Check out CEO Steven Parker #39;s first column where he shares his thoughts about parallels between digital and contactless payments, discusses the importance of customer experiences and reveals his vision of the future financial system.
Reasons for joining Crypterium
In the early 2000s, Visa began promoting contactless payments. Now in many countries, people can no longer imagine their life without taps and they even forgot about long checkouts, but it took us 10 long years to make this technology mainstream. Back then, I was a general manager and led a team that tried to introduce contactless payments across Central amp; Eastern Europe. It was not easy, but I already knew that this technology would form a new consumer habit, make people pay in a new way.
3 months ago, I joined the blockchain startup Crypterium because I see parallels: as well as contactless payments, cryptocurrency can significantly simplify and improve the lives of billions of people. And I have always been passionate about the financial services and the way they can empower customers. I simply could not get past of what I think will be the next revolution.
In the name of the customer experience
Innovative financial technologies always seemed fascinating to me. I’ve started my career in Standard Chartered Bank in 2004. It was the time when banks were still conservative and reluctant to implement innovations. In order to do something, you had to come to the office, there were no convenient applications, the share of card payments accounted for 20% in EU and the financial industry seemed unshakeable.
Thanks to gathering enough data and intelligence, we transformed the way we dealt with customers by offering them different channels for communication. We introduced call centers and significantly enhance our retail customer base. I continued to work on similar matters in Royal Bank of Scotland as a Head Operations amp; Planning, Retail direct sales. In RBS my job was to plan, oversee and improve communication. In addition, I was responsible for the aspect of operations and production within a Bank. Creating strategies to improve productivity and efficiency of our services was of main importance to me.
Enabling contactless payments
In my professional career, there were several moments when I had to convince major companies and banks to implement innovative changes in financial technology. Probably, the most impactful one was when I worked at Visa mdash; understanding the prospects for contactless payments. I persuaded banks to try them.
I thought that it would be easy and we would just show how much time would be saved and how much easier customer experience would become. It could also enable transactions to be done in much smaller types of outlets and shops, transforming the way of operation. Yet, banks being banks, they were very careful with the whole idea at the beginning. Everybody was saying it’s not going to work, and that the technology is too complicated, and issuing cards with contactless technology was, in fact, more expensive.
What we see now is that the contactless card payments for the first time started exceeding cash. Primarily because people started using NFC for small purchases like eating out, bus tickets etc. Today, some people don’t bother carrying cash because they can use their cards but back then we had to convince the banks to start issuing those cards, that was the biggest barrier.
Firstly, we gave them financial incentives. Secondly, more leading banks were innovative enough to realize that by providing NFC they would look more up to date, more modern. And we knew we had to have it in the best use case areas mdash; transport, self-service, food, petrol etc. mdash; basically places where you could save time for your customers by running transactions faster.
I remember one of the first meetings particularly well. It was with a big bank that was quite reluctant to start issuing the contactless cards. And we said let’s just experiment with your premium customers because they travel more, they get to go to other markets where contactless payment exists more. The experiment was so successful and the feedback was so positive that this bank became one of the first to start introducing the contactless payments to the masses. The cost of issuing cards was actually less than expected. People quickly got used to paying with NFC cards.
The other banks followed. With the introduction of NFC, the share of card payments significantly increased everywhere. If card payments amounted for around 20 percent in 2004, now they amount for more than 70%.
Next generation payments
Switching from leading financial institutions to blockchain startups that are still at the early stage of development can be seen as an illogical move. Yet, it is a very exciting opportunity to further enhance the customer experience when it comes to payments and finance in general. So in short, I have joined Crypterium because I believe that cryptocurrencies can significantly improve the traditional financial system.
Up to date, cryptocurrencies were seen mostly as an investment tool, the interest was almost purely speculative. That bubble is now subsiding, giving way to the real value of crypto which is to enable frictionless, almost cost-free transactions across borders, between formats whether it’s loyalty or mobile. In a sense, cryptocurrencies can become the universal currencies that can be used across borders at the low or new cost. Many traditional financial institutions were trying to build solutions like that, but it’s difficult for them in terms of infrastructure and friction costs, like clearing systems.
The way I see it, the development of the cryptocurrency market can very much remind of the development of NFC payments. It might not be obvious why people would use it in the future right away, but starting as an e-money alternative it can become easier to use, frictionless than any other payment form taking their share and even replacing some of them eventually. The job is now to show people that it is a safe, reliable, low-cost alternative.
Here are the major differences with contactless payments. There are fewer issues on the acceptance side, we can piggyback on infrastructure that already exists, when we issue the card, use bank accounts, mobile numbers. We can use all those existing networks. But this time the constraint is mostly on the consumer side: people don’t know much about this new form of payment, they don’t have wallets with cryptocurrency in some shape and form. We need to form the habit.
We can argue crypto is now at the early stage of the game. There’s not enough scale and enterprises, it’s difficult to use and it’s too slow. The tipping point would change. It’s already changing. Transactions in some of the apps can already be instantaneous. We don’t have to wait for new infrastructure to be built because we can use the existing one, at least for the beginning. As momentum builds, as the consumer experience becomes easier, more understandable, companies gain trust, it should grow significantly.
It took NFC 10 years to get where it is today. I hate to make any predictions regarding cryptocurrencies but I certainly believe that cycles are shortening.
Crypterium is building a mobile app that will turn digital assets into money that you can spend with the same ease as cash. Shop around the world and pay at any NFC terminal, or via scanning the QR codes. Make purchases in online stores, pay your bills, or just send money across borders in seconds, reliably and for a fraction of a penny.
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