The Global Payments Innovation Jury today releases its 2017 Report, revealing that while Asia remains home to most payments innovation, Europe has leapfrogged Africa, North America and Latin America for the first time in nine years.
The Global Jury is a panel of 70 CEOs and senior industry executives from 37 countries across 6 continents, making it the most global body to look into payments innovation. Every two years, the Jury convenes to compile a global research report into payments and fintech innovation trends.
With 64 percent of the vote, Asia remains the clear leader in payments innovation, a position it has held consistently since the inaugural 2008 Jury and significantly outpacing the competition.
Chairman of the Global Payments Innovation Jury, John Chaplin, commented, “This goes beyond a ‘China effect’. Many other countries in the Asia region are modernising their payments infrastructures and creating environments that support innovation.”
Notably, for the first time in nine years, Europe has leapfrogged Africa, North America and Latin America to take second place in the ranking.
“While Europe has never been rated favourably for payments innovation in the past, the 2017 Jury sees real grounds for optimism. There is now a much more progressive regulatory environment in Europe, world-leading innovation hotspots have developed in London and Berlin and we are starting to see that consumers are more willing to give new financial service providers a go,” said John Chaplin, Chairman of the Global Payments Innovation Jury.
B2B versus B2C
The 2017 Jury also explored which payment sector offers the most profit potential for new business ventures. In developed markets, such as Europe a big majority (76 percent) see B2B investment as more likely to generate good returns than B2C, citing the consumer expectation that payment services should be free and the major marketing investment required to build a substantial user base. However, in markets such as Asia and Africa, the sheer size of the population still without access to formal financial services makes the Jury lean more towards B2C (56 percent) than B2B (44 percent).
“While B2C payments tend to get most of the industry airtime, the Jury think the smart investors in developed markets are mainly focusing on B2B payment opportunities because
of the better profit potential,” said Chaplin.
Growing importance of APIs
Addressing top industry trends, three quarters (73 percent) of the Jury believe that APIs are going to play an increasingly significant role in the payments market over the next three years.
“Payments are often a source of friction and that means lost sales for retailers and frustrated customers,” added Chaplin. “Using APIs it is much easier to integrate payments into apps so that transactions become almost automatic. The ability to make transactions “disappear” was seen by the Jury as one of the most important enablers of innovation as more and more payments come from mobile apps and Internet of Things devices.”
However, the Jury did not see APIs as a risk-free approach and voiced concerns about security risks and who gets blamed by consumers when things go wrong.
As in previous years, the Jury picked out the area of payments innovation that they see as most over-hyped.
“The fact that an innovation is over-hyped doesn’t mean that it doesn’t deliver benefits for the industry, rather that the claims made are exaggerated. And hype tends to lead to misallocation of investment resources,” explained Chaplin.
The Jury decided that distributed ledger technology wins the over-hype award for 2017.
“While the Jury believe that distribution ledger technology can deliver real benefits for the overall financial services business they also consider that many of the claims made about its applicability to retail payments are over the top,” added Chaplin.