“As to the payments business in 2021, don’t call it a comeback; I’ve been here for years,” says Daniel Gouldman, CEO of Ternio. In “A Look Forward: What Executives Wish for America and the World in 2021,” Gouldman discusses how 2020 ushered in an acceleration of the mobile and digital trends that had already been unfolding prior to COVID. “With payments trending toward digital, it is inevitable that cryptocurrencies will dominate the payments industry in the years to come,” he predicts.
First and foremost, I hope that people are safe and healthy. COVID’s damage has been far-reaching in spirit, body and mind in a way we have never experienced in modern history. It has been a dark storm that wreaked havoc over our communities and businesses, leaving empty hospital beds and shuttered businesses in its wake, but there’s reason to have hope that 2021 will not be a sequel to 2020.
As to the payments business in 2021, don’t call it a comeback; I’ve been here for years. The “new era” has arrived as the challenges of 2020 have facilitated an acceleration of the trend toward mobile and digital that was already happening. What was a steady stream is now an unobstructed waterfall. With payments trending toward digital, it is inevitable that cryptocurrencies will dominate the payments industry in the years to come. Consumer adoption of cryptocurrencies parallels consumer adoption of the internet in the mid-90s.
Just as the internet changed the way humans communicated and gained access to information, cryptocurrencies (specifically stabletokens) will change the way humans interact with money. Its impact will be felt by banks, money services businesses, consumers … almost every human being on the planet will be directly impacted. When most people hear cryptocurrency, they think of bitcoin. The truth is that bitcoin is to cryptocurrencies what the Model T was to the automobile industry. Eighty percent of worldwide central banks are presently researching central bank digital currencies (CBDCs), according to a 2020 study by the Bank of International Settlements. Central banks have publicly stated that value transfer on top of blockchain technology is cheaper, faster and more secure than the legacy financial payment networks.
In testimony to the U.S. House Committee on Financial Services, the Acting Comptroller of the Treasury Brian Brooks recently compared cryptocurrencies to the ACH system. He argued that both ACH and cryptocurrencies are private payment networks; while bank ACH is only controlled and accessible by banks, cryptocurrencies are controlled by no one and accessible to anyone. Out of the 10 largest companies in the world ranked by market capitalization, seven of them directly compete in the payments space.
Cryptocurrencies are money-as-software that afford relatively small FinTechs the ability to compete against the multi-national companies worth hundreds of billions. Blockchain technology, the underlying force of all cryptocurrencies, is going to disintermediate the underlying business models of most financial services and payments industry companies. Many big brands in the banking/ payments industry have accrued large debts built on business models promising more revenues built on additional fees using old technology.
The old gatekeepers will eventually find that the tectonic plates within the payments industry have already moved underneath their feet, but by then it will be too late.