Analysis of the biennial Payment Innovations Report 2015 from June 17 has described an increasingly successful FinTech sector in Asian and African countries that they say is likely to take the lead in digital payment startups and new businesses, while they criticize NFC payments as a “solution still looking for a problem.”
Looking to the East
Looking at the future of payment innovation, the report seeks to identify the greatest opportunities in the sector, as well as dispel “overhyped” concepts. The strongest theme underlying the report is of the shift in FinTech innovations from the West to Asia and Africa.
The report said that payment innovation is both affecting and being driven by developing countries, and that Europe and the West have a lot to learn in order to achieve the successes seen in these smaller economies. It reads:
“Of payments innovations from the developed world, virtual card payments are the most likely to find widespread success in emerging economies. It is about time that developed countries accept that they can learn from developing markets. Asia and Africa are in the lead in the payments innovation stakes and Europe is at the bottom of the heap.”
The numbers back up the idea that innovation in some African states is moving fast. Earlier this year, Cointelegraph reported on the record Q1 funding the continent had seen in collective venture capital invested into digital currency startups.
The report highlights the remittances industry in particular, where there still is still a lot of room for innovation and improvement, a sector where non-Western startups should thrive. It says:
“Domestic P2P & international remittances are the areas of payments in most need of innovation.”
The opinion that Asia and Africa hold more promise for FinTech than the traditional financial capitals of the world, such as London and New York, does however run counter to many of the Western news stories on the subject. London is often referenced as a FinTech hub, for example, with over 44,000 said to be working in the sector.
The jury report is critical of what they call “overhyped” technology — specifically, the use of NFC as a headline feature. Drawing the example of Apple Pay, the authors say low demand for the service is an indication that the product has not solved a real-world problem. They write:
“The Jury was critical of apparently clever technologies that do not improve on existing consumer payments methods. In particular, contactless/NFC technology was referenced by many Jurors as a solution still looking for a problem.”
The jury report was sponsored by Currency Cloud, Ixaris and WorldRemit, and has been published biannually over the last eight years. It is chaired by John Chaplin, while the jury consists of 40 anonymous individuals from the FinTech world.