The Future of Payments

1. The Future of Payments Mobey Forum 10 years Bo Harald Helsinki 18.6.2010 Bo Harald

2. To get to the future... • We need to look at payments (all sorts) from new – holistic angles • Take into account what all the Internet, XML, global open markets, standardization etc enable and demand from those who want to stay in the game • If it does not happen on the first – or second try – it does not mean it will not happen • Stop overestimating impact in the short term and underestimating in the long term • The logical will happen – and those who have taken the long view – started early – will be better off

3. “ICE AGE” “ICE AGE” Approaches seen: “Any hype will do” Early start: “Explorer” Late (re)start: “Panicky follower” Start early! Better and less costly in payments and e-banking experince 2006-03-23 Page 3

4. Payment - not a goal in itself A payment has never been a goal in itself – but a means to achieve something else • Internet is giving birth to a networked economy > new dimensions where payments will be integrated parts of value chains in totally new ways • The value of Real Time completion of processes will become much more apparent • Payments, trade finance, trading etc have been global and strictly standardized for ages – now the global open economy calls for the same for pre- and post-payment processes

5. Payment – a means for many a new thing • In purchase processes - automatically ”sealing off” – from e-rfp, to e-offer, to e-order, to e-delivery notice, to e-invoice • In SME- and consumer environments – automatically effecting ”payment proposal” presented by invoice/bill/cash register/person • In postpayment automatically launching account posting, cash flow estimate update and VAT-payment – all in Real Time – enabling ”Cutting SME administrative cost in half”

6. 2020 35 million smaller 25 m larger EU workforce nosediving! EC Expert Group on e-Invoicing Digitalization leads to automation! Automation liberates much needed resources for productive work! Automation enables real time completion Mobile liberates from time and place Bo Harald

7. For faster progress: • We must have strong – holistic – visions ”If you do not know where you are going – any road will do” ”Without visions – no enthusiasm – without enthusiasm – no innovations” 2. We must lower thresholds for end-users – clinically simple and similar (economy of repetition) 3. We must find the critical mass faster 4. We must build the networks ”If you want to go fast – go alone - if you want to go far – go together.” 5. We must standardize more ”Without standards – not enough competition - without competition – too slow progress.”

8. Example: Standardization breakthrough in extended payments Invoice Biller Service Provider Buyer Service Provider Invoice Invoice Seller Buyer Payment instruction Account statement Account statement 20022 account statement 20022 payment 20022 payment reference 20022 e-invoice 20022 account statement Biller’sBank Buyer’sBank Payment Infrastructure Electronic Invoicing

11. Extended payments summary • From e-rfp to payment • From payment to accounts • Automating financing processes • Integrating new risk mitigation tools (TSU for global) • Better competitiveness – especially for SMEs as (i)cost are saved AND (ii) customer service is improved – two sides of the SAME coin • It is business to ALL and government to ALL

12. Cutting enterprise administrative cost inhalf - with extended payments Payment proposal in structured for (invoice, POS etc) can – when paid: • Automate accounting – real time • Automate cash flow estimates (out, in, paid) – real time • Automate reporting and payment of VAT – real time split payments (applicable also to salaries and benefits) • Automate invoice financing • Automate and unify reporting to public sector

13. The nut to crack Keep invoice information in structured form – avoid printing and PDF Then the platform is there.

14. Crystal clearmindset:Paper invoices have NO future in EU EC Expert Group on e-Invoicing

15. Mobile devices in the Real Time Economy • RTE business and administrative processes start and end in the same instance • With mobile devices processes can be initiated earlier – free of time and space • Mobile devices are always there and always on - ideal for receiving and approving proposals (bill payment, p2p payments, calender bookings etc) • The need for sending and receiving notifications and alerts is growing fast • ”Web squared” role as sensors – both m2m and m2p is growing fast

16. Time for Interactive Value Creation • “As the demands for higher value and creativity are the norm today and the complexity of offerings has grown, we have begun to see that division of labor has reached its points of diminishing returns.”http://eskokilpi.blogging.fi/2009/12/04/interactive-value-creation/ • …higher value creation is impossible without interaction. There is a move from action dominated by division of labor to interaction driven by increasing complexity. • Out of the SILOS – fast!

17. Look deep into the future - but test out now

18. The best innovation: Reuse familiar tool for new purpose.

19. It is created ! The future is not planned nor prognosed Thank you bo.harald@tieto.com, http://boharald.blogspot.com