In our latest instalment of ‘Inside PIF’, we asked PIF Board Member Kevin McAdam, Vice President Card Services & Global Strategy at Global Processing Services, to share his thoughts on the biggest challenges facing the sector this year and what the next two years has in store for prepaid and fintech.
PIF: What do you think is the biggest challenge facing the industry in 2019?
Kevin: Changes within the industry are moving at a rapid pace as technology and consumer demands seek ever more functionality, speed and uniqueness at minimum cost. However, whilst technology will continue to drive change, the biggest challenge to the industry will be regulation, but in a positive manner. There will be more to deal with as PSD2 and Open Banking start to take shape along with MLD5 and MLD6.
But all these changes will continue to drive innovation in the market place and whilst the UK has been a model of good regulation through encouraging Fintech development through the growth of challenger banks and new start-ups – it is very noticeable that globally relaxation of regulation is offering significant opportunities. Therefore, I feel UK businesses are in a great place to build on their core product offering. We are seeing significant changes within Asia through new virtual banking licences – most recently in Hong Kong, but also the US is starting to have a stateside framework across the country, whereas before the market was very fragmented.
Clearly, clarity and long-term effect of Brexit will continue to challenge the thinking and contingency aspects for business, particularly in relation to passporting and future growth.
PIF: What are the most important changes we’ll see in the prepaid and fintech sectors over the next two years?
Kevin: We are already seeing significant changes and new developments in how to manage AML solutions, so changes through artificial intelligence and machine learning will impact the way we view these solutions. Currently companies are witnessing large numbers of false positives, legacy systems don’t offer flexibility and many organisations have a set of solutions in place that lead to ‘patch and play’ strategies. What this means is that Compliance teams lack the tools to rapidly adapt rules and scenarios to the fast-changing financial crime landscape, with threats from cyber security to data management, as well as dealing with the increasing amount of new regulation. In view of this, next generation technology in this area will play a major part going forward through enabling rapid auditing, machine learning to support efficient management of rules and scenarios and E2E solutions with multiple products and not multiple vendors, so technology changes are easier to introduce.
Following the launch of GDPR and the implications that has brought to companies and greater appreciation to customers of the importance of data handling, the possibilities of monetising an orgnaisation’s data within the overall proposition will play a significant part going forward.
Open Banking will encourage greater choice and that will in turn create more innovation to the product and service offer. Whilst the future is full of change and potential hurdles, the opportunities from change far outweigh the potential pitfalls, as markets overall are becoming more liberal, demanding and expectations are much higher.
PIF: Why did you decide to get involved with PIF as a member of the Board?
Kevin: I have worked in the Prepaid space since 2005 and have had the opportunity to work across many parts of the value chain – retailer, programme management, issuer and processor, and for different businesses across different continents. The industry has gone through quite a transformation and the next five years will be even more exciting than the last five years. Therefore I wanted to be part of an association helping the industry. Through experience and exposure to global markets and having been part of the PIF family as a member I wanted to help shape, lobby, influence and support the businesses and felt this can be best achieved working with my peers who come from all parts of the industry to assist in that process. It is a privilege to have the board opportunity and important to fully embrace the role you can play in the industry and for the association.
PIF: Why do you think the work PIF does is important to the industry?
Kevin: The benefit of any association is the power of collective membership, and PIF brings together a wealth of experience and knowledge that serves the industry so we can share innovation, influence regulation and inform and facilitate cross-party working. PIF helps to raise awareness of key regulation and lobby for change through using the breadth of the membership.
Overall the aim of PIF when it started and still relevant today is to protect and drive innovation within the industry for the common good. Without the association, I believe the term prepaid would still have negative connotations, which was very evident when the product was first launched, but through the association and businesses applying good practice and driving that change it has enabled businesses achieve the benefits of prepaid solutions which have a breadth of appeal for consumers; from the vulnerable being able to receive social and benefit payments to mainstream product propositions.
PIF: What are your aspirations for PIF and what do you hope to accomplish during your term on the Board?
Kevin: Simply I feel it is more of the same – we need to continue to live the mission of the organisation and drive innovation, work closely with regulators and key stakeholders and influencers and protect the product values. The world is getting smaller. I witness so much in my current role that the UK is seen as the Fintech leader across the world and we should embrace this position and opportunity. I would also like PIF to reach out globally to other associations focused in this area to follow best practice and continue to support innovation and creativity in the market. Working together always provides better results and I feel sure this can be achieved on a wider scale as the UK takes on a different global (post-Brexit) perspective.