Despite all of the recent progress in fintech, one of the consistent challenges with innovating in financial services generally and payments specifically has less to do with great ideas and more to do with execution. That is to say, there are many great ideas, but even true visionaries still struggle to assemble the capabilities and partners needed to execute those ideas.
This is getting better, but it’s a real challenge if you’re trying to do something truly novel or something that breaks with convention. Part of that has to do with the inherent complexities of the industry and its areas of specialisation, but it also has to do with the fact that many of its underlying infrastructures are outdated, inflexible, unreliable and their operators too unwilling to lean into the problem shoulder-to-shoulder with the visionary. And, it doesn’t matter if you’re talking about legacy incumbents or nimbler next-gen players. Ask the real innovators and they will tell you.
Amir Wain is founder and CEO of i2c Inc, known for establishing a global issuing and processing platform favoured by many of today’s leading innovators in fintech and financial services. Here shares some of his thoughts around innovation in financial services.
What has been the traditional company response to financial technology innovations nationally?
I’ll give you the general response and contrast it with our company’s response. I think generally, across the industry the response to innovation, even in recent history, has been one of scepticism or suspicion. I mean, we all heard statements like, “Crypto is never going to be taken seriously,” or “So, people get paid for the work they do ahead of payday — big deal.” Most key players underestimated or took a pass on the revolutionary thing until its success or the practical need for it was inescapable.
Our response has been different. We don’t have to predict the future, we just have to be ready to enable it when it comes through the door. We have very practical ways of ensuring that we’re living up to that standard – and, the market is rewarding us for it.
How has this changed over the past few years?
I think the biggest change in recent years has been in embracing the idea of being and needing collaborators. Our business, issuing and processing, is an infrastructure business. Most of the innovators we work with are not interested in building what we’ve built and maintaining what we maintain. Their investors and boards are not interested in them doing it either. They have different ambitions. What they need is a partner with the technical flexibility, reliability and willingness to lean into the problem with them.
Is there anything that has created a culture of change inside the company?
Through the pandemic we grew, adding more than 600 people and had some of the best quarters in our history as a company. I think that factor and just the pace of innovation and variety of clients we work with, from fintechs to banks to crypto players and other enablers, all of it contributes to our culture of change tremendously. Having a seat at the table where really great innovation is happening and embracing truly visionary people’s ideas and making those ideas real, without compromises, affords our people not only great perspective and understanding but also energy.
What fintech ideas have been implemented?
So many great ideas. I’ll give you two that set new paradigms. Our client, Car IQ, was the first company to issue a payment credential to a machine. It invented the concept known as Know Your Machine (KYM). Another client, Payactiv, pioneered the Earned Wage Access (EWA) movement – bridging the gap between workers needing the money they have already earned and when they actually get paid.
What benefits have these brought?
Car IQ’s breakthrough means that fleet vehicles can autonomously initiate and complete payments for services such as fuel, tolls and parking. It creates an entirely new payment experience – one that never existed before. That’s special. And, it makes these payments more secure, simplifying accounting and removing other commercial frictions.
Payactiv’s solution provides respite to millions of Americans who are drowning in debt because their bills and basic needs are due before they receive their paycheck. The solution lets them transfer their earned wages to their bank account, Payactiv card, or pick up their cash at a Walmart store. Their vision is bringing financial security, dignity and savings to millions experiencing financial stress. I also think that’s special.
Do you see any other industry challenges on the horizon?
I think the inability to maintain reliability in payments is going to be a big challenge with drastic consequences for a lot of people. For an industry that puts so much of its resources into acquiring and engaging customers and stakes so much on customer experience, this is a major Achilles heel. We have a saying: downtime undoes everything. Not having access to your money is the worst customer experience one can imagine and it destroys trust – the one thing you absolutely cannot afford to lose in financial services.
The problem is that a lot of people don’t understand a simple fact about their SLAs. When your processor guarantees you 99.9% availability it means that you’re accepting the possibility of over eight hours of downtime a year — 8.76 to be exact. That’s unacceptable and it is pervasive.
Can these challenges be aided by FinTech?
Yes, and we’re doing it. As a company, we believe that payments should be mission-critical. We embrace the idea that you can no more deny someone access to their money than deny them safe food or transportation. We take it very seriously and it’s proven by the fact that in 20 years, we’ve never declined an authorisation due to downtime or failure of any kind. That’s over 175,000 hours without a failure. We do it by applying the same standards used by airlines, to guarantee critical system uptime.
Innovation in financial technology today emphasises creation through partnership and collaboration. Most organisations that endeavour to do something great in this arena have to focus their resources on their strengths and unique value and then partner for the rest. I can tell you because I’ve seen it — the best of the best don’t settle and they don’t compromise. They demand of themselves and their partner’s flexibility and reliability. Not one or the other. They know they need both to get to market faster, speed up innovation cycles and be ready for what they don’t yet know, but the data will tell them. It might be prepaid in the USA today and credit in Asia tomorrow. Visa here, Mastercard here and UnionPay there. Most of all they want to design, deploy modify and expand their payment and banking offerings to any geography over a single platform. And, that’s precisely what we do.