There’s innovation to be found in the mundane, according to panelists in a roundtable discussion Monday morning about innovation in the prepaid space.
Panelists from banks, processors and prepaid card companies emphasized the opportunities in prepaid amidst disruption from mobile payments and other technologies. Cathy Corby Iannuzzelli, senior vice president of global client success for I2C Inc., moderated the discussion.
When asked to name the most exciting thing going on in terms of innovation, Alex Liu, senior vice president and senior product manager at Bank of America/Merrill Lynch, said it would be easy to point to something like mobile payments or blockchain. “But today as we sit here, I think the most exciting thing we at Bank of America and the industry is doing is really the improvements to the processing infrastructure,” he said.
Carolyn Shapiro, vice president of business development for American Express, pointed to how businesses dispense money to temporary workers, contractors, trainees and job candidates. “To me, it’s a lot about the unsung heroism of our industry,” she said. “To us, the root of success for all of us is to keep our employment levels up around the country and around the globe.”
NexisCard president Andrew Siden also agreed with the importance of infrastructure and brought up electric cars to illustrate his point.
“You can go 200 miles from your house, and that’s it,” he said. “Until they build the infrastructure for the electric car, people aren’t going to use it.”
Innovation and market success
Panelists pointed to both a rush and a reluctance to innovate.
“The desire to lead in this industry is probably as much as the desire to jump off a cliff,” Siden said. “The regulators are looming. No one wants to be made an example of.” At the same time, Siden said there are advantages to being able to bring something to market that no one else can.
Often, innovation is a matter of coming up with an idea on the fly when a predicament arises. Paul Swinton, managing director for Payment Card Solutions, recalled his company’s response to a regulatory change in the U.K., in which scrap yards were no longer allowed to pay cash to individuals who showed up with scrap metal.
“We were able to show up and hand out prepaid cards,” he said. “That was an overnight opportunity that came around, and no one could have planned for it. And we got a nice scoop of the market.”
When asked whether regulators stymie or foster innovation, Seth Brennan, director of prepaid services for Citi, said the “motivation of spite” can be a driver.
“Regulation gives us the context in which to work, which can certainly spur innovation.”
Iannuzzelli said that the fact that the prepaid platform was built in the late ‘90s gives it an innovative edge over credit and debit, which came about in the ‘60s and ‘70s. “You just have fundamentally newer technology underlying the prepaid platforms that lets you do more than you could on a legacy system,” she said.
The “killer” app?
One question centered on whether there was a “killer” app for prepaid and payments. Siden said that people don’t want to go to their computers anymore to do things and that they expect to be able to do everything on their mobile devices.
Elizabeth Bohlen, senior vice president and chief payments officer for Pueblo Bank & Trust, brought up an example of an app someone showed her that would allow someone to follow all the steps of an ATM transaction on their phone, and then hold the device up to an ATM to complete the transaction and obtain their money.
“Why would I do that? I can pull out a plastic, put it in the machine, put four numbers in and the money comes out,” she said.
“Keep in mind I sponsor 100,000 ATMS in the country, so I’m pretty familiar with the ATM industry.”
Buy, sell or hold?
Panelists were generally optimistic when asked whether they would buy, sell or hold if prepaid was in their portfolio.
“I think prepaid is touching people five years ago that we thought it would never touch,” Siden said. “So I’m still very much in the buy camp.”