With AI, blockchain and other disruptive technologies accelerating the rate of change in the payment industry, it is impossible to guess what the future will bring. So how should fintech companies keep ahead of the curve?
This is an issue that occupies PayPal’s SVP and APAC CEO Rohan Mahadevan, who attended the recent Rakuten Fintech Conference in Tokyo. “The pace of change we see in the next five years is going to be more than we saw in the last 15-20 years,” he told Rakuten.Today during an interview on the sidelines of the conference.
“If I had to say what tech is going to prevail in the future, I’d be wrong”
Mahadevan admits attempting to predict the future of fintech is rarely helpful. “If I had to say what tech is going to prevail in the future, I’d be wrong,” he said when asked to describe the payment solutions of tomorrow. “Technology is going to change and it’s going to evolve. Whether tapping a phone to pay using NFC (near field communication), fingerprinting, retina scans, using your ring to process a payment, or something else – nobody knows what technology will prevail.”
Nevertheless, he is confident in his company’s ability to adapt. The secret to sustained success, he said, is not just about picking the next breakthrough technology; it’s about winning the customer’s trust by providing security, simplicity and excellent service.
“Any company that wants to process payments needs to be able to underwrite risk. If you really want to democratize money and be everywhere, you have to underwrite everyone that’s going to accept payments and you have to protect them. That’s going to be key.”
On nascent technologies, Mahadevan believes AI will be a key tool in the future of payments. “We need to use AI to help evaluate risk. We need to utilize data to keep people safe,” he said. While today PayPal absorbs fraud, he added, in the future, increased security through AI, may result in substantial savings.
Once a customer feels secure using a payment platform, they want to think about the process of payment as little as possible.
“Globally, cash still accounts for 85% of spending.”
“People don’t want to feel like they’re paying for something. You want to go into the grocery store, take a photo of what you want and then get it delivered to your door. You never have to enter your financial information. It’s a seamless experience.”
When asked about how fintech companies should deal with the pace of change in the industry, Mahadevan points to a healthy sense of paranoia. “If you think nothing is going to happen, you’re probably wrong. With this mindset, you are always seeking out new innovation that allows you to deliver more for your customers.”
Despite the competitive nature of the industry, ultimately the biggest competition to digital payment services like PayPal could be cash. “Globally, cash still accounts for 85% of spending,” Mahadevan explained.
In countries like Japan, where the government recently announced it intends to increase digital payments from 18% to 40% over the next 10 years, this represents massive potential for growth.
“If the entire world goes to that, it would be a huge market opportunity,” Mahadevan said.
For his part, Mahadevan is looking at the immediate opportunity created by the Olympics coming to Tokyo in 2020.
“You’re going to get a deluge of people coming from all parts of the world,” he said. “When these consumers come in they want to pay with what they’re used to. They don’t want to get another card or prepay or top up, or pull out cash and get charged ATM fees, etcetera, etcetera… We have to start making sure that Japan is ready for all these people that are going to come in.”
Read more posts from the Rakuten FinTech Conference 2017 here.