Even the most potentially impactful innovations in the world can languish if not successfully commercialized.
That’s where standards come in.
While standards are frequently derived from technology, innovation is often spurred from shared standards as well.
That’s because standards tend to make the competitive landscape less about the basics, de-risking investment in innovation by accelerating confidence and general trust in its performance, allowing commercial differentiation to focus on the value being added to emergent marketplaces and end-user experiences.
Both General Motors and Ford have now agreed to adopt Tesla’s North American Charging Standard (NACS) for their electric vehicles (EVs).
Together, Tesla, GM and Ford account for about 70% of current EV sales in the United States, Reuters reported Friday (June 9). That three of the top EV sellers in the North American market have now agreed on a standard for charging hardware makes Tesla’s network the de facto primary EV network in the country — positioning it as an industry standard, an important advantage to hold as companies in a variety of industries gear up to meet the needs of a new, and growing, generation of EV drivers.
Industry executives see differing EV charging connectors as a barrier to wider consumer adoption of electric vehicles. Already, Tesla Superchargers account for about 60% of the total fast chargers in the U.S. and Canada, according to Department of Energy data.
Standards play a critical role in making new technologies commercially viable by building trust in the repeatability of an emergent innovation’s use cases. They, in effect, represent a formula that describes the best way of doing something in such a way that allows that thing to go mainstream.
By making end-users and enterprises comfortable with the applicability and interoperability of an innovation’s foundational impact, standards allow for greater market differentiation as customers can choose from competitive best-fit solutions across a marketplace of multiple providers.
As PYMNTS CEO Karen Webster wrote: “No one can ever be certain that a good idea will turn into a great company, great product or great platform that throws off revenues and profits. What is pretty certain is that the original business model that launched the idea will morph over time as market dynamics shift… Frameworks allow everyone to critically decide whether an idea that looks convincing on a PowerPoint slide solves enough of a problem to get enough of the right customers to agree.”
Particularly among utility-centric and commodity offerings like charging for EVs, standards and industry collaboration play an important role in reducing fragmentation that can — and frequently does — hinder the commercial adoption of future-fit solutions.
That’s why even the fiercest competitors will come together to align on certain industry standards.
This is particularly true within the payments and financial services industry.
The world of finance is about to undergo a revolution with the launch of its new global messaging standard, ISO 20022.
The International Organization for Standardization (ISO) developed the standard, which is currently being adopted by countries and financial institutions worldwide in different phases.
While it remains an ongoing, multiyear effort to prepare legacy systems for the move to a standard that aligns closely with ISO 20022, when fully adopted, the standard is expected to bring about significant changes to how financial services are conducted, improving data quality and reducing errors in the banking chain, making transactions more efficient and secure.
ISO 20022 also enables interoperability between different payment systems, which is critical in keeping today’s global financial ecosystem functioning smoothly.
As Michael Knorr, CIB industry and advisory lead at Wells Fargo, told PYMNTS in a conversation earlier this month that ISO 20022 represents a “unique opportunity for the industry to embrace this common standard” that removes historic silos among payment systems, with ACH, Fedwire, card systems and wire systems all using their own proprietary messaging standards.
With ISO 20022, financial institutions can communicate with each other using a common data language, making it easier to conduct cross-border transactions and ensuring a higher level of standardization across different payment systems.
Elsewhere in the financial services sector, PYMNTS data shows that when the U.S.’s open banking rules go into effect in 2024, governance standards will spur greater partnerships between banks and FinTechs which must rely on each other for data sharing and compliance.
Back when credit cards were a new thing, issuers, acquirers and other key stakeholders in the emergent payment landscape all came together — despite their differences — to create and use standards on card size for interoperability across terminals, processing and more.
Those standards have led to the emergence of digital wallets, contactless card technology and many more innovations built on interoperable frameworks where firms can win by providing the best product atop a foundation of utility.
That’s because the role of innovations and standards is, and has always been, to work together in driving progress forward.
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