March 13, 2018 | Trevor Williams
Editor’s note: Atlanta may be the center of the payments universe, but the rest of the world hasn’t necessarily gotten the memo.
A few local groups are trying to change that, acting as the industry’s modern-day Galileos to show that transactions really do revolve around the Southeast’s economic capital.
In the process, the Atlanta-based American Transaction Processors Coalition has landed an indisputably influential partner: London, which, it might be argued, carries its own gravity as a hub for global finance.
Together, the two cities last year launched P20 — short for Payments 20 — a grouping of industry executives, government officials and regulators who will use their combined heft to move the industry forward. Their hope is that by getting decision-makers in the same room, they can more quickly arrive at consensus on issues of import for the global industry. And that, they argue, could help hasten the adoption and improve the security of electronic payments around the world, leading to faster economic growth and greater financial inclusion.
A kickoff meeting was held in Atlanta in February to look forward to the closed-door October conference, which will be held at the Atlanta History Center.
Global Atlanta caught up with two leaders of the effort from each side of the pond to see get a recap of the initial forum and see how it’s planning to deal this year with big questions of innovation in payment technology.
The below interview with Bruce Lowthers, chief operating officer of FIS and chair of this year’s P20 event, and Peter Radcliffe, a longtime payments-industry executive who joined the P20 as executive chairman last year, has been edited for length and clarity:
Global Atlanta: How was the inaugural P20 conference at Lancaster House in London last year? Where do you see it evolving?
Bruce Lowthers: Last year was a big success. Peter pulled everybody together and led a great initiative, really building consensus among the 20 business, regulators and government officials. I think we came out of it with a lot of momentum about what we’re doing — even a lot of enthusiasm. You’re still seeing it spill over here months later, building toward the next event here in Atlanta.
Peter Radcliffe: We picked on the issues which were important as far as spreading payments globally, like … identity verification, cyber risk and, of course, financial inclusion. Those are such massive global issues, but at this stage, we want to focus on getting the U.S. and U.K. aligned. Undoubtedly, a vast number of countries in the world look to the U.S. and the U.K. for leadership in these issues.
Global Atlanta: The argument for P20 seems to me almost like the arguments I’m hearing for TPP and other big multilateral trade agreements: “We can set the rules of the of road for future governance of trade.” It sounds similar to what you’re trying to do in the payments sector.
Radcliffe: We’re not doing any original work. There’s a huge amount of work going on in different organizations, be it the World Economic Forum, the World Bank, or the Gates Foundation, and also among regulators in different countries.
Having the group of board members that we do, it’s a question of seeing the common denominators and the success factors and then putting that to them, so the board as a group can say, “Yes, we see the rationale they’re putting forward, and this is the way the directions that we as CEOs, regulators and government will actually support.” That will speed things up, because it does have that gravitas to push it forward.
Global Atlanta: Where does the bilateral U.K.-U.S. relationship fit into this equation? You can have recommendations, but if they don’t have a binding effect other than in their own jurisdictions…
Radcliffe: I think it was obviously about getting London and Atlanta together in the first place, but bear in mind we had quite a few people from Europe at the meeting.
We also had China UnionPay, and we’ve been invited out to Shanghai to meet with the president. Singapore has been interested. Hong Kongis. Australia is. New Zealand is. A lot of countries will always watch what the U.K. and U.S. do, because people don’t want to reinvent the wheel. If there is a common-sense approach to this matter, why wouldn’t they want to copy and join in what is already being formatted?
Global Atlanta: Is there a sense of openness to disruption within this endeavor, or is it simply about legacy players preserving the existing system? Aren’t there sometimes competing incentives at play when you talk about innovation in fintech versus incumbents?
Lowthers: I think that question is interesting, actually, because if you ask the 20 that are around the table from the corporate side, I think uniformly you would hear that they are the ones that are driving the innovation.
Global Atlanta: …basically driving it so it doesn’t drive you, in a way?
Lowthers: Each of us invests hundreds of millions of dollars every year — far more than a lot of the fintech (startups) have the capability to do. We’re investing heavily in innovation making new things come to market every day. I would argue that we view ourselves as the disruptors and innovators, even though we are the legacy players as well.
I think the dynamic is different today as well. Security and compliance are such a major component of what we do, and candidly, a lot of startups don’t have the capacity or the inclination to be able to solve the complex security issues that exist today — and I say that as a guy who started four companies.
It kills me to say it, but I really am concerned about how the market is lining up for the startup world, because security is critical to what we do. And it’s difficult to introduce somebody into the ecosystem that is going to create systemic risk.
Global Atlanta: Isn’t that Atlanta’s advantage? When you’re talking about startups here, you’re not talking about someone starting something and going off on their own, but starting something that can be commercialized and put to use in a system that’s already well-developed.
Lowthers: In the fintech space from an innovation perspective there’s very little — if any — infrastructure innovation that’s happened. The innovation is all around customer experience. The rails that people ride are still my rails or First Data’s rails or Visa or MasterCard. And if you look at innovation on real-time payments, candidly FIS leads that globally because we’re the only ones who have the scale and assets to solve that problem on a country-wide basis.
Global Atlanta: Do you see that playing out the same way in emerging markets? In India recently, demonetization has increased adoption of mobile wallets, while in China you have mobile payments everywhere that aren’t tied to the traditional credit-card rails.
Lowthers: I was just in India two weeks ago. We have a significant presence there. We have had significant growth in that market. The other 20 around the table have all had significant growth in that market.
There are 1,500 fintech companies in the country of India, so while there are a lot of people trying to expand, the ability to scale to what you need to happen is very difficult for a startup to get to.
If you look at the whole marketplace, there are very few people who can really drive scale and sustain. One of the big guys always takes them out before they get too big. That’s just the reality of where we are, but it drives change and drives us to adjust.
Global Atlanta: Doesn’t it kind of benefit the established players, too, because they are learning about where the future is going? These are the big population centers in the world, where digital natives coming onto the Internet first with their smartphone and not through their computers and having to adapt. Everything’s changing so rapidly, it seems like having exposure to those parts of the world is valuable.
Lowthers: It has been for us at FIS. One of the big things for us is that we do have a global presence; we get to see what’s emerging in different markets and really harvest that and bring it back to the States. Or if something’s happening in the States we can bring it to other markets. There’s a lot of IP sharing that we do across markets.
Again, with P20 it’s an opportunity to be at the table and drive innovation. Innovation’s not just about product necessarily, but innovation is really around how to improve processes and become more efficient, and that’s really what we’re pushing through P20.
Global Atlanta: I know the chief end of P20 is not to create investment for Atlanta or not to create investment for London, but do you see that happening as a happy byproduct?
Radcliffe: I think the big thing we’ve all agreed on in the kickoff meeting in London was that P20 is not to be a talking shop. Hence, on the outcome statements that we actually made around identity verification, cyber risk and financial inclusion, we’ve actually got to show that we’re making genuine progress, and the working parties that are actually looking at these now will be reporting back to Atlanta in October. This is a bit like any summit: the work goes on beforehand and not at the actual meeting.
Global Atlanta: How do you make these points to top U.S. regulators when you’re hosting this event in Atlanta, not Washington?
Lowthers: While we’re not at the center of government here, we are at the center of payments here. That really was the connection here at the beginning. London and Atlanta both have our own specialties, but together P20 created an opportunity to do something unique.
It’s a short hop from D.C. to here, so it’ll very convenient to bring officials down. We had a great turnout from the U.K. side in London. We’re expecting a great turnout again from the U.K. to come to Atlanta, and we’ll have our own firepower from the U.S., as it’s on our home turf this year.
Radcliffe: Nobody has thrown their weight more behind this industry than Atlanta.