At last week’s Payments Innovation Institute I was struck by the fact that two of the major themes we discussed seem to be headed in opposite directions.
Open standards and open platforms for innovation are ruling the day, both in technology innovation and in the payments realm. Not only have technology companies like Apple and Facebook have embraced open platforms, but leading payments companies like PayPal, MasterCard and Visa are racing to take advantage of the inherent innovative possibilities of open development platforms. This trend has great promise for creating explosive growth and incredibly positive effects for consumers and businesses alike.
At the same time, the emergence of paternalistic regulatory paradigms, like the Consumer Financial Protection Bureau (CFPB), has worrisome implications for innovation. The structure and size of this new regulatory entity remain unclear. What is clear is the fact that the CFPB will have expansive authority across any organization that touches any aspect of the financial or payments system. Technology companies, telecommunications companies, processors, as well as financial institutions will all be affected by the regulatory power of this new entity.
My sincere hope, however, is that all of the parties interested in the payments arena, use this opportunity to strike a balance that is pro-innovation. Open platforms and open development standards traditionally lead to innovations that are pro-consumer. In fact, there is perhaps no more democratic trend in technology than open development. If existing financial services players embrace open standards and a pro-consumer stance, innovations have real potential to create growth opportunities for corporations, without running into too many problems with regulatory entities like the CFPB.
Margaret is a Managing Director at Market Platform Dynamics and experienced payments industry executive with a proven track record of commercializing new technologies in small start-ups, and large multi-national corporations. Margaret joined fellow Market Platform Dynamics colleagues David Evans, Karen Webster and Tim Attinger for the [Payments] Innovation Institute where they led participants in a series of facilitated simulations focused on finding and igniting innovation. Click here to contact Margaret.
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