These are the slides from the keynote presentation at a conference in Mexico by our friends at Clarion. Lots of facts, a few opinions and lots of insights gleaned from the bleeding edge of payments innovaiton.

1. Advancing Payments InnovationTony Craddock
Director General, EPA
EPA Lead
Benefactor
EPA Benefactors

2. What qualifies me to be here?

3. The EPA’s focus
Emerging payments
New and innovative ways to move value
between people and organisations

4. Payments Innovation
1. What is driving innovation in payments?
2. How is global payments growing?
3. Where should you search for the next
innovation breakthrough?

5. What is driving innovation in payments?
Top drivers
1. Changing regulations
2. New technology
3. Growing and changing consumer demand
1. Demographic shift – millennials, digital natives
2. Negative trust in banks
3. More use cases
4. Ubiquity of mobile devices
5. Government support
6. Profit potential in transaction origination
• 22% ROCE v 6% ROCE on credit
7. Entrepreneurial talent
8. Investment

6. And investment is rising
Global investment in Fintech, US$
• $23 billion of
venture capital and
growth equity has
been deployed to
Fintechs over the
past five years
• 50% of this was
deployed in 2014
alone
• Source: Cutting through the noise around
financial technology, McKinsey & Co, 2016

7. Largest part of Fintech is ‘Paytech’
• Source: Cutting through the noise around financial technology, McKinsey & Co, 2016 – 350 companies, not necessarily representative
47%

8. Payments Innovation
1. What is driving innovation in payments?
2. How is global payments growing?
3. Where should you search for the next
innovation breakthrough?

9. 40% of global banking revenues $105bn revenue
$30bn profit
McKinsey & Co, Global Payments 2015: A Healthy Industry Confronts Disruption
7% CAGR through 2019
CAGR to 2019 in EMEA 9%
“Payments growth
is truly a
global phenomenon”

10. “Modernization
of domestic payments infrastructures is under way”
“Cross-border payments inefficiencies are
opening doors for new players”
“Digitization
in retail banking has important implications
for transaction bankers”
McKinsey & Co, Global Payments 2015: A Healthy Industry Confronts Disruption

11. “Fintech will take between
10% and 40%
of banks’ profits
in the next five years”
Source: Cutting through the noise around financial technology, McKinsey & Co, 2016

12. Payments Innovation
1. What is driving innovation in payments?
2. How is global payments growing?
3. Where should you search for the next
innovation breakthrough?

13. The strategic approach to payments innovation
Ambition
• State that innovation-led growth is critical and set targets that
reflect this
Investment
• Invest in a coherent, time and risk-balanced portfolio of initiatives
with sufficent resources to win
Insights
• Generate insights about your business, market and technology that
translate into winning value propositions
Business models • Create new business models that generate defensible profit streams
Speed
• Accelerate the speed of innovation by developing and launching
innovations quickly
Scale • Launch innovations that can achieve scale
Networks • Create and capitalise on external networks
People • Motivate, reward and organise to innovate

14. Where do innovations really come from?
The greatest innovations come from . . .
somewhere else

15. Donkey
+Horse
Nature
= Mule

16. History
Spoon
+Fork
= Spork
1874 2016

17. Sport
Lighting
+Camera
= Fly6

18. Industry
Textiles
+Contactless
= Project Jacquard

19. Payments
Payments
+Logistics
= Collect+

20. From payments
Payments and logistics
+37%
$36,000,000

21. Payments
Contactless
+Fashion
= KERV

22. Mobile
Payments
Timepiece
= Apple Pay

23. eCommerce
Payments
+Mobile
= Judo

24. Incentive marketing
Gifting
+Mobile
= Givvit

25. Givvit
Combines mobile and gifting
• Easy to use, intuitive smart phone application
• Enables sending of tangible, every day, low cost treats
• Coffees, cakes, drinks, meals, flowers, cinema tickets, chocolates
• Amazon vouchers
• Treats are redeemed in-store at well-known brands
26

26. Our conclusion
The greatest innovations come from . . .
somewhere else

27. To find the next innovation I recommend you . . .
Go somewhere else

28. Some ideas for where to go
The Five ‘C’s
1. Customers
2. Countries
3. Consultancies
4. Communities
• Free library, www.emergingpayments.org
5. Conferences
• PayExpo, June 2016, UK
• EPA’s Pay360 Digital Payments, June 2016, UK

29. www.emergingpayments.org
www.emergingpaymentsawards.com
Advancing
Payments
Innovation
Tony Craddock
Director General, EPA
tony.craddock@emergingpayments.org
+44 7803 203 405