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Tuesday, 08 November 2016 12:03
Open access
New technology causes a filing problem

Payments network or fintech? The rules of classification are being re-written

We have just had a really interesting discussion in the office about the filing. Not filing of paper, but of stories.

It doesn't matter how often we change our sub-section headings, there are another half a dozen subjects to cover and to correctly assign to a place. Today's discussion was about blockchain, artificial intelligence, smart bots and APIs (the open Application Programming Interface that makes it so much easier for people to develop things). We decided to put all of this under the technology heading, because although each will develop, they are all the nuts and bolts that sit behind today's (and tomorrow's) payment systems. Maybe in future we will change our minds.

Then there is our experience is that once a development is no longer new (the internet for example, you can't categorise it at all because it is too far reaching). The same will happen to social media soon, and to contactless.

Another trend that was discussed was about Visa and Mastercard. In the beginning, they were card associations, then they were card networks, now it is being suggested that they are technology companies - the facilitators that make things happen for everyone. They cleverly decided not to compete - with PayPal, with Apple, with fintech firms or with the host of other companies offering services. Instead, they buy those ideas that work for them, and suffocate those that don't. The majority of the time it is about partnerships and coalition. This often gives us a problem about which company we are writing about, as well as which sector. Alipay for example could go in several different sectors. This isn't going to change any time soon.

The problem of filing is an ongoing one. We are in the process of a fundamental and wide reaching state of change, when virtually all the rules governing finance, banking, payments and interaction are being re-written. Well not exactly re-written. In many cases the rule book has been thrown out of the window, as is the case with P2P lending and payments.

Of course the regulators are still trying to keep control. It is important to keep trust, and to ensure that commerce can carry on in a transparent and fair way. But progress is happening so quickly and unpredictably, regulation, and indeed the law, is struggling to keep up.

Many fintech companies fail to make the grade, but there remain morel than enough to fundamentally jolt us from today's regulated environment into tomorrow's unknown one. It is a fascinating journey, and we are very pleased to be part of it, but it is a filing nightmare.
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