Skip directly to search

Skip directly to content

 

How The Rise Of The Smartphone Underpinned A Payments Revolution

 
 

Innovation | Jourik Migom |
10 September 2019

As part of a report to ‘get a sense of the most significant seismic shifts that have pushed payments innovation inexorably ahead through the past 10 years, as well as what lies over the horizon, PYMNTS queried 29 C-level executives with a collective thumb on the pulse of innovation’. Endava’s Jourik Migom offered his opinion on how smartphones have not only significantly changed our lives, but also driven innovation in the payments industry.

THE SMARTPHONE CULTURE

When identifying one innovation that has most dramatically moved payments innovation forward in the past 10 years, it is almost impossible not to talk about the smartphone. The increase of smartphone ownership (the raw numbers) and the relationship we all have with that device (the changed human behaviour) have been so transformative that it has touched almost every industry and created entirely new ones. The smartphone is a platform that has enabled a lot of change in the payments industry, so let’s unpack that further to identify what made it so influential.

THE RIGHT CONDITIONS FOR DISRUPTION

While I pointed to the smartphone as the most significant innovation, in reality, it is the combination of mobile internet, availability of 3G and 4G, cheaper data deals and the rise of the App economy that have driven a true payments revolution. All that technological change,¬ “sponsored” by the abundance of Venture Capital (VC) and Private Equity (PE) money and endorsed by the start-up culture, has created a very fertile environment for change.

THE PAYMENT ECOSYSTEM SHAKE-UP

We have seen a shake-up of traditional industries by new business models that tap into the opportunity to do business with the smartphone-empowered consumer: subscription models locked in consumers — think Spotify for music; direct-to-consumer retailers started selling online, circumventing traditional channel partners or the need for expensive retail shops — think Caspar for matrasses; on-demand businesses started billing customers in a PAYG mode, often having a default credit card stored in their app — think Uber for transportation. This new way of doing business has put the incumbent payment players under pressure. Their businesses were built in an age where the payments industry was very much an infrastructure play, with complex legacy powering a secure but much slower-moving number of interactions between a less complex pool of players. Today’s scattered payments landscape has unbundled a lot of that legacy and has created more nimble and specialised players providing services to each other. They do one thing — or a couple of things — extremely well and are built for an API economy rather than as a change request to a legacy payment system of a massive organisation.

THE EMPOWERED CONSUMER HAS COMPOUNDED THE EFFECT OF TECHNOLOGICAL CHANGE

Consumers with smartphones have started behaving dramatically differently over the past ten years. New features developed for the smartphone operating systems, combined with the apps operating on top of iOS and Android, have created a ripple effect in payments innovation. Contactless payments happen predominantly through cards, but an increasing number of consumers have started using the NFC functionality on their phone or the in-app payments functionalities of their favorite apps. Payment cards have become invisible in this world of mobile wallets, and the way micro-payments are facilitated to ensure safe and correct billing between a consumer’s smartphone, a merchant and the banks involved has created a new level of complexity that is handled more effectively and more cheaply by next-gen technology-powered players.

PAST INNOVATION DOESN’T EXPLAIN THE FUTURE — WHAT’S NEXT?

While the enabler of lots of the change for the last 10 years can be linked to the rise of smartphone adoption, the ripple effect wouldn’t have been so massive without the behavioural change we have seen with digital consumers and the tolerance that millennial audiences have with technology enabled payments. The changed role of payments — where the trade-off between security and convenience has constantly been tested — might as well push us to the next big thing in payments: cryptocurrency and a systemic shift towards more distributed and abstracted forms of payment where identity becomes the new currency. The use of quantum computing, the availability of 5G and the rise of more IoT will power a lot of those next innovation cycles. Let’s talk again in 10 years’ time.

Read the full report in PYMNTS here.

Jourik Migom

SVP Strategy Acceleration, Global

Jourik has 20+ years of experience in strategy related roles across consultancies, digital agencies and a couple of client-side stints. At Endava, he leads a global team of thinkers focused around Strategy, Product and Data. Jourik especially loves the early phases of strategy projects and conversations with clients about how technology can help them change their business for the better. Outside work, you can probably find him in coffee shops and art galleries or in airports, he is always on the go.

 

Related Articles

  • 31 October 2019

    Balancing authentication and frictionless payments as Open Banking and Digital Identity make waves

  • 25 October 2019

    Digital Transformation is still at the heart of innovation

  • 10 September 2019

    How The Rise Of The Smartphone Underpinned A Payments Revolution

  • 02 July 2019

    Is your payments provider 3DS2 ready?

  • 18 June 2019

    Retails trends influencing customer journeys and experiences in 2019

  • 21 May 2019

    Eight factors to consider when creating a corporate start-up

  • 07 May 2019

    Failure to launch - Why contactless in the US is behind the rest of the world

  • 01 April 2019

    Can Tech Improve The T&L Experience?

Most Popular Articles

Payments Trends – A Q&A with Nick Telford-Reed
 

Next Gen Insights | Nick Telford-Reed | 15 October 2019

Payments Trends – A Q&A with Nick Telford-Reed

Harnessing Knowledge to Increase Efficiency
 

Next Gen Insights | Seth Clifford | 31 July 2019

Harnessing Knowledge to Increase Efficiency

Is your payments provider 3DS2 ready?
 

Next Gen Insights | Glenn Geil | 02 July 2019

Is your payments provider 3DS2 ready?

Balancing authentication and frictionless payments as Open Banking and Digital Identity make waves
 

Next Gen Insights | Nick Telford-Reed | 31 October 2019

Balancing authentication and frictionless payments as Open Banking and Digital Identity make waves

Retails trends influencing customer journeys and experiences in 2019
 

Innovation | Teodora Chetan | 18 June 2019

Retails trends influencing customer journeys and experiences in 2019

Getting more out of DevOps – A Q&A with Edward Butler
 

Next Gen Insights | Edward Butler | 16 July 2019

Getting more out of DevOps – A Q&A with Edward Butler

The Future of Mobility – A Q&A with Tony Whitehorn
 

Next Gen Insights | Tony Whitehorn | 12 November 2019

The Future of Mobility – A Q&A with Tony Whitehorn

The payments revolution in the US
 

Next Gen Insights | Glenn Geil | 24 September 2019

The payments revolution in the US

Can a business thrive in the age of continuous innovation?
 

Next Gen Insights | Bea Tartsanyi | 04 February 2019

Can a business thrive in the age of continuous innovation?

 

Archive

  • 12 November 2019

    The Future of Mobility – A Q&A with Tony Whitehorn

  • 31 October 2019

    Balancing authentication and frictionless payments as Open Banking and Digital Identity make waves

  • 25 October 2019

    Digital Transformation is still at the heart of innovation

  • 15 October 2019

    Payments Trends – A Q&A with Nick Telford-Reed

  • 08 October 2019

    How do you rate as a Business Sponsor?

  • 24 September 2019

    The payments revolution in the US

  • 10 September 2019

    How The Rise Of The Smartphone Underpinned A Payments Revolution

  • 27 August 2019

    Taming AI in a Cognitive Driven Business World

  • 13 August 2019

    Platform Meets Product

  • 31 July 2019

    Harnessing Knowledge to Increase Efficiency

  • 16 July 2019

    Getting more out of DevOps – A Q&A with Edward Butler

  • 02 July 2019

    Is your payments provider 3DS2 ready?

  • 18 June 2019

    Retails trends influencing customer journeys and experiences in 2019

  • 04 June 2019

    Insight as an Accelerant to Change

  • 21 May 2019

    Eight factors to consider when creating a corporate start-up

  • 07 May 2019

    Failure to launch - Why contactless in the US is behind the rest of the world

  • 23 April 2019

    Placing the customer at the centre of your business transformation

  • 08 April 2019

    Get Emotional - How Feelings Dominate Decision Making

  • 01 April 2019

    Can tech improve the T&L experience?

  • 18 February 2019

    Programmes Can’t be Agile, Right?

  • 04 February 2019

    Can a business thrive in the age of continuous innovation?

  • 07 January 2019

    Delivering Business Value at Speed: A Recipe in Three Steps

We are listening

How would you rate your experience with Endava so far?

We would appreciate talking to you about your feedback. Could you share with us your contact details?

 

By using this site you agree to the use of cookies for analytics, personalized content and ads. Learn More