The possibilities of payments
UK Fintech Week is upon us again, which is as good an opportunity as any to celebrate a sector that we spend a lot of our time thinking about here at psLondon.
Fintech is a fast-growing sector that has seen considerable innovation over recent decades. This makes it perfect for our unique approach to FutureThinking: it’s an area where businesses are always looking forward, like a driver with both eyes on the road stretching out before them. This year we wanted to explore one area of fintech that we take a particular interest in – payments – since it epitomises the forward-facing characteristics that we find so compelling.
A quick glance in the rearview mirror reveals a history of payment digitisation. A move away from analogue payment solutions began in the 1960s and ‘70s, perhaps most notably with the foundation of the Society For Worldwide Interbank Financial Telecommunication (SWIFT) in 1973, which set the standards for transactions moving forward.1 But it was the development of electronic payment terminals and platforms in the ‘80s, spurred on by innovation in telecommunications, and the transformative role that the internet played in the ‘90s internet that really laid the groundwork for the systems we know today.
By the turn of the century, when e-commerce players like PayPal, eBay, and Amazon were transforming the way consumers bought books and gizmos, bigger changes were occurring behind the scenes when it came to the scale and speed of processing, as well as security through encryption. Since then we’ve seen new payments providers and technologies springing up to offer new solutions, be they at the point of sale (POS) or online. For example, companies like Marqeta (full disclosure – we’re one of their creative agencies) place a premium on simplifying legacy processes with new programmes that offer speed, flexibility, and scale.
And what does the future hold? A lot of people would say that wider adoption of the blockchain will be what propels payments forward. It’s all too easy to focus on the ballooning market in cryptocurrencies like Bitcoin, Ethereum, or the ever-whimsical Dogecoin, but the digital ledger that underpins them, offering unparalleled encryption, is where the magic really happens. A range of blockchain-based payments solutions are already in development, presenting unparalleled opportunities for fraud-free transactions.
What this all comes down to is speed and security – a kind of hare and tortoise dynamic. Currently, the blockchain is extremely secure, but is known for sluggish transaction speeds when compared to other payments systems, for example, Visa.2 For our purposes, blockchain would be the tortoise and Visa would be the hare, but in this instance slow and steady doesn’t always win the race. In plenty of situations, the more transactions you can handle per second the better. That’s a potential stumbling block for fintech’s would-be golden child (or golden tortoise) – at least in contexts that require payments to be lightning-fast.
So, when we imagine the future of payments, the leaders will be the ones who are able to strike the right balance between these two factors for their particular use-case. We’ll also see new innovation: perhaps the blockchain tortoise will find some roller skates in the form of its new Lightning Network,3 or equally a hare might don some protective gear, cracking next-level security.
Whatever the outcome, this UK Fintech week we’ll be looking out for the latest innovations as the brightest and best come together to discuss the past, present, and future of fintech. Who knows, we may even end up working with one of them.
If that sounds like you, why not take the first step into an exciting future by reaching out to us at firstname.lastname@example.org?
And if you want to find out how you can look to the future so your brand can stand out today, you can read a mini report we wrote on the subject here.