Our overriding theme of this year’s Live5 is interoperability which will lead to inclusion. Whether this is in payments or transit, identity or as a generalised trend what we’re seeing is a collapsing of the barriers between silos. In some areas this is happening more quickly than in others.
We believe that the technology changes around digital acceptance beyond QR codes are breaking down the previous reliance on POS based systems – and that starts to collapse the difference between consumer present and consumer not present, between physical and digital commerce. This is not just about payments, as these alternative forms of acceptance are applicable across applications and sectors.
In payments, the development of real-time clearing systems accompanied by the pervasive availability of smartphones means that consumers are facing an ever more bewildering set of options – and helping them manage their way through this great convergence of payment methods using AI supported intelligent wallets to support financial health will be a key trend in 2022. If this doesn’t occur, then digital inequality and lack of inclusion will only increase – reminding us once more of the digital divide.
Identity systems themselves suffer from a lack of interoperability and building bridges between these systems while standards emerge to support this process will be critical to ensuring identity systems aren’t siloed – and that the systems they also give access to are not siloed. A failure to do this will only lead to worsening issues around inclusion and sustainability.
In transit the need for fare systems that better meet the needs of a post-pandemic world will push transit operators increasingly towards solutions to support single rides, fare capping and towards open architectures. Again there are issues of fairness, equality and inclusion and to make this work we need to see transit operators finding ways of supporting equitable fares and interoperability between themselves.
Finally, our ‘out of the corner of the eye’ bet is the concept of the cross-border CBDC. We think it’s now inevitable that Central Bank Digital Currencies in some form will become part of the payments ecosystem. However, the area we think is really interesting is where it becomes possible to exchange CBDCs across borders. While it’s arguable that in a domestic retail payments context CBDCs don’t offer a huge amount, in cross-border transactions they have the possibility of radically changing the friction that at any point sees trillions of dollars dematerialised and unavailable for use in activities of economic value. And, of course, this is another interoperability use case.
Although there is no single solution to interoperability it isn’t a coincidence that these different sectors are all suddenly making changes in the same direction. Interoperability and better data sharing is essential in reducing inequality and increasing inclusion and finding ways to make the service more efficient and sustainable.
Don’t forget you can read the full Live5 or watch the team from Consult Hyperion discussing this in more depth, on our website insights page. We’d love to hear your views on our thinking. Join in the conversation on social @chyppings #live5.