The world’s largest industry event, the Mobile World Congress (MWC) takes place annually in Barcelona and for a week it takes over the city when even the cheapest of the worst hotels sell out well in advance, restaurants are jam-packed, and taxis are hard to find. New products are rolled out by the world’s top mobile device manufacturers, innovations are proudly displayed, new initiatives are unwrapped, and in general, there is ample opportunity for everyone to grab the world’s attention.
This year, there were recurrent themes from last year such as connectivity and the Internet of Things, wearables, driverless connected cars, and of-course, breath-taking virtual reality demos with different experiences on offer for those with the time and inclination to line up and wait their turn to get inside the latest shining connected Jaguar, the space flight VR Samsung simulator or, my favourite, walk the virtual plank with wobbly knees.
A driverless connected car
Walking the VR plank
This year, there was added emphasis on artificial intelligence and machine learning. Exhibitors showcased the latest connected wizardry from intelligent platforms and data flow management systems to contextual conversational chatbots to all types of robots, from app controlled impressive drones to cute-and-cuddly pet robots or petbots.
Want a petbot, anyone?
Of course, most of the show is devoted to the mobile industry. Network efficiency, superfast data pipes, intelligent routing, operator hardware, and the latest phones and gadgets and other elements critical to the mobile industry are discussed and displayed at the giant booths, some so big, that they look like huge futuristic cities rather than conference pavilions. It is in these futuristic pavilions that relationships are cemented, mega deals are made, and contracts are signed, all in the process of one energy-packed week of organised innovation.
Conference pavilion or a mini-city – The Huawei Pavillion
But this is the event for everyone. Besides the mega mobile network operators, hardware and software vendors, handset manufacturers, and technology giants, the event provides an excellent opportunity for the smaller suppliers and those excelling in niche areas, to showcase their technical wares. One pavilion featured resilient phone casings that could withstand liquid damage by placing them in mini fish tanks complete with tank-like air bubbles where the phones sat happily charged.
Living in liquid
Finance and Payments at the MWC
Mobile devices are now widely used to access financial services and make payments in both the developing and developed parts of the world. Visa and MasterCard and other payment services providers were present in full force at the Congress and though the interest in payment services from mobile network operators has waned a bit, the handset manufacturers have redoubled their efforts to take a lead in mobile digital wallets leveraging the tokenisation solutions from Visa and MasterCard. But progress has been slow as consumers still cling to the familiarity of plastic cards for payments but now have a wide choice of connected gadgets and wearables for making payments.
Disruption in Digital Finance
I moderated a panel discussion on disruption in digital finance. The auditorium, as always is the case at the Congress, was full and the session was oversubscribed. I opened the session with some perspectives and set the scene for the debate and discussion that followed.
Starting the debate on disruption in digital finance at the Mobile World Congress 2017 in Barcelona on March 1
The financial services industry has been more resilient than other industries and the process of disruptive innovation has been slow to take root in banking and finance. This is because of three reasons:
- Regulatory Protection: The banking sector has been protected by regulation and quite rightly so because regulators must look after consumer interests so they don’t allow just anyone to setup shop as a bank and start accepting customer deposits
- Ownership of Infrastructure: Banks have traditionally owned the core assets that facilitate both local and international payments such as domestic Automated Clearing House (ACH) systems, international clearing and settlement operations, and the global payment card networks. Access to these networks was traditionally restricted to the financial sector only; and finally,
- Information Access: Banks never shared customer data nor have they ever allowed anyone to make transactions on behalf of customers directly from accounts held by them
These industry advantages that banks and financial services providers have traditionally enjoyed, have acted as barriers to entering the industry for non-bank players. These barriers are now being eroded by regulatory measures emanating out of Europe which are also being adopted elsewhere. Open banking APIs – standardised and interoperable connectivity interfaces – that make it easier for other providers to connect and exchange data with banks, and the Second European Payment Services Directive or PSD 2 are allowing registered and regulated third parties to access customer bank accounts (with their permission) to use the data for making credit decisions and initiating payments on behalf of consumers. These measures are likely to relegate the banks to infrastructure providers but it is not all gloom and doom for the banking industry. In fact, banks are looking at these changes from a positive perspective and as drivers towards innovation helping the banking industry evolve to the next level of technological excellence. It is making banks rethink their business models and the value they provide their end-customers and develop new ways to serve their customers. Infrastructure ownership and access is also opening up. Both Visa and MasterCard are now publicly traded companies.
The Disruption in Digital Finance – at the Mobile World Congress 2017 in Barcelona – March 1 – with (L – R): Pere Nebot (CIO of CaixaBank); Rocky Sopelliti (Global Industry Executive, Telstra); Speaking – Gulru Atak Gundem (Head of Innovation Lab Citi); Dror Oren (CEO of Kasisto); and Samee Zafar (Director, Edgar, Dunn & Company) moderating
Rocky Sopelitti, global industry executive at Australia’s largest mobile network operator Telstra, discussed the details of his research on key global trends relating to Millennials, Mobiles and Money, the forces reinventing financial services. He highlighted some important results from Telstra’s extensive survey. The rise of the millennials – those aged 18 – 34 – who now constitute 1 out of every 3 consumers and are projected to own 28% of global wealth by the year 2030. The Fintech industry – the challengers and the disrupters – those who are and will be competing in digital finance – have invested billions in new ventures. But despite 90% of the bankers believing that Fintechs will have significant impact on the industry, only 50% report their institutions have created value through digital partnerships with Fintechs.
Pere Nebot, CIO of CaixaBank, one of Spain’s largest and most respected financial institutions, talked about disruptive innovation from a bank’s perspective. CaixaBank which calls its new model branches “stores” always take a customer oriented view of change. He said that in 2004, only 18% of the bank’s customers accessed the bank over the internet. But today a majority – 53% – do so over digital channels. CaixaBank has also rolled out an exciting new digital only bank called “imagin” which is designed for the millennial consumer and does not charge any fees. He also spoke about how the bank uses data to analyse customer behaviour and identify needs and is now implementing AI tools to help it understand its customers better.
Anuj Nayar, Head of Global Initiatives for PayPal, talked about the company’s strategy and how fundamentally it is linked to enabling the Fintechs and the innovators in the field of payments. PayPal could be called the original disruptor of the payments world when it started operations around 20 years ago. Today, PayPal’s subsidiary Braintree provides the platform and the necessary API’s over which some of today’s key innovators such as Adyen and Uber have developed their services. PayPal owned Venmo has been a phenomenon in person-to-person payments in the United States. Another successful acquisition for PayPal was Xoom which signalled the company’s participation in the international remittances industry. Recently it also acquired TIO networks for $233 million. TIO is a “bill-payment processing service for those who don’t necessarily use bank accounts for their financial transactions. With its API, you can pay your utility and telecom bills from your phone, computer, or a self-service kiosk without having to go through a bank.” TIO will also enable consumers without bank accounts or payment cards to fund and make payments using PayPal.
Dror Oren, co-founder and CEO of Kasisto, a San Francisco based start-up originating from the same group that developed Siri and later sold it to Apple, has developed a platform that provides a natural language interface which helps banks, mobile network operators, and other companies automate many of the services through conversational interaction via a mobile device. It goes beyond voice recognition and voice activated commands such as those offered by Siri or Amazon’s Alexa but provides a contextual interface that is very nearly like talking to a human being on the other end of the digital conversation. A natural language interface will automate many of the tasks that collectively cost banks and other providers billions of dollars each year in employment costs of customer services / call centre staff.
Gulru Atak, the newly appointed head of Citi’s Dublin based digital labs, part of its global treasury division discussed the importance of trust and compliance, two requirements for corporate customers, and two reasons why big banks add significant value to global trade and finance. Citi has developed open APIs that enable its customers to connect with its platform and directly integrate their treasury applications with backend systems. Gulru provided insights from the perspective of a global institutional services provider on the impact of Fintech innovation and stressed the importance of partnerships between Fintechs and banks for mutual benefit.
One thing that all the panellists agreed with was that Fintechs and disruptive innovation in financial services and payments is a good thing for everyone. While some incumbents will fade away or struggle to provide value, the process of experimentation and innovation will continue to contribute fresh ideas and help to propel the industry forward. Interestingly, there is a significant collaboration between incumbents and start-ups. Many start-ups are financed by banks or other financial services providers.
Even though the session duration was a generous 70 minutes, it seemed that the audience felt some disappointment when it finished because the discussion was alive and strong and could have carried out for another hour keeping every one focused and engaged. But then there were eight mega halls with thousands of exhibitors to talk to and an overall attendance of over 100,000 delegates to network with. There was just so much to discover and do.