complete a fantastic customer experience? According to mytaxi, 70% of app users pay using the app. And this battle of two also reflects another competition between Wirecard and Braintree, the payment processors of both apps.

OpenTable could be the next success story. The company, the world’s largest online reservation service, currently works with 31.000 restaurants and 41% of their seated diners are booked with mobile devices. In June it paid $11 million in stock to acquire JustChalo, a mobile technology company, and soon it will introduce its mobile payments system.

4) Local/Regional competitors: at national and even city level, like for example MomoPocket in Málaga city (Spain). Momo Pocket is a wallet and mobile payment solution based on QR codes. Created by the local technology company TICteck Tecnología, it has been able to strike deals not only with local shops and restaurants, but also with international chains like Burguer King or Dunkin Coffee. Although their reach is simply local, no other mobile payment player has its penetration in Málaga.

Orué (euro written backwards), is an NFC-based social currency in the neighbourhood of Russafa, Valencia, and is another example of local initiative. This electronic currency has been designed by the district’s own residents; consumers will earn units of the currency instead of loyalty or reward points by shopping in the district. The goal of the promoters is to help to combat social exclusion by helping out local businesses.

All these four reasons, make me think of the existence of a sort of Long tail in payments, where different solutions will target different users in terms of reach, and where in some cases some of them will coexist in some usage segments.

What this means for the incumbents?
These developments seem to leave the incumbents in a problematic situation. And in fact, they are. My view is that the only move that they can make in order to succeed is to start being more open and more collaborative. It is time for companies like banks to embrace collaboration and evolve to a collaborative enterprise. This is the logical evolution after becoming firstly a digital enterprise and then a social enterprise. This will eventually lead to alliances and partnerships that just a few years ago would have seemed impossible.


Do you share Manuel’s views on the transforming payment industry?  How big a threat are the new entrants to traditional financial institutions?  Join the conversation here or on twitter.

What do you think?

Written by Manuel Romero

I joined Barclays in 2006 and since then I have been working in Digital Banking. Previously, I worked for BBVA in different roles, what means that all my professional experiece has been in the financial industry. As I like to say, I am not what I do, but I love what I do.

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