The L word
It’s fair to say that there’s some uncertainty afoot across the European financial landscape as we enter the new year.
It’s fair to say that there’s some uncertainty afoot across the European financial landscape as we enter the new year. Organisations of every size are rushing to ensure that they achieve some measure of GDPR compliance by the end of May. More pressingly, PSD2 is on the horizon with only two weeks left for European payments services to toe the line . In any normal year, just one of these milestones alone would be enough to give leaders of financial services organisations sleepless nights.
But in 2018, both of these regulatory changes are just small parts of a much bigger picture – especially in the UK, where the future of every financial organisation is at best unclear. Brexit, in particular, is posing some enormous existential questions about where businesses will be located, and whether or not they can operate in the EU in the same way that they do today. Meanwhile, the governmental organisations that normally provide leadership and guidance on such matters have effectively shut down, clueless themselves about likely outcomes and implications for one of the critical engines of the British economy.
These are not just theoretical problems. Everywhere we look, we’re seeing the extraordinary energy and creativity of this industry being stifled. Today, financial services organisations are investing so much time with regulation that they are at risk of losing the ability to innovate. As even the nimblest start-ups have discovered in the last two years, it’s hard to achieve market-leading positions when you’re spending all your time and resources ensuring that you’re fully compliant with a constantly moving regulatory target. All this is much harder, of course, when the target is not just moving but actually invisible. What the post-Brexit regulatory landscape will look like is unclear; the only way to gain more clarity is to move to a place where the rules are already known, as many organisations are visibly planning.
So far, so gloomy. But my recent experiences working not just within my role at Paysafe but out in the wider financial services community have shown me that there’s still plenty to be optimistic about. I’ve seen first-hand how strong leadership from within is helping to maintain critical momentum and innovation across the whole payments industry. It’s vital that we find it within ourselves to keep pushing forward, and not get trapped in the mire; a key element of Paysafe’s broader mission is to constantly seek new value and create new opportunities for our customers. In particular, I’ve observed three key leadership principles in the last few months that I think will help payments organisations of every size and shape to navigate the tricky course immediately ahead of us.
Take a really hard, cold look at your existing business. Good leadership isn’t just about relentless innovation. It’s also about ensuring that you keep getting the basics right, time after time. Constant scrutiny of the business tells you what works, what doesn't and what you can optimise. We’ve found some surprising trends this way, such as gradual and unexpected declines in some merchants’ business. Staying focused has allowed us to deal with issues like this and work with our merchants as they arise, rather than fire-fight them when they become problems.
Have the courage to use your platform. We have a voice, and we shouldn’t be afraid to use it. It’s become increasingly clear to me that outside the truly corporate banks and card schemes, payments brands are allowed to have a perspective and express our views. We can be tenacious on a wide variety of issues without getting ourselves into trouble or compromising our integrity with customers. And if we do it in conjunction with industry bodies, so much the better; in my role as Chair at the Emerging Payments Association (EPA), I’m particularly proud of our lobbying work with influencers and decision-makers across the board, from MPs, Bank of England and regulators and other trade bodies.
Never stop looking for new opportunities, even in the unlikeliest places. There’s always a price to pay for compliance in regulated industries, but there are almost always opportunities too. Look at how the Bank of England has given the all-clear for non-bank payment service providers (PSPs), offering direct access to the UK’s sterling payment systems. This will promote fintech, innovation and open up competition outside of the traditional banks and credit institutions PSD2 will open a whole new set of doors to new players as they’re given access to customer data; the trick is to seize them quickly and gain early competitive advantage. It’s hard to do with so many other distractions, but if you don’t someone else inevitably will.
Andrea Dunlop is CEO at Card Solutions & Acquiring at Paysafe Group. She has long been instrumental in lobbying financial services bodies, and advising trade associations to overcome the barriers to payment innovation. She appears regularly in PayExpo’s Payments Power 10 list, and won the Payments Pioneer award at the Payments Awards 2017.