As we edge closer towards the start of a new year, we hear the thoughts of Ripple's Marcus Treacher on how 2020 could change financial services
International payments will continue to get faster and smaller.
Payment providers and banks will continue to offer ever faster cross-border payment services to their customers, enabling them to send and receive low-value payments in real-time. The cost overhead of these payments will also continue to shrink.
This trend will accelerate in 2020 as customer demand for frictionless, on-demand payments grows, enabling solutions like Interledger and distributed ledger technologies to gain traction and scale up.
More banks will use banking-as-a-service tech platforms to revolutionise their cost-to-serve and cost-to-change.
As technology costs associated with running and development continue to climb, we can expect banks will turn to cloud providers of banking technology to help radically reduce these costs.
Pioneers of such cloud services - such as 10X and Thought Machine - will be the ones to watch in 2020. Because cloud-hosted banking technology providers have developed new platforms with modern methods, they are ideally placed to easily and cheaply plug into emerging blockchain networks, AI engines and other categories of fintech.
This means the competitive advantage of innovative banks over slower-moving rivals will be intensified. The long-awaited tipping point from on-premise 'museum' banking technology to agile, cheap cloud-hosted bank technology is getting closer. 2020 perhaps is the year?
2020 will see new consumer purchase solutions emerge for tourists/travellers that don’t require cards or card rails.
Technology like Ripple’s will be key in achieving this. For example, imagine if a Japanese tourist visiting Thailand could buy goods using a mobile app or QR code, triggering an immediate cross-border payment from their Japanese yen account to a Thai baht merchant’s account. If more consumer purchase solutions start leveraging blockchain technology in the same way, the payoff will - quite literally - be huge!
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The global economy will see continued growth of micro and wallet payments to support immediate, low-value payment flows.
The use case for micropayments has traditionally been confined to messaging apps like Telegram and Line. But with big tech companies introducing payment services of their own, we can expect a surge of developers flocking to digital assets as the solution to keep up with in-app, real-time payment processing demand.
The shift from traditional, large-value batch flows to low-value, high-volume payments will help SMEs break into new markets much faster.
SMEs are often young and fast growing, which exposes them to cash flow crises through late payments from their larger, foreign buyers.
Cross-border payment services today are not set up to help them: they are slow, uncertain, prone to errors and accrue extremely high costs. In some parts of the world, cross-border services aren’t even readily available - all of which puts enormous pressures on small organisations’ small balance sheets and lifeline cash flows.
New blockchain payment technologies like Ripple’s enable SMEs to invoice and receive international payments immediately, in small amounts, and with certainty.
This will be a game-changer, decreasing costs-of-business and enabling SMEs to free up precious capital for reinvestment. This will, in turn, increase the access to new markets for SMEs. 2020 will see a rise in international payment services for SMEs across emerging markets, helping them to expand and process immediate payments around the world.
Outpacing of OECD economies by Asian economies in payments innovation will continue through 2020.
With 80% of the volume in digital asset trading coming from Asia, the region has an appetite for innovation - and perhaps the greatest need for a better payments infrastructure. Blockchain has played a key role in this innovation, with its ability to make micro-transactions such as loans, payments, remittances - much more efficient and transparent.
In a region primed for advances in both consumer and enterprise remittances, there is enormous opportunity for the use of blockchain technology to address issues of liquidity, speed of implementation, and the cost of capital.
Marcus Treacher is SVP of Customer Success at Ripple, the real-time gross settlement system, currency exchange and remittance network created by US-based technology company, Ripple Labs Inc.
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