LAS VEGAS — Disruption. Disintermediation. Reinvention. These three themes rocked the first installment of Money2020, a bustling conference that attracted a full house of 2,000-plus attendees and, more importantly, it brought in very senior executives from major financial services players ranging from American Express to Visa, MasterCard and Discover; from Wells Fargo to Bank of America; and from Google to PayPal. Money, old and new, crammed into the Aria hotel in search of a roadmap to what it will look like in a scant eight years.
The biggest headline out of the conference: The mobile phone changes everything.
Mike Cook, a Wal-Mart vice president whom MIT's Technology Review recently called the most powerful man in payments, threw down the gauntlet at Money2020. He stated that if a payments solution portraying portending to be new does not build upon the inherent security and intelligence built into the smartphone, Wal-Mart wants no part of it. Period.
"I do not see EMV playing a role in payments," Cook pronounced. He explained that the chip and PIN toolset "is just replicating the existing system. Phones are much smarter than that." Cook and Wal-Mart have already dissed near field communication, saying that favorite of companies such as Google has no obvious place in Wal-Mart's plans.
And then Cook threw out his real zinger. "Think about how easy it will be to disintermediate financial institutions. I do not think they even see this coming."
Cook was speaking on a panel about MCX—Merchant Customer Exchange—a merchant driven initiative to define mobile commerce where Wal-Mart, BestBuy, CVS, Gap, Target, Shell Oil, and many more national merchants have joined together to set out how they want mobility to play out in their stores. And the message is plain: it will be their way or it won't be.
Cook's comments reflected the prevailing tone at Money2020, an event characterized by pugnacity and not the blandness that so often flowers at financial industry conferences. He pulled no punches, and neither did anyone else at an event that would have to be characterized as edgy by financial institution standards.
For instance, representatives from Isis, the joint venture of AT&T, Verizon and T-Mobile, were on hand to tout this mobile commerce initiative that, in the same week as Money2020, announced it had officially begun its NFC mobile commerce pilots in Austin, Texas, and Salt Lake City. Elsewhere under the Money2020 big top, Don Kingsborough, a vice president at PayPal and the founder and former CEO of Blackhawk Network, snorted on his panel that NFC stood for Not For Commerce.
That dig was aimed not so much at Isis, which few at Money2020 seemed to take seriously, as it was at Osama Bedier, the Google Wallet guru who sat on the same panel as Kingsborough and who, the day before in a keynote, pointedly noted that Google "is not another mouth to feed in payments" because Google plans to eschew a slice of the payments fee pie in favor of monetizing data in advertising.
Bedier let the audience draw its own conclusion about whether PayPal and its brethren could be seen as more mouths to feed.
Something was simmering in Kingsborough's craw when he snorted, "I don't believe mobile payments are about advertising" on that same panel, and he gave a direct look to Bedier as he spat out his fighting words.
Bedier, meantime, had opened his keynote in a surprising fashion. He talked about shopping with his mother when he was a boy in Cairo. The merchant greeted his mother by name, chatted with her about olives, often tossed a free loaf of fresh bread in her bag and would call Bedier's dad whenever a particular favorite cheese was in stock. When mobile commerce is as rich as that experience, then it will flourish, he said, insisting that mobile commerce has to be as rewarding as old-fashioned analog commerce.
In perhaps the most surprising moment of Bedier's talk he seemed to back off Google's monogamous relationship with NFC, suggesting that "bridging technologies," such as QR codes, might be needed in the near term as the payments ecosystem awaits more NFC-capable merchant terminals and more NFC-equipped devices in consumer hands.
Bedier also insisted that it is Google's intention to work with financial institutions with the clear implication that such a commitment is harder for a PayPal to convincingly make since many bankers see it as a prime driver of disintermediation.
Big banks were not at Money2020 to throw in their towels of course. On a panel, Bank of America Senior Vice President Tim McCourt said that financial institutions had the opportunity to reinvent banking and emphasized using mobile devices to deepen relationships with customers. At no point did he signal that B of A planned to wave the white flag of surrender.
McCourt did suggest that bankers had better brace themselves for a mobile-driven round of price-cutting as new efficiencies reshape the financial services marketplace.
The comments set a stage for Bluebird, the nearly free financial tool now offered jointly by American Express and Wal-Mart to give consumers a high-value offering with no monthly fees or fees for overdrafts.
"Bluebird is Money2020," said Alpesh Chokshi, president of global payments options at American Express, in a keynote talk.
Chokshi indicated that approximately 28% of the U.S. population to be underbanked or unbanked. Lower-income Americans with traditional checking accounts pay on average $250 in fees annually, he said. With Bluebird, he indicated, those fees will plummet to nearly zero. Bluebird offers rich features including person-to-person payments and mobile remote deposit capture.
"It is about giving the consumer greater value," said Chokshi. He added: "We think this is a product that will work for all Americans," and the underbanked are just an opening market.
Paper checks will be added to Bluebird in early 2013, and as more features roll out the implication was that Wal-Mart and American Express will target a broader slice of the American population. From there he talked of introducing it to global markets.
Chokshi also plainly rejected the contention that Bluebird's lack of FDIC coverage will be an impediment to adoption. He said American Express has offered a range of financial products for more than 100 years without FDIC backing and that hasn't hindered the company's growth.
The stage at Money2020 was dynamic, yet one fact repeatedly mentioned was that change comes slowly in financial services. Google's Bedier indicated that by his count, in human history there have only been three widely accepted payment forms: coins, cash, and credit cards, the last of which he traced back to the 1958 rollout of BankAmericard in California. Consumers will not suddenly embrace of mobile tools as the mainstay of commerce.
That said, several speakers cited statistics that supported that point: 7% of commerce happens in the digital world, but 93% happens in the bricks and mortar analog world.
But change is coming. Bedier, citing Google's rich data, said that in 2012 there was more email on mobile devices than desktop computers, keeping in mind that in significant parts of the world such as India and China desktop computers are few but mobile phones are plentiful. He added that next year Google believes there will be more World Wide Web viewing on mobile devices than on desktop computers.
Speaker after speaker noted that commerce definitely is shifting to mobile devices. It won't happen this year, but will it by 2020? That just might have been the conference's biggest unanswered question. ν
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