October 08, 2016 | -
While banks may have been assumed to penetrate the most distant areas of the world and educate the “financially illiterate” on how to use cheque-books and log-in to online banking with tokens or deposit money through ATMs, people in “leapfrog environments” do neither of these things: they bank with apps.
How would one comprehend that Alipay and Tencent today process more than Visa and MasterCard combined, with Alipay in 2017 having 2.5 times as many users as PayPal and more than 11 times as many as Apple Pay. Today Alipay has 622 million users and handle more than half of the country’s 15.5 trillion worth of payments. It basically supports the ecommerce drive of the world’s leading business-to-consumers (B2C) manufacturer - and the one that makes global waves. Banks response should be proactive: where originally trade finance deals took up to 11-13 days, the surge of e-commerce and building of logistics hubs to cover global delivery spread the meagre and 20th century processes way too thin - and create a humongous backlog banks would only be able to narrow through tech.
XYZ generations assume behaviour proposed by the invisible infrastructure of online communication and more interfaces actually tap into them and mimic their inputs and outputs: Visa and MasterCard are pushing a single QR based format and invest more in tokenisation to allow a number of ways you can originate a transaction irrespective whether you are a bank or a fintech.
They should not try and win by reinventing the wheel that’s well oiled: but propose spokes that would help the wheel to become all-terrain. One is regulation as the mastery and the accumulated skillset is probably the single most important differentiating factor for incumbents versus challengers. Yet it can be bought as the cost of access to the financial market went down substantially after the Great Recession: the liquidity glut changed the risk / reward equation of big groups now providing amble liquidity i...
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