Did the disintermediation train leave already from Platform 9¾?


September 2016 by Brian Cunnington

We commiserated with a colleague in the office last week after him rushing to get on a departing train and ending up 50 plus miles past his station and then having a rather tortuous journey getting home over 4 hours later than expected. It looked like the right train, was going in the right direction, leaving around the same time, but wrong platform and not stopping at the right stations.

Are we on the right platform? (no, not a play on words for payments platform – but maybe a future topic)

So what has this got to do with Payments? After reading some recent articles, I started thinking about the ‘tsunami’ of payments regulation that are setting currently parked, ready to depart off down the track at varying speeds. The industry is focussed on PSD2, APIs and Open Banking et al, with an increasing concern that the dates are somewhat, let’s say, challenging for incumbents. Arguably the newer PSPs will also be in a similar place as they are probably no longer working to a blank sheet of paper. A good summary blog here from Dave Birch echoes my own views about the dates and probably those of my colleagues and many others.

So, and continuing the analogy, everyone is looking to getting onto the right platform and grabbing these trains assuming they get to the right station at the right time before anyone else gets there.

At the centre of all these regulations and changes is the desire to enable straightforward access to customer’s accounts be opened up, with the resulting risk that PSPs could become disintermediated. The high level nature of the principles and lack of detail so far look like giving these new 3rd party providers, and other players, a headache, but it won’t take them long to work out how to work within the new environment. Indeed, a number of them are already out there (see Meet my new private banker.. Cleo) making a good effort using existing tools like Yodlee and Saltedge.

Has a train already left the station?

However, as an Apple fanboy, I was drawn, like millions of others to the recent Apple iOS and similar (forthcoming) MacOS upgrade. If you believe the PR noise, then Apple Pay (and the Android equivalents) is growing spectacularly.  Apple Pay is now being extended to web browsers.

The Naysayers will point at the simplicity of card etc etc, but where else do you get such an instant and informed transaction experience consistently? Extending Apple Pay (and presumably others soon) to web browsers (beyond the ‘in app’ route) and the Apple Pay proposition gets a whole new opportunity to further disintermediate the back end players. See here for a ‘how to’ article. It also seems to address the secure authentication requirements.

Of course, we’re still reliant on that experience being as good, if not better, than a current payments web experience and you need merchants to sign up, but if the level of abandoned baskets is reduced it feels like volumes won’t be far away. Always assuming that a plethora of acceptance methods can be handled by a merchant – I guess you can be sure that Apple will have considered that or someone is thinking about it.

Some of the things that we’ll certainly be talking to clients about during our more strategic payments discussions.

So, without even thinking of the PISP push payment possibilities in the post PSD2 world, the sheer growth of mobile/tablet growth indicates that perhaps the disintermediation train may already have departed from a platform that we didn’t even know was there…… or did we???picture2