Why Payments Should Stop Worrying About ‘The Next Big Thing’

Gerhard Oosthuizen, CTO of Entersekt, contributed the following piece as part of PYMNTS’ 2018 year-end eBook.

I remember a conference almost a year ago. Bitcoin (and other cryptocurrencies) had started its major run; everyone was excited. In the panel discussions, the bitcoin proponents were talking about it reaching $100,000. This was what everyone was hoping for — bitcoin was finally taking off, and it was going to be HUGE. Cryptocurrencies were going to change the world! The true believers were talking about liberty and freedom. Johnnies-come-lately were jumping aboard to set up mining rigs as fast as they could get their hands on graphics cards.

There were, of course, the naysayers, who were drawing parallels with the Dutch tulip bubble of the 1630s, cautioning that a currency based on burning CPU cycles would not be sustainable. The moment it got really serious, they said, the regulators would step in and kill it.

As 2018 rolled along, bitcoin dipped. Then it dipped again. It fell gradually. The mining rigs, burning all those CPU cycles, gradually became unprofitable in many countries. A lot of people made a lot of money, but a lot of people lost a lot of money too. More bitcoin forks emerged. At Entersekt, we started exploring a new market segment — the scores of rich cyber exchanges popping up all over the world.

The goldrush got out of hand. Over-exuberance gave way to reality. The media soured on what it had previously appeared to boost. Investigators were looking into fraud at Tether; crypto exchanges were being preyed on by hackers. At the close of 2018, a lot of people are hurting, either from climbing in too late or having lost their savings through account takeovers or hacking.

So, what’s the lesson to be learned? Are cryptocurrencies a bad idea? Personally, I think these are the wrong questions to be asking.

Looking at Things Back to Front

Not all that long ago, I was at another conference. This time, the buzz wasn’t about bitcoin but blockchain, its underlying foundational element. The latter had a whole track to itself. There was also a big data track and one for biometrics. In a session on biometrics, the presenter asked the audience how they would prefer to make a payment, with the choices rather astonishingly being these: biometrics, traditional card with PIN, or eCommerce with card PAN entry.

As multiple choices go, this would not make it into a high school test. How can you compare payment rails with a technology that plays no role in moving money? A technology that, on its own, does nothing to help consumers perform a task or overcome a hurdle.

When did we start organizing tracks at FinTech conferences on the basis of individual technologies rather than industry challenges and opportunities? Surely, we should first focus on the issues we want to address — faster payments, account takeover, and customer experience — then explore how we do it.

In 2018, I saw far too many presentations that started with a hot new technological concept and then moved on to the use to which we might put it. I see the same back-to-front thinking in articles and closed-forum discussions. This reversal of priorities has been growing throughout 2018.

Return to the Customer

As technologists, we do so love a “next best thing.” Potential new use cases for a technology are what gets us up in the morning. At Entersekt, we are always evaluating new tech. It’s a big part of my job, and anyone who knows me knows how innovation excites me. But we never lose track of the consumer in our research. The question is always how, in a very tangible way, a new tool might meet users’ well-established needs, how it will add value for our clients.

Successful companies are not “about” blockchain or AI or any other type of technology. Some firms may be seeing good returns for consulting now, but they will ultimately be eclipsed by those that:

  • Solve a real problem
  • Are user-friendly
  • Offer real value, and
  • Protect the customer

I sincerely hope that in 2019, we will moderate our exuberance for the next big thing and get back to solving real-world problems instead of grasping around for ways to use cool new tech. Perhaps we can also get back to conferences that focus on understanding the here and now, and discussing ways to use the tools we have to make life easier for everyone, instead of passionately debating technological hypotheticals. If, like Entersekt, you’re a financial institution or FinTech that seeks to create value for your clients and not fixate on hype, we’re bound to bump into each other soon.