Future of Payments: Evolution or Revolution?

Future of Payments: Evolution or
Revolution?
May 2-4, 2016 | Mohegan Sun Convention Center | CT

http://www.qinsights.net
Today’s Discussion…
2http://www.qinsights.net

Defining (r)evolution
3
ev·o·lu·tion (ĕv′ə-lo͞ o′shən, ē′və-)
n.
a process of slow change and
development
rev·o·lu·tion (rĕv′ə-lo͞ o′shən)
n.
a sudden, radical, or complete change

Evolution of Payments
5
1950s – 1960s
CHECKS used as
mass instrument
• Invented in the 1950s
• Widespread use by 1970s
• Peaked as a percentage of
consumer transactions in the 1990s
1950s – 1990s
CREDIT CARDS
1970s – 1990s
DEBIT CARDS
• Invented in the 1970s
• Not widespread until 1990s
ALTERNATIVE FORM FACTORS
NEW PAYMENT INSTRUMENTS
• First bitcoin mined in 2009
• Virtual currencies in mainstream media
in 2015
• Experimenting with form factors in 2006
• 2014-2015 launch of “m-pays”
CASH
is king
Pre-1950s
Now – Future
1950s 1970s 1980s 1990s1960s 2000s 2010s1940s

http://www.qinsights.net 7
1.Digital Age

2.Technological Innovations

3.Millennial Shift

4.Pressure to Reduce Costs

5.Consumer Preferences

6.Big Data

m-Lexicon
15
broad array of
financial
services, includes
mobile banking,
mobile payment,
and mobile
money transfers
mFinancial
Services
mCommerce
extension of ecommerce
covering wide scope of
applications including
mobile financial services
and mobile marketing
mBanking
extension of online banking
mPayments
payment transactions
executed on a mobile device

Common Mobile Payment Types & Technologies
16
Near Field
Communications
SMS QR Codes P2P m-app mPOS Location-based
beacon tech
mCommerce
pay
/
wallet

Spotlight: Apple Pay versus Starbucks
17
SOURCE: https://www.youtube.com/watch?t=1&v=xDK2tjws_uw

What’s Next? – The New Mobile Identity
18
1. Fingerprint
3. Selfie
2. Vein scanning
4. Wearables

Global Faster Payments Landscape
Completed
instantaneously –
majority within 1
minute
Finality – cannot
be reversed
Certainty –
confirmed as
either
completed or
rejected
ISO 20022 –
underpinning
standard of
many payments
systems
Payments can be
made 24 x 7 x 365 –
not all systems
operate at these
levels, but process
payments nearly
every day during
specified times
*NOTE: Faster Payments is not the same as Real-Time Payments
Same Day ACH
BiR
IBPS
CIFS
(TEF)
TIC-RTGS
RTC
Instant Payment
(NIP)
Greiðsluveitan
pockets of innovation
Common Characteristics of Real-Time* Payments
NPP
The Clearing House RTP
NOTE: Live or in
development, excludes
planned initiatives

What is Digital Currency?
23
Digital currencies are very similar to physical
currencies. They can be used to pay for
products and services and can be exchanged
for other currencies
aka virtual or crytocurrency

Cryptocurrencies
24
SOURCE: 2015 PwC Consumer Cryptocurrency Survey

What Are People Saying About Bitcoin?
25
[Bitcoin] is a techno tour
de force
Bill Gates
Founder of Microsoft
It's money 2.0, a huge
huge huge deal
Chamath Palihapitiya
Previous head of AOL instant messenger
It’s a bubble. It has to have
intrinsic value. You have to
really stretch your
imagination to infer what the
intrinsic value of Bitcoin is. I
haven’t been able to do it.
Maybe somebody else can.
It’s gold for nerds
Stephen Colbert
Late Night Show Host
Alan Greenspan
Former Federal Reserve Chairman
I think there is a 20% chance
that Bitcoin will become a huge,
worldwide success
Peter Thiel
Co-Founder of PayPal
Bitcoin Today is the
Internet in 1994
Marc Andreessen
Venture Capitalist and Co-Founder
of Netscape

What is Bitcoin?
26
SOURCE: https://www.youtube.com/watch?v=Um63OQz3bjo

The Good, the Bad and The Ugly
27
21 million
The Good The Bad and the Ugly
Direct transfer -
decentralized, no
middleman
Faster transaction
time
Lower transaction
fees
Secure
Universality -
independent of
government,
country, or banking
system
Anonymous
Irreversible
Volatile prices
Block-size limit
Attracted criminals
Unregulated
Not insured

Bitcoin & Blockchain Ecosystem
28
NOTE: Representative companies and not an exhaustive list
Bank Labs / Research Investors
Startups

Divergence of Bitcoin and Blockchain
29
Blockchain
While Bitcoin is established as the leading digital currency, banks are
more focused on applications of the underlying Blockchain technology

What is BLOCKCHAIN?
31
Technology underpinning bitcoin, a public decentralized ledger
of all transactions

How does it work?
32
Blocks can carry a certain value of bitcoin or other pieces of information
which makes the Blockchain so powerful!
Mining math
Block n
Block 2Block 1Block 0
Hash Hash
Each block contains the hash of the previous block that link together in a long chain
Miners’ computers
calculate
cryptographic hash
functions, a unique
"fingerprint" that
makes
transactions verifiable
Computers bundle transactions into a
new transaction block

Blockchain Applications
33
Blockchain uses being explored today... irrespective of the use of bitcoin
smart contracts smart property
digitization of documents
and proof of ownership
for transfers
digitally recorded assets
stock exchanges
digital trading platform
music distribution
proof of ownership for
digital content
health records
decentralized patient
records management
secure digital
voting
fraud-proof, anonymous
digital voting solutions

Blockchain Applications Continued…
34
business-to-business
payments
Other potential uses of the Blockchain still yet to be realized!
Just to name a few...These are early days!
cross-border
transactions
international financial
transactions 2
correspondent banking1
peer-to-peer remittances3

36
Thank You – Questions? Let’s Connect…
Nasreen Quibria| Managing Director & Founder
nasreen.quibria@qinsights.net
(m) 617.388.6207
nasreenquibria
@nquibria

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