The Week In Payments: Digital Healthcare, COVID-19 Passports And The Banking Innovation Challenge

Big money moves in the world of healthcare. There are public concerns about FinTechs. And there’s the continuing debate about when, where and how consumers should be asked to document their vaccine status. Just another week in payments — and one that attracted some strong observations from payments automation platform Versapay’s CEO Craig O’Neill, who told Karen Webster that the FinTech segment continues to be a magnet for investors.

“I speak with lots of investors and I hear a theme frequently,” O’Neill told Webster. “When they find FinTech companies whose business model clearly resulted in COVID being a tailwind versus a headwind, they are just all over that.”

Both topics were, incidentally, in the headlines this week.

Payments Are the Prescription That Healthcare Needs

The problems in the U.S. healthcare market issuing from high costs are myriad, complex and drawing an ever-growing number of innovators. The two big plays this week came from big players: Verizon launched its new telehealth platform, and Bank of America purchased the healthcare payment tech firm Axia to give its clients additional options to provide healthcare financing options to customers.

Two imminently sensible moves, O’Neill said, given the rapidly changing dynamics in a healthcare market clearly in need of help. “The way healthcare is delivered is changing. It is virtualizing and digitizing,” he said. “As that starts to happen, different players get involved and payment flows change. It all has to be modernized [in order] for healthcare to be delivered in the new ways we are seeing.”

Payments can no longer be “bolted on” to healthcare providers, said O’Neill: They must be baked in from the word go, as the entire ecosystem realizes that the patient is also the main payor in the system. As patients continually pick up the lion’s share of out-of-pocket costs, they shouldn’t have to jump through hoops to make or receive a payment. But baking in payments presents new challenges that must be addressed in the heavily regulated and HIPAA-dominated healthcare field, where privacy concerns are particularly heightened.

But the wheels are in motion, said O’Neill. Innovators of all sizes and types are chipping away at the problem, guided by a common goal of creating digital payment options that can happen quickly, securely and accurately.

And the drumbeat of progress wasn’t only loud in healthcare this week: Banking had its share as well.

The Big Bank’s Innovation Issue

Jamie Dimon’s annual shareholders’ letter is always a media event in and of itself, and 2021 proved to be no exception. Dimon’s predictions this year were optimistic about the coming economic boom. He also expressed concerns about the growing power and size of FinTechs and the threat they present to mainstream banking players like J.P. Morgan.

Neobanks and non-banks have been taking share in consumer accounts,  Dimon pointed out — but they have not been held to the same capital rules and regulations as traditional banks. “We should remember that the quantum of risk may not have changed – it just got moved to a less regulated environment. And new risks get created,” he warned.

O’Neill had something of a mixed message on the review. He conceded that banks are under the yoke of more regulation than their FinTech and neobank counterparts, and he agreed that it creates an advantage in some segments like lending. But the banks’ problem isn’t purely that they are the most regulated players in the game — the problem is, he said, it that it’s much harder for them to innovate.

“It’s inherently hard to be innovative, because it pretty much means that when you’re innovating, you’re cannibalizing your existing, very successful business,” O’Neill explained. “So they’re at a disadvantage in their ability to innovate in terms of how they work, who they work with and how quickly they can move. It’s just really challenging for them.”

But the reality is that hard or not, banks must find a way to do it if they want to stay in the game, he noted.

“Bank leaders need to realize that if they don’t somehow learn to be more like Apple and Google in terms of innovating and moving with speed and purpose into the digital world, they will keep shrinking, share prices will fall and market caps will keep going down, much like traditional retailers versus Amazon,” he said. “I think it’s going to happen to banks as well. And they can’t blame it on regulation. That’s part of it, but it’s a relatively minor part.”

COVID-19 Passports — And Saying It Correctly

An interesting tidbit surfaced in the data this week about asking people to certify their COVID-19 vaccination status before they do things like travel or attend a sporting event. If you call it a vaccine passport, consumers en masse go sour on it. Ask the same people if consumers should have to verify that they have received the vaccine before doing certain activities in public, and over 60 percent of people were fine with that. It seems the objection arises when people feel like they are being compelled by the government to surrender their private health information onto a public document.

The issue, O’Neill said, is similar to the conflicting opinions consumers have about merchants tracking their data online. When it is used to build a better, more personal experience, it’s great. But when they feel they are being stalked around the web against their will with irrelevant ads, not so great.

“The conundrum is how to bring the advantages of sharing information and having a very verifiable identity,” O’Neill said. “Do you bring those advantages to bear and not have the disadvantage of feeling like you’re being tracked and watched? And do you feel like somebody is exploiting that knowledge about you?”

In the case of the passport, he said, the options mostly hinge on not making the documents overly filled with information beyond vaccination status that consumers might be hesitant to present. And that should echo in how we think about all data sharing, noted O’Neill: How much information does the entity taking the passport really need?

“Isn’t that the evolution of how we should be thinking about data, data capture and data usage?” he asked. “We want to create a situation where everybody feels comfortable that they’re giving only enough information to get access to the services or products they want.”

The questions this week were all complicated — and none have simple answers. But given the power of the emerging digitally connected economy, said O’Neill, those answers are all under construction right now.

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