Payments Innovation

The Benefits Of Bottom-Up (Payments) Innovation

Innovation can be categorized into two types: “top down,” which starts with the introduction of a new element — EMV, for example — and “bottom up,” which builds on available technology. Both innovations are useful, and both are represented among the companies in MasterCard’s Start Path, a program that bridges the gap between startups and the global opportunities they seek.

One such company involved in the Start Path program is Moneytree. Its CEO, Paul Chapman, recently made the case to PYMNTS that “bottom up” innovation is more likely to result in solutions that people use.

PYMNTS:  What makes Moneytree innovative – and what value did it deliver to the stakeholder group that was its target?

PC:  Data aggregation became popular during the Web 2.0 era and everyone approached the problem from the perspective of a browser. As a result, product designers expected people to be sitting in front of a computer, willing to read lots of text explaining the process, and focused on features approximating Excel spreadsheets. We thought that there might be a better way, especially since our market, Japan, was highly mobile-oriented. So, we invested a year designing and iterating to condense the experience into a small screen, with no need to visit a third-party website and are the first mobile only data aggregation based money management app for smartphones in Japan. Needless to say, our approach very quickly became the industry standard in the space in Japan. 

PYMNTS:  Where do you look for innovative ideas and why?

PC:  As an entrepreneur, there are many strategies that one can follow. You can compete on price, you can compete by segment, you can compete by fast following earlier entrants. At Moneytree we compete on the basis of innovation in technology and purpose for two simple reasons: i) it can create a considerable competitive advantage, and ii) there are things that only we would do. We use the software we make everyday, and unless we build the product we can see in our heads and in our hearts, it probably won’t get built.

PYMNTS:  How would you define your approach to innovation?

PC:  Our type of innovation comes from design thinking and privacy by design. Thankfully it’s becoming more commonly known that design is not limited to visual characteristics. Design thinking views product creation as the iterative resolution of each problem arising in the design and development process. Whether making an app or a car, we believe the most meaningful experiences are achieved when you really care about how the product interacts with people and the product environment.

Privacy by design is a commitment to applying certain privacy principles, from the outset, to the design and development process. For example, privacy is the default setting, privacy considerations are clearly communicated and privacy does not mean a lesser or compromised experience.

PYMNTS:  What do you think that most people underestimate about innovating in payments?

PC:  People don’t understand the difference between top down and bottom-up innovation. Top down innovation (like EMV) is slow to take root, extremely expensive and conceived from an industry insider perspective. Bottom-up innovation (like Moneytree) takes advantage of the latest readily available tech (like smartphones, apps, sensors) and imaginatively repurposes existing finance and payments infrastructure (like Internet banking, credit cards, loyalty) to create a polished experience that centers on the user. Both approaches are important, but time again we see large players thinking top down when making apps or services for customers, which results in solutions that few people will ever use. We also see startups thinking too big and running a top down strategy without the customers or resources to make it work. Both mistakes result in what I call empty room syndrome, this is a successfully executed technical solutions that almost no one wants use.

PYMNTS:  What person or company do you think “gets” innovation and why – and, conversely, who or what has missed it and why?

PC:  Apple is an obvious example of one of our role models. I have heard people refer to it as the world’s biggest startup, and their innovation successes speak for themselves. Most startups that make it big never really understand the innovation process that got them there. Based on observation, Apple has understood the how of innovation and turned it into a repeatable process.

There are lots of examples of companies that do not understand innovation, particularly in the Japanese IT sector. Historically, it was more important to have lots of capital or be part of a particular group than competing on the basis of real innovation. That is why, as a country, we are not a net exporter of software like the U.S. Thankfully that is changing, with a generation of new Japanese startups led by people who have grown up with as much access to the best software in the world as any kid in the U.S. It’s an exciting time to be an active participant in the Japanese startup community.

PYMNTS:  What advice would you give a young innovator in this space and why would you tell her to heed it?

PC:  What I would say depends on her stage of development. For someone of university age, I recommend gaining exposure to multiple and diverse fields through part-time work, volunteering, community groups and internships. Most innovative ideas are found at the intersection points between fields, so broad range of interests are table stakes. To someone with a few years’ work experience, I strongly recommend developing a sense of taste. Specifically, know what you like and don’t like about all the products, services, media and art you come into contact with. Only by refining your sense of taste will you accumulate enough experience to have insights into what you should make and what you should not make. Being an innovator means being a leader. By acting on insights you’ve had before anyone else, you will be ahead of the curve in your space. Without innovative insights, you are destined to be a follower. This does not mean you will fail in business; reality is much more nuanced. Simply, followers cannot count on innovation as weapon in the struggle for relevance.



The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.