[Dave Birch] I’ve just been preparing some slides about the drivers in the European retail payments sector for one of our Asian customers and I wanted to cross-check the detailed Consult Hyperion roadmap with a couple of other higher-level narratives. It happens that I saw a very useful description of the European situation recently. In the day two keynote for Sylvia Lukas’ excellent PayComm event near Frankfurt, Christian Bucheli from SIX Payment Services made an interesting presentation about the pressures for disruptive innovation in the European payment sector. Christian used the Christensen framing of disruptive innovation, as we all do, and used it to run through a PEST analysis with the audience. I won’t transcribe everything that was said, but I will pick out the line items that Christian said were the most important because I thought it might be interesting for readers to compare and contrast the European perspective with (for example) the US perspective.


  • The Payment Services Directive (PSD) and the Electronic Money Directive (EMD) and their impending merger in “PSD2”. Like many other people at the event, I feel that the emerging regulatory framework in Europe is, in the long run, the most important factor in shaping the next generation payment industry here.
  • Commission “account holder” laws and the proposed account switching directives.
  • Data Protection. I mentioned this in my presentation to the conference when I was discussing what new services might be provided by banks using new payment technologies, because I think that privacy as a customer proposition remains untested (except at the margins, by Bitcoin). We tend to treat data protection and privacy as back office “hygiene” factors, but perhaps it is time to work with the marketing and customer experience folk to see how they might work as customer-facing elements.


  • The euro crisis and the war on cash. I won’t bore you by summarising any of my last 1,000 posts on this topic, but the point holds. The economic crisis means that the war on cash might become serious and in my opinion it is an opportunity for the payment industry to align with the legislators and regulators to do something very positive for society as a whole.
  • Bank intermediation. This applies to savings and loans and small business finance as much as it does to payments. Bank intermediation is threatened, as it has been for years, but the technology-driven unbundling of banking functions is becoming easier.
  • New business models. I think that Christian meant models based on data rather than on fee income or interest income but we didn’t explore this any further.


  • There was quite a bit of talk of the “digital natives” and how they might use financial services in the future.
  • Mobility was, naturally, the dominant meme and not only in the sense of mobile banking and payments. The assumption seemed to be mobility would create the demand for entirely new kinds of mobile services, and I think this is probably true.
  • On reflection, I might have put more focus on Europe’s ageing population and the redesign of financial services that this entails (partly because of the work that we have been doing on the relationship between financial and social inclusion) and this might be a good topic to explore at a future event.

Christian then moved on to talk about the Technological. factors in more detail.

  • The internet of things. This is inescapable. I remember making a presentation about this to a client a couple of years ago and talking about the problems of moving payments into this environment, which are essentially identity problems.
  • The open API. This is the crucial technology for making payments a seamless component of business processes.
  • The mobile wallet.
  • The rise of big data, although the more I think about it, the more I think it is the relationship between big data and small data that creates the space for disruption because “simple” Big Brother plays aren’t going with the flow of decentralisation and distribution.

He shared some survey results with us. These indicated that industry players think that the card schemes will be the big losers through the disruption and the new “OTT” players will be the big winners. How will they be winners? Because they will ally with the retailers. The retailers are frustrated, they have high and unpredictable costs, they have the relationship with the customers (which they want to deepen) and they want to develop value-added services.

In summary, then, the high-level European narrative? It is that disruption is coming, it is coming from the new players, enabled by a friendly regulatory environment, and the vector into the mass market will be retailers.

This was a sound analysis, serious food for thought, well presented. Thanks Christian, and thanks Syliva for putting together an enjoyable event (in a lovely spot!).

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers

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