Mark Beresford, a director located in the London office, recently caught up with his old boss and former Managing Director, Ken Howes.
Ken Howes led high-profile and leading-edge assignments for blue-chip organizations in many countries throughout the world. These included business growth, product, competitive and international expansion strategies and due diligence projects in payments and financial services. Ken was at the forefront of all significant developments in the payments industry for over three decades. Before joining EDC in 1996, he spent 26 years with Midland/HSBC bank where he held a range of executive management positions. He was a co-founder of the Prepaid International Forum (PIF). Ken is now enjoying his retirement in what is best known as the ‘Garden of England’, Kent.
Ken was keen to share his learnings from strategic projects where he had been involved in developing new payments related products and services for both consumers and businesses. Ken unfailingly understood and appreciated the ‘big picture’. As he took a step back and provided his big picture thinking it typically created the right context and enabled his clients and the people working around him to be more connected to their business objectives. As he reflected on the last few decades of his experiences in the payments industry he was candid to acknowledge that it was not all successful.
Ken spoke about how he had learnt from his mistakes and recognised that the best future leaders are able to learn from history. Ken talked about how often he saw innovative and new products that leverage technology failing to succeed in the marketplace. Technologists, he described, could dream up scenarios of how their technology might be used by non-technology-savvy consumers, citing a range of benefits that, they claimed would guarantee mass usage. There had been a rush by several companies to invent new payment instruments that they believed would solve a problem that actually did not really exist at the time. He stressed that technology for technology’s sake is a ‘complete waste of time and investment’, but payments businesses for many years have continued to look for the elusive killer application, product or service. The crux of the dilemma is that most consumers and businesses are very happy with the payments methods that already exist, and technology-driven strategies to replace them fail to understand that.
Ken reminisced when he worked for Midland Bank in the 1990’s. At the time, he was responsible for the bank’s involvement in the launching of an entirely new way to pay. It was called Mondex and, arguably it was ahead of its time. It was a smart card electronic cash system, that used a stored-value card and proprietary Point of Sale (PoS) devices, card readers and an ‘electronic wallet’. It was a forerunner to the prepaid technology solutions used today but with one fundamental difference. With Mondex there was no central account, the monetary value was held in a chip on the card. Mondex was a ‘closed loop’ payment ecosystem.
Source: British Museum
The system was publicly unveiled in December 1993 followed by trials in 1995 that were carried out in the west country town of Swindon, in the UK. Ken said it was a magnificent example in the history of payments where a technically comprehensive solution did not actually address the needs of the end-user. Mondex was trumpeted as the card that would help put the final nail in the coffin for cash. Unfortunately, like cash, if Mondex was lost or stolen, there was no refund. Mondex being a ‘closed loop’ system, customers could only use it in the few places with a special reader. It could not be used in the Visa or Mastercard PoS device that most retailers used. So Mondex failed to achieve critical mass and retailers did not install the costly equipment. Mondex was an expensive disaster but it did provide a huge learning benefits. A lesson that Ken fondly described.
Users and businesses take longer to catch up with technology than most industry experts predict. Ken says history demonstrates that solutions driven by technology for technology’s sake almost always end in failure. Too much money needs to be invested for any positive business case and too much emphasis is given to the solution rather than the intrinsic demand for the solution. The result is take up by end users is slow and critical mass is not achieved. Ken believes that speed of the transaction or the overused term ‘frictionless’ payment, that we are seeing with contactless payments, is not always the requirement for all types of consumer. Some customers still prefer cash or even paper cheques, some traditional chip and PIN payments. There is an aging population, increasing in size, particularly in the Western economies, that will not be rushing to use ApplePay, AndroidPay or SamsungPay unless there are real benefits over existing ways to pay. The proliferation of failed payment methods in the last 30 years is because of a failing to understand the basic needs of the end-user, and that consumers are slow to change their spending habits that they had formed a generation ago.
It was noticeably amusing for Ken to learn that Mondex and its various hardware devices, such as the Mondex wallet, the Mondex Card Reader Keyring and Mondex PoS can be found in the British Museum, categorised as ‘financial instrument’, a financial instrument that failed to understand and appreciate the bigger picture and take a strategic perspective in resolving a customer problem – or at least a real problem that doesn’t already have a perfectly good solution. Ken said that this museum piece was a superb example of how history can quickly shelve irrelevant technology and how we can learn from those examples to better develop new payment systems and advise our customers in the future.