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Why payments innovations are rubbish!

Here's my latest retail payments focused presentation.  It's premise is that there's loads of innovation out there, with micropayments and iPhone apps being hotbeds of innovation for developed economies whilst microfinance and 2G GSM messaging being creative fields for developing economies. 

However, all of these innovations are just froth on the cake of the payments infrastructure and the core of that infrastructure – the clearing and settlement services that underpin these services – is still pretty rotten.  There's still lots of legacy infrastructure out there, which needs updating to operate in our 21st century world … but sits languishing because banks are slow to act.

And the fact that banking protects banks through bank licensing, means that none of the innovative firms – including PayPal – can make much difference to this rotting core.

A little bit over-stated, but I think it makes the point.


Why all payments innovations are rubbish

View more presentations from Chris Skinner.

You'll notice some of my usual slides in here, but I've also added quite a few new ones, including several that list stunning numbers … such as Facebook currently uses over 30,000 servers!!

About Chris M Skinner

Chris M Skinner

Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here…

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  • Micro payments are just a vehicle to push people away from using cash for everyday transactions into a recordable system that will aim to total remove cash from the system so that all transactions are accountable

  • I agree- most banks still rely on legacy infrastructure that is around 30 years old!. With the expiration dates looming of existing legacy payment solutions, hopefully banks will use this opportunity to embrace next generation, innovative payments solutions.

  • Have been saying this for some time. Think the difference between WAP on mobile phones nearly 10 years ago and now the experience on iPhone. The key difference is the 3G network. Financial networks are like 1G (actually much worse) – mostly batch rather than real time and hopeless at integrating with other systems and providing information around the transaction. Financial networks need to be upgraded to the 3G equivalent at which time the explosion in mobile payments and other innovations will match that seen with the iPhone and similar devices. In the meantime, it is not surprising that early signs of such innovation are coming outside of the banking industry where they are not encumbered with these legacy networks.

  • In many regions of the world the situation is even worse. The Middle East is a prime example. http://www.innovatepayments.com/blog/?p=31