Blockchain big bang or API ascension: What will 2019 bring?

Gerhard Oosthuizen|16 January 2019
Blockchain big bang or API ascension: What will 2019 bring?

Gerhard Oosthuizen, Entersekt’s CTO, uses his crystal ball, together with years of industry knowledge, to bring you a glimpse into the future of banking and payments.

At the beginning of a new year, alive with possibilities, we want to be ahead of the game. Some of us prefer a bit more certainty with our possibilities and look to industry experts and thought leaders to give us a preview into the year ahead. But we soon realize that there are countless banking industry initiatives poised to come to fruition in 2019, to the extent that it’s difficult to know which questions we will see answered as the year unfolds.

  • Will it be the year of open banking and APIs? Will banks seize opportunities to innovate and collaborate, expanding the consumer relationship? Or will they be more hesitant and take a more slow and steady approach?
  • Will we finally see Big Tech (Facebook, Amazon, Netflix and Google) entering banking in a big way, following the likes of Ant Financial (of Alibaba fame)?
  • Will social payments take off? Will we all be paying our bills from our Facebook or Twitter accounts?
  • Will we finally find blockchain’s ‘sweet spot’, which as we have all been told, will completely change the world? Blockchain was one of those buzzwords taking the world by storm in early 2018, but it doesn’t seem to have found its promised all-encompassing purpose. Will 2019 be the year that changes all that?
  • Will the Internet of Things and the Internet of Payments be the next ‘big thing’? We can already make payments through smart home devices like Amazon Echo or use a smart watch to make purchases – what will be next?
  • Will personal digital assistants finally reach a tipping point?

All of these are interesting questions, and the next year is sure to see at least some of them answered. However, if you sift carefully through all this noise, there is something much bigger brewing. There is a war happening in our industry; a war for the control of the consumer experience – specifically, in the digital payments (including e-commerce) space.

The fight for retail was arguably won when Apple added NFC – this was a gamechanger for the tap-to-pay market. But e-commerce has to be the next frontier: this is where the battle is currently raging. Payment networks won round one by tokenizing the cards on file and asking the merchants to reach out to them for every transaction. The World Wide Web Consortium (W3C) promptly fired back with a web payment spec, which is now adopted by most browsers. This could potentially mean the success of the browser-for-payments, but, it has not been widely adopted, yet. Finally, 3-D Secure 2.0 was added to control the e-commerce payment layer of the future and was built to solve authentication in a general way.

2019 will present us with the inflection point: Visa and Mastercard, to start with, will be forced to work together on secure remote commerce (SRC) – it’s their big ‘single button’ play to consolidate the lukewarm Visa Checkout and Masterpass buttons. And, for the first time, EMVCo released a spec early (just the week before Money2020 in the USA). 3-D Secure and tokenization will be pushed hard and mandated in 2019, while web payment handlers (next up to take payments out of the cards realm from W3C) will be starting mainstream adoption.

All of this begs the question: what are banks going to do when these new and developing payments approaches all become a reality?

The answer is quite simple: by choosing a fintech partner that will enable these capabilities in a streamlined way, banks can come out on top regardless of the approach. With the right partner, banks can focus on what they’re good at: giving customers the innovative products and services they demand, while at the same time keeping them secure and giving them a consistent experience no matter where or how they’re paying.

About the author

Gerhard Oosthuizen

Gerhard Oosthuizen

CTO

Gerhard provides the organizational and operations heft to turn vision into reality. His role at Entersekt represents the CTO function in its purest and most exciting form. Our purpose is, after all, to design and build high-performance, market-leading software and support systems for an international customer base with extremely high expectations.

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Entersekt is an international software development company based just outside of Cape Town, South Africa.

We are leaders in authentication, app security, and payments enablement technology, offering a highly scalable solution set with a track record of success across multiple continents.