What We Learned About the Future of Payments From CES2018
CES, the Consumer Electronics Show came to a close last week and was without a doubt, a week full of innovation. Spanning across innumerable and interweaving industries, CES brought out the best, brightest, and most thought provoking topics and products we can come to expect in both the near, and far future. And, payments, an industry that is key to the launch and success of many companies, if not most of the products on display, was at the forefront of discussion among attendees.
Looking at new ways to integrate payments processes, and talks of what the future of payments holds, it was clear that CES didn't just want to dwell on the immediate and now, but rather look to how the now can lead us into the future. There is no question that the payments industry has seen its biggest evolution in the last 5 years after 50+ years of stagnation. And, with such anemic progress in the past, the rapidity with which growth and development has taken hold in recent years seems to only inflate the chaos and misunderstanding of where payments is really going.
Payments evolution is not designed to eliminate jobs, or have robots reign supreme, but rather, the key takeaway echoed among innovators is that of eliminating consumer pain points and friction when it comes to purchases in the user experience.
And it is with this pain point in mind, that the innovation emerges.
Of what we saw at CES2018, nearly all of the discussion revolved around addressing this pain, to find solutions and streamline the purchase process; innovation designed to enhance the user experience.
So, how do they plan on doing it?
Here are our key takeaways from our time in Vegas:
You Say You Want a Revolution, Well, You Know, We All Want to Change the World
Ok, so Beatles lyrics aside, they had the right idea. Payments' future is pretty clear; there is an evolution on the horizon and a revolution brewing.
One of the last big evolutions in payments came from the introduction of the credit card as a means to streamline purchases from cash and cheque. And, with all innovation comes its overexaggerated claims of grandeur and, its naysayers. While many feared or reveled in the idea that credit cards would completely eliminate the need for cash or cheques, that clearly isn't the case, even today.
And so, with the emergence of fintech solutions making changes to the existing payments infrastructure, many fear or exalt in its potential. But while it's important that we see its possibilities, we also need to acknowledge the need for cooperation and collaboration with those existing structures to achieve maximum success. Thus, fintech's success lies in the technology's ability to merge with payments and prove its accountability and security to gain the trust and usership of the general population.
This usually comes from word of mouth, positive reviews, success rates and more. Look at Uber for example, who integrated payment into the user experience so users could revel in the brand and service and not worry, think or waste precious time in the payment process at the end. The lasting impression now lies with the brand and not the purchase. Payments is integrated seamlessly into the experience.
With this evolution of service, product and technology at the forefront of payments, comes a corresponding revolution. As the technology grows beyond the infrastructure in place, the question in play then becomes, how can we expand without being slowed down by the old methods and processes of the past? From this, cryptocurrencies and digital money emerge, existing outside of the legacy platforms and regulations which are often slow and hard to change. These innovations are met with endless possibilities but the question arises if they too need regulations.
How do you innovate and implement? What security measures should be put in place? Should there be regulatory bodies that govern cryptocurrencies? And if so, who is in charge of it?
Blockchain governs itself. Ideally, the very structure of blockchain prevents collusion and fraud, solving the issue of trust that is so often questioned with other payments. Tokenization, too, allows for immediate execution of purchases, there are use cases and development already being seen within the world of virtual reality. And with the future promise of digital and crypto wallet's ability to quickly cash out cryptocurrencies into fiat currencies, digital money doesn't eliminate cash or cheque or even credit cards - rather it opens new payment possibilities for online goods and services that don't follow traditional payment molds.
Which, leads to the key of the payment evolution and revolution.
In God We Trust, All Others Must Bring Data
Edwards Deming hit the nail in the coffin, so to speak. Data is the key to understanding our consumers, their spend behaviour, their habits, their activities, and is also the basis for which we will begin to trust new technology and emerging products. But, the struggle lies in just how much information we are willing to surrender about ourselves to gain the convenience that this new tech provides. Innovators require data to enhance and develop their products, be it AI purchase advisors or virtual assistants, but we in turn demand that they present us with the data that proves (and re-assures us) their products are legitimate.
It's one of those colloquial conundrums that we often look at and ponder over, "What came first the chicken or the egg?" "You can't eat your cake and have it too," and now, "You can't get the functionality you seek without surrendering some data of your own."
Payments is one of those things that both pulls in and provides data for innovators. Consumer purchase history, transaction amounts, spend behaviour and more provide innovators working in AI banking robots and advisors the data that help them code their AI product. This data then allows the AIto understand and work with how to not only react to your requests but to eventually proactively analyze your data and suggest what you may be needing, "Brenda, I see you are getting low on milk, shall I order more for you?"
And with more data comes more accurate marketing, a better understanding of each personal consumer, ads delivered to you that are directly chosen for you based on the plethora of data points you provide. In-retail AI advisors that let you know in real time as you step into stores that "hey Brenda, check out the deal on the latest jeans , don't worry, we know your size for this particular style."
But again, this isn't possible without the surrender of some of our privacy and our personal data. AI can't suggest to you the new deals on jeans if it doesn't know you like jeans.
Kids Really Love Robots
And kids grow up into tech geniuses who love robots and create AI like Sophia. So let's talk about Sophia.
Sophia, joined by her creators from Hanson (not the boy band), opened discussion about the ways in which AI can enhance the economy and payments industry. As we learned from the need for data access, AI's unique capabilities when it comes to analysis, deductive reasoning and suggested solutions is designed to eliminate the pain point of customer friction and create seamless transactions integrated into the brand experience.
And the biggest challenge, beginning to be addressed by the likes of Sophia, is the lack of emotional intelligence and human behaviour receptors. Can they really pick up on the nuances of inflection of voice or understand body language? Can you give them the right heart to care about humans, and wildlife and the planet? Or will it just be programmed that they should?
Well, Sophia is starting to step into the limelight for her interview prowess and demeanor. She even runs her own Twitter account. Last month, model Chrissy Teigen mocked Sophia's makeup online, to which she recently replied "@ChrissyTeigen It looks like we're both at #CES! Want to meet up and say hi? I need some makeup tips ;)" demonstrating that even written mockery can be picked up by a robot these days.
And many companies are trying to address these concerns in their own way when it comes to their AI tech. There seems to be an evident shift from the current chatbot point-and-click AI into more conversational demands and eventual suggestions. They want you to be able to say, "Hey Google, send mom $100" and have the AI know, based on your data and previous history, the steps involved in that process and the ability to implement it. Or when you receive your paycheque, for your AI bank advisor to analyze your data and suggest or automatically disperse your funds where needed.
The hope is that AI will eliminate those middle steps that can often be infuriating and time-consuming. No more unlocking your phone, opening your banking app, signing in, going to accounts, setting up e-transfer recipients, allocating funds, choosing an account to withdraw from, and sending.
A simple conversation with Siri, and boom, funds transferred. A seamless transaction, an enhanced user experience and a faster solution.
Virtual Reality is the First Step in a Grand Adventure Into the Landscape of the Imagination
VR is no longer just a gamer's fantasy. It's a tool being developed to exist far beyond gaming. There are VR arcades of course, and currently, its primary use case is gaming, but VR technology is being designed to contribute to the economy from beyond just the hardware. VR is now allowing for the possibility of VR payments. To engage, experience and purchase all from within your VR headset.
Last year, in Copenhagen, the first live VR payment transaction occurred. With a Google headset, a shopper walked into a store in New York to shop for yoga gear. They could pull the items from the rack, examine the fabrics and make a purchase from across the globe. And how can you make a payment without access to a keyboard, or PIN verification? Well, with biometrics.
Biometrics identification is already successful with apps like Apple and Samsung Pay that scan thumb prints or phones that unlock with retina scans. Now this tech has been injected into the VR headset. With a simple scan of your retina, items are purchased. Watching a movie in VR and see a product you like? The hope is for VR to be able to process the product and allow you to purchase the item from within the experience. If that isn't a frictionless transaction than what is? It literally scans your retina as you watch a film and lets you buy products that interest you. The Uber of retail.
CES2018 clearly proved to be filled with stimulating topics that unfolded a dialogue of not only where the future of tech is going, but how it can seamlessly integrate with the payments landscape to offer up better security, trust, and enhanced user experiences.