Published: April 19, 2021
Digital currencies are a trending topic in today’s payments ecosystem and a key topic of discussion at The SUMMIT. As we move closer to Canada’s premier payments conference, we chatted with Dave Birch, a highly anticipated speaker, to get a preview of his keynote on digital currencies, and his thoughts on fintech evolution.
Dave Birch brings an impressive list of payments experience. He is the Director of Innovation & Global Ambassador at Consult Hyperion as well as an established author, advisor and commentator on digital financial services. He’s also been recently recognized as one of the top ten most influential voices in banking by Financial Brand and named one of the global top 15 favourite sources of business information by Wired magazine.
We’re looking forward to hearing your keynote presentation at The SUMMIT on June 1, 2021. Could you give us a sneak peek into what we’ll hear?
I'll be talking about the practical options for implementing a digital currency and exploring a few ideas around why Canada might want to take a leading role in the global evolution of this new direction in payments.
You’re seen as an internationally renowned thought leader in the fintech space. Can you share any new initiatives you’re involved with?
My recent work has been focused in two areas. These are digital currency, and the new payment opportunities that it might afford different players around the ecosystem (including some very interesting work on the evolution of regulated digital asset markets); and the new thinking going on around identification, authentication and authorization in an online economy. Specifically, I’ve been taking a look at the interesting work going on in the field of credentials and proofs. It's actually very enjoyable to work in these areas right now because there are so many different aspects to the work across different geographies and sectors - I’ve been working on projects in the U.K., U.S.A., Asia and of course Canada! I've been delivering webinars on open banking in China, cryptocurrency in Africa and digital identity in Australia, so despite the pandemic I’ve been building a useful global perspective.
I’ve also become the chairman of a U.K. startup in the Internet of Things space, so I’m spending more time looking at the opportunities there too
I wrote in Forbes magazine that when Jamie Dimon, the CEO of JP Morgan Chase, said that his bank should be "[scared s\\\*less]" about fintech competitors, he identified the fintechs PayPal, Square, Stripe and Ant Financial in addition to the techfins Amazon, Apple and Google as companies that the bank would need to compete with and singled out payments as a specific “hill for banks to die on”.
This is because the business models of the future depend on data, and payments are the overwhelming majority of interactions between a bank and its customers.
When storming this redoubt the techfins don't care about the money (because the margins on payments are going down) but the data. They are more than happy to have banks, for example, do this boring, expensive and risky work with all of the compliance headaches that comes with it.
The techfins want the banks to do the manufacturing while they take over the distribution. This is an obvious strategy with major implications because if the techfins get between the consumers and their banks, then the banks will end up having to give away margin but, far more seriously, data. BofA Securities, amongst others, have pointed out that there is a "huge and valuable prize for private-sector players" from outside the banking sector if they can get in this business: the "treasure trove" of customer data that is not being fully exploited by the banks.
This shift from margins on money to margins on identity, if I can clumsily paraphrase it this way, is the core dynamic to the next generation of payments.
Given your vast experience in payments for the 21st century, what are some of the current payments trends you’re seeing globally?
I think you can divide the trends in the payment sector into three.
First of all there is the regulatory pull that is opening up new dynamics across organizations with developments in open banking and the pressure for open finance.
Secondly there are the business pressures that are driving many companies to reassess their strategy toward payments, because there is a growing realization that the transactional data associated with payments is more central to many business models than the margins on payments themselves: the potential for the fintechs and the tech fins to capture value here is real and pressing.
Finally, there is a continuing technology push at the intersection of what I previously (and superficially) summarized as "blockchains, biometrics and bots''.
What role do you think The SUMMIT plays in driving these conversations forward?
I'm really looking forward to The SUMMIT because Canada is driving forward so many of the key fields where we can learn and share global experience. Instant payments and open banking are specific examples where the U.K. went first and learned a lot but made some mistakes. Now I am keen to learn from the next generation of instant payments, open banking and digital identity initiatives, areas where Canada is forging ahead. I can't help but wonder if I'll be back in a couple of years learning from what you guys are doing in the digital currency field!