Pay-iT Conclave 2018: The new payments architecture needs new thinking
A wave of payment and fintech companies has been witnessed in the last decade, piggy backing on demonetisation. This has led to the transformation in the way we transact today. The Payments industry is believed to be a $200 billion dollars industry and is expected to become trillion dollar by 2023.
The recently concluded HPE Pay-iT Conclave 2018 was an attempt towards deciphering the India opportunity. In the summit the panellists deep dived into the various Fintech standards and compliance being evolved and how major IT giants such as HPE are employing various technologies, solutions, platforms and approaches and helping in this journey of digitisation.
One of the crucial point observed by Shailesh Paul, VP , Merchant Sales & Solutions and Cyber Source with VISA, was that though, Card usage has grown (2.4x), wallets and UPI have grown (3x) but Cash usage has also grown since demonetization (1.2x). The biggest competition in the path to digitisation of payments and making it a norm rather than an exception is cash. Further he observed that big companies such as VISA are the facilitators for the various upcoming fintechs/ startups and hence shouldn’t be viewed as competitors.
Navin Surya, Chairman Non-Executive, Fintech Convergence Council (FCC) went on to highlight the 3 key trends which will help shape the future of the payments industry as follows-
- Driverless - Who gets insurance? Do you just go and sit? Manufacturer directly running their vehicles on the road? What about all the intermediaries? Be it commercial or private. What will be the implications on business, commerce, payments, etc. We have to adapt to such trends when they come
- Deviceless – With the onset of Earphones auto activated with sense, touch. AI assistant inbuilt or plugin to execute commands, day to day activities are converging onto a small device. Services available through APIs or simple connectivity can be used in such models. While working on mobile, designing and developing things one needs to factor in flexibility such that these applications can work on any mobile or platform. We don’t know which one will pick up in future. Tv, Fridge, washing machine, car, etc.
- Peopleless - Another very interesting thing would be a combination of machine learning and holographic technology. Deterrents like full paper KYC for even a 3000 rs transaction have to go away to spread digitalization of payments. Tech is there and solutions can be created. But if govt policies and regulators are not ready to adapt to these, it will simply not work. In fact they use physical checking of photo and person, where tech would be way more accurate. However, solutions need legal backing.
The first panel, moderated by VCCircle CEO Jaideep Mehta, included Anand Bajaj, Founder & CEO, Nearby Technologies; Manas Nath, Country Sales Manager - NonStop Enterprise Division, HPE; Daykin Creado, CTO, Itzcash; and Bertam Dsouza, VP & Vertical Head (Digital Payment & Fintech Strategy), Kotak Mahindra Bank.
The second panel discussion was moderated by VCCircle, Managing Partner, Shalil Gupta. The panellists included, Abhishant Pant, Founder, Cashless Journey;Sanjay Desai, EVP IT, HDFC; and Harish Kumar GS, Country Manager MCS, HPE.
In the panel discussions, Mr. Daykin Creado, of Itzcash, touched upon the importance of UPI. He said that instant payment is evolving at a broad level, and can be categorised mainly into two buckets of fast money and slow money. Maximum disruption happening in the market is on fast money. Slow money is more traditional products offered by financial institutions; this market hasn’t really seen a drastic change over the years. Lot of things happening like net payment methods like UPI, is what is fuelling the growth trajectory of fast money.
Abhishant Pant, of Cashless Journey, further enlightened the audience on the next wave of B2C evolution; the payment methods that customers use i.e. cards will change and evolve over the years which will be very different. UPI is seeing a lot of use cases now. He further commented upon the changing landscape of payments in the last couple of years. “On the back of P2P payments we see a lot of Fintech partnerships who consume these services from banks today and offer it to their customers.”
According to Harish Kumar GS, of HPE, blockchain shall also play a big role in cross border payments and the role will be to reduce that friction means reducing a lot of documentation of proof. There are two directions of payments in the case of remittances; outward and inward remittance. For Outward - certain framework has to be followed but for Inward - a lot of change is already happening. Blockchain has the promise of solving the issue that is competing with traditional and legacy framework SWIFT.
The biggest takeaway for the investment community is that they need to focus more on the infrastructure for now. It’s more of the necessity to acquire that transaction and the customer and build a relationship in retaining that customer if it’s B2C and satisfying the merchant if it’s B2B . Basically one needs to look out for providers of value added services.
Sanjay Desai, EVP IT, HDFC, spoke on the role of large institutions like HDFC. He said that customer’s security and experience is of utmost importance. You need friction less experience in security, meaning, you ask less questions like otp, mother’s maiden name etc, which disturbs the customers experience. The customer is interested in buying something not in how he’s paying. One needs to factor in for what kind of amount what security needs to be used. HDFC is working towards a friction less experience where your security will also be AI & ML based or maybe behavioural biometric (behavioural science) in the future.
So as to counter companies born in cloud, for whom agility and flexibility is inherent, big institutions are deploying microservices, commented Bertam Dsouza, of Kotak Mahindra Bank. He says “we planned to make microservices out of big transactions as these enable us to deploy container and cloud based apps. We can scale it on our own architecture”. On the on premise cloud, Kotak has microcontainers carrying these microservices. API and container will ease the problem much more. For infra, they also have API. Where their infra can be coded. That code can be put inside the app program.
Payment fundamentals such as robustness and high availability (HA) have not changed; the highest demands placed upon core payments processing—trust, availability, and security—remain absolute. For mission-critical systems, Hewlett Packard Enterprise stands as the world’s partner of choice. Today’s payments world is far from predictable. The pace of change is unprecedented. The new norm is to have on-demand customer services payable at any time, anywhere, and on any device. Banks are seeking a fresh approach to planning and managing their payments ecosystems. It is an approach where new product development cycles are measured in weeks rather than months or years. The new payments architecture needs new thinking around aspects like, Fraud management;• Biometrics; Loyalty programs; Wider connectivity with the world of commerce. To achieve this, banks require the increased flexibility offered by HPE hybrid technology solutions. Connectivity is paramount with multiple platform solutions, as provided by Hewlett Packard Enterprise like HPE NonStop and Hybrid systems support. By harnessing the power of Hewlett Packard Enterprise for their solutions, customers have the assurance that all infrastructure components will work seamlessly together with the convenience and assurance that they are serviced and supported by one organization.