Where Will We Meet Next?

May 21st, 2014

Traditionally, our conference season has always been September through November, when large industry events from BAI Retail Delivery to EFMA Retail Payments to Sibos take place. Increasingly, it feels that the conference season is all year around, and we often use these blogs to reflect on various events we attend.

This time I just wanted to post a brief note highlighting a few events I plan to attend in London, such as:

  • May 22: Payments Innovation 2014, Tech UK and the UK Payments Council
  • June 10-11: Digital Banking, Marketforce
  • June 23-24: Innovation in Payments, Marketforce

If you are also attending any of these events and would like to meet up for a coffee or an informal chat, don’t hesitate to reach out. Look forward to seeing you.


Do You Have a Story to Tell in Cards Management and Transaction Processing?

May 21st, 2014

Having spent the last few years deep in digital payments, this year I decided to dig into trends and providers in card management and transaction processing  (CMTP). My view is that CMTP technologies are more relevant than ever. Despite advancements in mobile payments and digital wallets, cards are not disappearing any time soon. Furthermore, modern transaction processing systems can be at the heart of the banks’ cards and retail payments offerings and act as a hub for a broad range of transactions from different channels, devices, and payment instruments.

However, many financial institutions around the world remain stuck with legacy solutions. Growing transaction volumes, proliferation of products, channels, and transaction types, and changes in customer expectations have been putting significant strains on those legacy platforms. Not surprisingly, issuers, acquirers, and processors around the world have been looking at options to renew and transform their retail payments platforms.

There are many vendors and service providers with relevant offerings in this space. However, navigating through their capabilities and understanding how they compare against competitive offerings can be a daunting task. Therefore, I am looking to understand:

  • What are the demand drivers for card management and transaction processing capabilities? Who needs them and why?
  • What options do the clients have to acquire those capabilities: build, outsource, etc.?
  • Who are the main players in key categories: software vendors, processors, system integrators / implementation partners?
  • What are the differentiating features to look for in solutions?
  • Which vendors distinguish themselves in terms of solution capabilities, market presence, and customer focus?
  • What can the industry learn from banks that have recently transformed their retail payments infrastructure?


I have already published a primer on CMTP technologies, which Celent clients can access here. Now, I am looking to understand the breadth of relevant capabilities and market presence for a diverse set of vendors – software providers, processors and professional services players. I have already reached out to many vendors and service providers, but if you haven’t yet heard from me and would like to be part of this research, please get in touch with me via email, twitter or simply by leaving a comment on this post. Also, I would be interested to hear from banks that recently undertook a cards/ retail payments transformation project and are willing to share their success story and lessons learned. So, if you have a story to tell in CMTP, I look forward to hearing from you.

Technology and Service Providers: Different Beats, Same Tune

Dan Latimore

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May 16th, 2014

It’s been a whirlwind week for service provider analyst days and client conferences: Friday with Genpact, Tuesday and Wednesday with FIS, and Thursday with IGATE. Each firm is trying to differentiate itself amidst all the market noise; like banks, they’re constantly resisting the grind of commoditization. And while interaction was unique and fascinating, four common themes struck me as being indicative of the massive changes going on today in banking technology. Not coincidentally, they’re all consistent with what Celent has been saying about the evolution of the banking ecosystem.

  1. Focus
  2. Realignment
  3. Security
  4. Partnership

Focus takes on different meanings for different firms, but both Genpact and iGate were very clear about where they were going to spend time and energy, and where they weren’t (banking makes the cut for both of them). FIS may seem oxymoronic because of its product and service breadth and depth, but the company appears to be making steady progress towards rationalizing a variety of disparate products obtained through acquisition.

Realignment follows focus. FIS is for the first time dividing itself into three groups: North America, International, and Global Institutions (roughly the top 30 international banks). Genpact and IGATE are both focusing on nine verticals (the specific nine vary), with IGATE putting P&L responsibility with the verticals for the first time. They will both have, however, certain horizontal practices that continue to run across their verticals.

Security is a key value-add for these companies; with a broader base across which to spread costs, they tend to impose attention and discipline that many smaller banks can’t hope to match. While specifics vary, all made it a point to mention their approach to security. As the issue continues to increase in importance, we think this element of their value proposition will become ever more significant.

Partnership is perhaps the ultimate defense against commoditization. Each of the three firms mentioned in their first breath the desire to work with their clients as Partners. Celent has written extensively on the transition from a vendor/customer to partner/client relationship in banking, and while talking about it doesn’t guarantee execution today, it’s a necessary first step for it to be tomorrow’s reality. What will be particularly interesting is the ongoing tension between providers’ professed desire to do the right thing and regulators’ apparent wish that contracts spell out in gory detail what will be required (including who bears responsibilities for mistakes). For more, see an interesting American Banker article here: http://bit.ly/1sAAE7j. For providers, guaranteeing that they can pass regulatory muster with minimum fuss will be a key requirement as they seek to win more business.

As the year continues we’ll be watching keenly to see whether other providers’ actions echo these trends, and what banks’ reactions are.

As a footnote, two of the firms have taglines, one brand new, the other a bit older:

IGATE: Speed. Agility. Imagination.

Genpact: GENerating imPACT

FIS may have an opportunity here to help define itself; right now it’s self-admittedly one of the biggest companies that no one’s ever heard of.

What do you see in the marketplace? Has my quick synthesis missed a key trend? I welcome your thoughts.

Quotes from the Innovation Roundtable

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May 15th, 2014

They said it couldn’t be done, but we held the latest installment in Celent’s series of innovation roundtables in Tokyo recently. Our innovation roundtables put the focus squarely on interactive discussion among the participants. This is a relatively untried model in Japan, where events typically take the form of conventional conferences with presentations. We’re glad we tried it though, because we got a very interesting line-up of firms. Participants included the whole spectrum: banks, capital markets firms, and insurers; Japanese and foreign firms; traditional mega-institutions and alternative new entrants.

The discussion was lively; below are some quick notes I took of some of the more interesting comments made, to capture a bit of the flavor of the day.

Why Innovate?
“Innovation is not the goal, it is a method and a tactic.”

“We need to innovate because it has become difficult to differentiate us from our competitors.”

“In today’s environment, innovation is necessary if you want to stay profitable.”

Paths to Innovation
“Incremental innovation is an axymoron. You can’t innovate by increments; innovation requires a big bang change.”

“It might be possible to rearrange existing elements to create something new.”

“When to innovate? If our clients think a new service is interesting, we try and create it for them and see if it succeeds.”

“Innovation needs to be business driven.”

“Financial institutions need to have an innovation division; an incubation unit that accumulates ideas from throughout the company.”

IT and Innovation
“IT is not the impetus for innovation, but because IT inevitably evolves, that creates need for innovation.”

“Legacy is a barrier: it is hard to throw things away.”

Cultural Challenges
“We need to justify ROI on any investment each fiscal year. It is hard to show this on an innovation project.”

“If you think about it, financial institutions don’t even have R&D departments.”

Quote of the Day
“Changing company culture is really about changing oneself. I personally enjoy innovation and change. Innovative culture is about getting a bunch of people together who enjoy change.”

6.11.2014 Celent Webinar: How to Better Leverage Celent

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May 12th, 2014

Celent CEO, Craig Weber

This event is free to attend and we expect you to walk away with a better view as to how you can get more from working with us. For more information, please contact Anna Griem at +1 603 582 6137 or agriem@celent.com.

Please click here for more information.


NACHA Payments 2014 Roundup

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May 8th, 2014

After attending IPS, NACHA Payments is always a slightly strange experience. Not bad, just quite a different set-up. IPS is very international – if anything the UK is under represented – and more senior. NACHA offers much to the more junior member of staff, particularly those seeking to renew their AAP accreditation. This means that the attendance is much, much higher, but that there is a real mix of people. As a result, some of the sessions are detailed, nitty-gritty discussions, great for learning about areas I don’t usually cover.

The main topic of conversation for me was real-time payments. I’ve spoken a couple of times in the past at NACHA on the topic, partly because of my involvement in the UK Faster Payments scheme, and clients will know about my forth coming series of reports on the topic. Real-time was also mentioned in numerous places across the agenda, with several friends and former colleagues speaking.

The focus of my first report was also the starting point for many of my conversations – addressing the many myths that seem to pervade about real-time. These include:

  • that it’s only in the UK and Singapore (it’s not – there are at least 35 other systems globally)
  • that its new and leading edge (its not – at least one system is 40 years old)
  • that it’ll canabalise wire revenue so should only be a p2p proposition (multiple examples proving that this doesn’t have to be the case!)

Shortly before NACHA Payments, NACHA announced it’s enhanced Same Day ACH proposals which also came under great debate. It’s my belief, and shared by a growing number of people, that the Fed has decided the US *will* have a real-time payments system. As such, one group of people saw this announcement as being a response to ensure that NACHA is not bypassed in some way.

Jan Estep, the CEO, of NACHA, was on one of the panel sessions, and was asked about how this attempt will be any different to the previous NACHA proposal. The vote on that proposal received a Yes from the majority of banks, but not the 75% voting majority to pass it. It’s widely believed a handful of big banks effectively blocked the proposal.

To my point at the beginning about there being a large operational audience, Jan gave an excellent and detailed explanation of how this proposal differed from the last. But a number of the audience suspected that the question was rather more pointed and was really asking why the blocking banks would suddenly vote for this now. That specific question was never addressed.

By the time the conference finished, I was left with the impression that the debate had turned a corner, or at least moved into a new phase. Over the last year, I’ve increasingly found that people have formulated their opinions on the subject. But as my discussions highlighted, there are a lot of misconceptions, and I’m not always sure some of the people contributing to the debate aren’t muddying the waters further. I think the next step for the Fed is to address that, and even if it stops short of compiling a list of requirements, a view on what isn’t the solution would be helpful. I understand the logic of the NACHA proposal, but I fear it’s a short-term solution to a long term problem.

IPS 2014 Roundup

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May 6th, 2014

So you’ll have gathered from recent blog posts that it’s conference season. This is the first of a few posts rounding up some of my recent events.

This post is about International Payments Summit (IPS) which took place last month. Jacob mentioned in his Finovate post that he ensures that he attends as many sessions as possible – IPS is very much turning into my equivalent. I wrote last year about my return to the event after a long absence. This year didn’t disappoint either. For me, there is a great mixture of depth but also variety, with many speakers I’d not seen before. It’s not a cheap show, but content wise, worthwhile. If I had to make some suggestions, I’d suggest perhaps fewer 20min presentations. Whilst I can think of one speaker where that was probably 18m too long, there were some others who deserved longer.

Lots of notes and things to follow-up on, but two themes really stood out.

1)      Innovation. Some great presentations, some challenging ideas. For me, the most provocative was from Mark Stevenson, of Flow Associates. The famous baseball player Yogi Berra once famously said “The future ain’t what it used to be”. Mark left me feeling somewhat like that! I can’t do his presentation justice here, but from the advent of cheap solar power to impact of 3D printers, the picture of the world that Mark painted was necessarily, radically different than the world of today. But effectively the punch line to the presentation was that this future was not 50 years away, but only 5. Scary, scary thoughts ensued as we thought this through!

2)      Regulation. The second day of the conference fell the night after the second draft of the PSD2 was voted upon in Brussels. The speaker had attended the session, and then hot-footed it to London – content can’t get much fresher! But across the conference, there were some very deep, technical discussions, which even I struggled with at times. Regulation seems to be getting ever more complex and specialised.

The conference closed with the panel that I sat on, where we summarised the key points of the conference. My take away was labelled “Mind the gap”. I was particularly struck about how little overlap there was between the innovation and regulation discussions, and noticeably, how they were moving further apart. It would seem, considering the sheer volume of regulation that banks face, an obvious place for innovation to take place.

Finovate Spring 2014 Recap

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May 6th, 2014

I spent much of last week in San Jose attending Finovate Spring. I’m a Finovate veteran at this point, having seen all kinds of companies take the stage at the conference. Even after all these years Finovate is still my favorite conference. I rarely attend sessions at industry conferences but I make it a point to attend most if not all of the Finovate demos. The demo format is awesome, new companies show up each year, and there is much to learn. Granted, some of the companies don’t stand a chance, though all need to be applauded for innovating and attempting to take our industry to the next level.

There were several key themes at Finovate Spring:

  • Lending and alternative credit (e.g. LendingTree, LendingRobot, Roostify, CUneXus, Visible Equity, etc.)
  • Security and authentication. (e.g. Rippleshot, EyeVerify, TrueLink, ID.me, etc.)
  • Digital investing. (e.g. Motif Investing, Stockpile, TD Ameritrade / LikeFolio, etc.)
  • Self service (e.g. Interactions, Intellisresponse, etc.)
  • Mobile enhancements. (e.g. Ondot Systems, Loop, Jumio, etc.)

What stood out?

Funniest demo and best pitch: PrivatBank with their Topless ATM. Stay tuned for when the Finovate crew posts the videos. This one is really fun to watch.

Most innovative demo: Fiserv’s demo of payments and notifications using Google Glass and a Samsung Galaxy Gear smartwatch. The demo is a great example of why it’s important to dream, try things out and not be afraid to fail.

Most useful and practical: Jumio’s card activation using a smartphone camera; TrueLink’s solutions to protect the elderly and impaired; Stockpile’s stock on a gift card (shout out to former Celent senior analyst Dan Schatt!)

Glad it was gone: PFM has dominated the stage for several years at Finovate and I was glad to see only a handful of PFM companies on the docket this time around. Banks have lots of work to do on the PFM front and it is going to involve rethinking how banks and consumers approach PFM. More on that another time.

There were other standouts, though this should give you a good sense of what Finovate Spring had to offer. Finovate Best of Show winners (audience selected) can be viewed here. I’m looking forward to seeing you all at Finovate Fall in NYC!


Reflections on NetFinance 2014: It’s about relationships

Dan Latimore

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May 5th, 2014

NetFinance 2014 just finished in Miami.  Celent spoke on “Engaging Mobile Customers through Content, Display, Alerts, and More,” which generated a number of follow-on conversations on how to execute on the notion of engaging with customers, and a great question on how long today’s innovation stays differentiated. Our answer: “not very.”

I’ve mentioned before that customer-centricity is becoming a key concept that many banks are highlighting as a key point of their retail strategy. What NetFinance crystallized for me is that the necessary follow-on to this customer-centricity is this simple idea:

The best defense against continuing commoditization is a solid customer relationship.

Technology, clearly, can go a long way to enhancing that relationship. A number of vendors at the show (like AdRoll, Backbase, Domo, EarthIntegrate, Ektron, Epsilon, IgnitionOne, Leadfusion,  Liferay, Message Systems, Message Broadcast, and Personetics, among others) focus on helping banks touch customers at the right times, or giving them an omnichannel view of all customer touch points, or enabling customers to start a transaction in one channel and continue it in another. But for these technologies to be effective, customers need to be receptive.  And they’re going to be more receptive if they think, and feel, and believe in their gut, that their bank is going to do the right thing by them. All the technology in the world can’t replace some very visceral customer feelings.

To engender these feelings with their customers, and stop them from transacting with one hand holding their wallet so their pocket doesn’t get picked, banks should consider some potentially radical ideas (simple concepts?):

  • Not every touch needs to be a sale.
  • Foregoing short-term income for longer term gain can (in many instances) make sense
  • Surprising customers on the upside can yield long-term benefits

Now, the natural reaction to this is that it potentially puts banks into a (short-term) revenue hole. And that may be true, but when the real game of ongoing commoditization is long-term, banks need to thinking beyond the next quarter.

A “Shout Out” to Finextra Future Money

May 2nd, 2014

I just spent a couple of fascinating days attending Finextra Future Money in London. The content of the event has already been well covered via a Twitter feed, and Finextra’s own live blogs and a post-event summary. I would strongly encourage to click on those links, as the discussions have been interesting, informative, sometimes provocative and always lively.

Rather than trying to summarise all the ideas over the last couple of days, I just wanted to highlight and give thanks to:

  • Everyone at Finextra, but especially Liz Lumley and Nick Hastings, for putting together a great event and for inviting me to moderate a panel on Convergent Commerce.
  • All my panelists – Danielle Anderson (Harris and Hoole), Arun Glendinning (Birdback), Eddie Keal (IBM), Peter Keenan (Zapp) and Paul Thomalla (ACI) – for their insights and making the hour allocated to the panel fly by.
  • Richard Brown (IBM), as I never heard anyone speak so clearly and eloquently about cryptocurrencies and their impact on the future of finance.
  • Dave Birch (Consult Hyperion), who could probably moderate a panel of actuaries and still make it informative AND entertaining (with apologies to any actuaries!) Given that here both his topic (banking apps and APIs) and panelists were genuinely interesting, it is no surprise that it was perhaps the best session over the two days.
  • Bankers, such as Alessandro Hatami (Lloyds), Pol Navarro (Banco Sabadell), Brigid Whoriskey (RBS) and others who bravely presented, engaged and sparred with an audience and sometimes even fellow panelists feisty enough to suggest that “PingIt is nothing more than a PR exercise” or that “Western Union/ SWIFT shouldn’t/ won’t exist in the near future.”
  • Everyone with whom I had the pleasure and privilege to chat during the networking breaks.

I am certainly looking forward to another such event next year.