PYMNTS Connected Economy Ebook

WHAT’S NEXT IN PAYMENTS: CONNECTED

46 TOP PAYMENT EXECUTIVES

JUNE 2021 WHAT’S NEXT IN PAYMENTS: CONNECTED TABLE OF CONTENTS

08 a&o Hotels and Hostels 66 FIS 122 Mars 188 Pollinate International Oliver Winter, CEO Bruce Lowthers, President, Jason Thomstatter, Herman Spruit, CEO Banking and Merchant Solutions Head of Digital Commerce 12 Airbnb 194 QED Investments Sam Shrauger, Global Head of Payments, 70 Flourish 128 Mastercard Mike Packer, Partner Chairman and CEO Airbnb Payments Emmalyn Shaw, Managing Partner Ron Shultz, EVP 198 Sesame Care 18 AT&T 76 Forward 132 NCR David Goldhill, Founder and CEO Jason Inskeep, Director of 5G Center Robert Sebastian, Co-founder Doug Brown, SVP and GM, Digital Banking of Excellence 204 Sezzle 82 HomeLight 138 Neruo-ID Charlie Youakim, CEO 22 Brighterion Drew Uher, Founder and CEO Jack Alton, CEO Sudhir Jha, SVP and Head 210 Shake Shack 86 i2c 144 New Enterprise Associates Steph So, Head of Digital Experience 28 Car IQ Jim McCarthy, President Liza Landsman, General Partner Sterling Pratz, CEO 216 Soul Machines 92 Ingo Money 150 Northwestern Mutual Greg Cross, Co-founder and CEO 34 CellPoint Drew Edwards, CEO Souheil Badran, EVP and COO Kristian Gjerding, CEO 222 Stand Up NY 96 Johnson & Johnson 154 NuORDER Dani Zoldan, Owner 38 Chipotle Sarfraz Nawaz, Head of Digital Transformation, Heath Wells, Co-founder and Co-CEO Scott Boatwright, Chief Restaurant Officer Supply Chain 228 sticky.io 160 OppFi Brian Bogosian, CEO 44 Circle 102 Joor Jared Kaplan, CEO Jeremy Allaire, CEO Kristin Savilia, CEO 232 The Yes 164 Paidy Julie Bornstein, CEO 50 Dick’s Sporting Goods 106 JPMC Russell Cummer, J.P. White, Senior Director of Engineering, Max Neukirchen, CEO of Merchant Services Founder & Executive Chairman 238 Verizon Stores and Omni Sampath Sowmyanarayan, CRO 112 LendingClub 170 PayPal 54 Doctor on Demand Scott Sanborn, CEO Dan Schulman, President & CEO 244 Volition Capital Hill Ferguson, CEO Jennifer Fleiss, Venture Partner 118 Mall of America 178 Perfect Corp 60 Fabric Jill Renslow, EVP Alice Chang, CEO 250 Vroom Faisal Masud, CEO Paul Hennessy, CEO 182 PhonePe Sameer Nigam, Founder and CEO The ConnectedEconomy™

n 1990 New York Telephone (now Verizon) rolled out a new marketing line: “We’re all connected.” The phrase got a full court press, with print, radio and TV ads prominently Ifeaturing the slogan — often sung in jingle form.

We weren’t connected, of course. The internet barely existed in 1990 and most Americans were 100: still nearly a half decade away from even having heard of it. There was no such thing as eCommerce, mobile telephones were an expensive rarity, tweeting was something birds did and the advance in human connectedness the phone company was actually pushing at the time was low-cost long- distance calling service from the landlines people CREATING AND had in their kitchens. CONNECTING

In short, we were all pretty of the connected consumer, with a consumer’s desire for a series of connections become more myriad, disconnected. demand set that has digitized about digital doorways that make it easy to the combinations and offers the five years ahead of schedule. complete tasks by seamlessly moving connected economy will be able to But what New York Telephone lacked between channels will remain. bring to the average customer will in descriptive accuracy it more than What’s Next? grow accordingly, and in ways that made up for in predictive ability, as How we shop, how we pay, how are hard to predict — but easy to get 31 years and one global pandemic With the pandemic era easing back we interact and transact with each excited about from the vantage point later it seems we are in fact all in the United States and around the other has changed fundamentally of mid-2021. connected. Pushed by necessity and world, and restrictions being lifted, and for the better, the experts enabled by technological advances digitization will soon no longer be a agreed, as consumers have a range What we can know today is that the that have been creeping up over matter of necessity for consumers of choices they’ve never had before connected economy was off and for a decade or so, the last year has as it becomes safe to go out and businesses now have an ability running in 2020 and shows no sign seen consumers shift how they work, again. But the reopening of the real to customize and curate user of slowing down in 2021 or beyond. eat, seek medical care, shop, relax, world, and the return of so-called experiences and offerings. If anything, it is likely only going to connect with friends and family and “normalcy” does not mean the era of keep picking up speed as the pace of consume entertainment to digitized connectedness that the pandemic And that, experts nearly across the the race continues to accelerate with channels. helped usher into existence over the board agreed, isn’t the exciting part of more and more players setting out last 16 months is going anywhere. the story. Because all the advances from the starting line. That digital dive has forced all manner the connected economy has made of merchants and businesses to That was the consensus of executives so far are mostly prelude to what rapidly accelerate their digital journey PYMNTS interviewed for this eBook; could potentially be offered up and recreate their offerings for the era that while the pandemic will fade, next. As technology advances and

CHASING GROWTH IN TRAVEL’S HYBRID HOTEL-HOSTELS SEGMENT

or those in the lodging the company has expanded its offering industry, the last 16 and footprint around the world. months have been all about evolution as such According to A&O Founder and Fbusinesses have struggled to recreate CEO Oliver Winter in his Connected themselves and their offerings for the Economy chat with PYMNTS, OLIVER era of COVID-19 and all the restrictions the hospitality company is now WINTER and consumer anxiety it has spurred. developing a “hybrid-mode” that Founder & CEO offers consumers the choice between But evolution has been a constant more hostel-like offerings with rooms over the two decades that A&O Hotels for four to six people all sharing a and Hostels has been in business as common bathroom or a more hotel-

like offering with a private room and The company created the position of do so and make them feel safe while normalcy will be back to the European bathroom. A&O currently runs 35 social distancing specialists to help they are doing it. market as vaccine distribution establishments in 21 cities and seven guide guests to the best places to eat regularizes and the great reopening countries (Germany, Austria, the or best activities where guests could Critical to creating that feeling is can get more fully underway. The Netherlands, Hungary, Czech Republic, count on strong social distancing or to investing in connectedness, he said. company is now serving a business Italy and Denmark). The goal is growth. make sure their hygiene requirements traveler client base, something it didn’t were in line. Today, Winter said, some 50 percent see much pre-pandemic and that it “We are in progress in many more of bookings are made online via the is going to keep trying to grow post- cities,” Winter said. “So, for example, Business functioned mostly as website, app, social media channels, pandemic. Barcelona, Florence, and Heidelberg. usual over the summer, when case etc. The aim is to increase that We are also very, very happy that we counts were down, and consumers percentage to 70 percent by the end of Moreover, Winter noted, the hope he will enter the U.K. in Edinburgh. Our started traveling again. But when the this year. Digital streamlines the guest has going into 2021 and beyond is aim is still from Istanbul to Rome to second, third and fourth rounds of journey — from making a reservation that hotels, hostels and other lodging Copenhagen. We want to be covering COVID-19 began sweeping through to check-in itself to using their phone players, having seen how much they all major cities. Europe in the fall, and lockdowns to pick up their room key totally were able to change and upgrade their began again, A&O worked with contact free when they arrive. That’s if properties and experiences in 2020, But even though the company kept municipalities to provide lodging they need a key at all; at seven of the will take that innovative attitude to opening locations, Winter noted, the for the local homeless and medical locations, users can use their mobile solving the industry’s next big problem year 2020 was one of changes for workers in need of a place to stay. device as their key via Bluetooth. once the pandemic has passed. the A&O brand, including a focus on buildings that were safer, more The company learned an important Connectedness “is critical to optimize “I would be happy to see this effort accessible and more connected than lesson about consumers and their will this contactless guest journey” that end with a pick-up in trying to create ever before. to get out on the road again, Winter guests are increasingly looking for, he sustainability,” he said. “Hygiene said. said. measures are still the main focus of The New A&O everybody. But I always say that after The year 2020 was one of changing “What we see is that people in general What’s Next contactless, we will need to start the A&O business to meet the needs are not afraid to travel; they are willing A&O is entering the summer optimistic speaking about emission less and how of the time, Winter said. to travel,” Winter said, provided one about what’s next, and hopeful that by we can create a very little footprint can offer them the right conditions to late in the season or early fall, more when we travel over the next decade.”

TRUSTED PAYMENTS ARE THE CONNECTED ECONOMY’S BACKBONE

s the economy has globally was roughly cut in half — started to reopen and from 10.4 percent in 2019 to 5.5 vaccinated global citizens percent in 2020. No corner of the look to scratch their sector was left out. Airbnb CEO Brian Atravel itch, the tally of just how much Chesky described the early days of damage the global pandemic caused the pandemic as “the most harrowing SAM the travel sector is just now becoming crisis of our lifetime” in an email to SHRAUGER more clear. employees. Global Head of Payments, Across the segment globally, it has And yet, while other travel firms Chairman and CEO Airbnb Payments been reported that 62 million jobs continued to struggle for the rest of were lost; in the U.S., that number 2020 and into the early days of 2021, hit 5.6 million. Contribution to GDP the Airbnb story played out a bit

WHAT’S NEXT IN PAYMENTS: differently. After an initial dip, bookings observed before the pandemic but Enabling the “pay out” to hosts is began surging on the platform through was clearly intensified as a result of much more complex. Ninety percent the end of 2020. Airbnb went public it. More so than before, people were of Airbnb hosts are people; more than CONNECTED on Dec. 9 with a blockbuster IPO that thinking of living, working and having half are everyday people who want saw its share price double on the first fun as “one” — a phenomenon that to rent out a spare room or a part of day of trading. Shrauger said doesn’t appear to be their home to add to their household abating. cash flow. Providing a safe, reliable and So what was behind the counter- accurate payout to those more than 4 cyclical activity that kept Airbnb Consumers, he said, have rewired million hosts operating in those 200+ connecting consumers? There are the connective tissue of their lives to countries and territories who accept several nuanced answers to that better enable them to function — and those more than 40 currencies is question, Airbnb’s Global Head survive — during a great disruption. one of the reasons that Chesky gave of Payments Sam Shrauger told They are looking for a different, Shrauger’s global payments operation Karen Webster when he sat down fundamentally simpler, much more a shout out on its Q4 2020 earnings for the ConnectedEconomy™ series connected ecosystem to exist and call. discussion last week. Overriding all transact in. of the answers is one simple, highly “We have created the system that anecdotal reason: People really wanted The Power Of Underlying provides both sides of that transaction, to get out of their houses, but not Payments Strength the ability to experience payments necessarily into a hotel. Powering this shift is payments, the way that [each side] wants to,” something that may not be the “flashy” Shrauger said. “Many people were just tired of part of the Airbnb experience, but working remotely in their own homes, they are, no doubt, a very critical one. It’s become increasingly complex and if they were going to do it for a Enabling “pay in” for consumers who as Airbnb continues to add more long period of time, they wanted to do are booking properties in more than functionality to the platform, making it somewhere other than their home,” 200 countries and territories and who the guest/host experience richer, Shrauger remarked. use one of more than 40 currencies to rewarding, and personalized. For do it, expect that payments will work instance, when guests are booking It was a trend that Shrauger said smoothly. experiences along with their stays, that he and the team at Airbnb had they want their “tab” to reflect all of

those experiences, not a series of That the industry is and will be said, for how the money moves, trust one-offs. Shrauger quoted Airbnb different, Shrauger noted, is certain; that the policies are what they say they data that suggests that 80 percent what exactly that will look like is are, that the properties are what they of Airbnb hosts offer those types of still very much under construction. say they are and that if problems arise, recommendations for their guests — Regardless, Airbnb remains true to its there’s trust that Airbnb is there to 50 percent of whom follow through mission — helping guests connect to help intermediate between the guests with them. neighborhoods where they can “like and the host. a local” outside the city centers and Longer-term bookings, such as those experience the restaurants and shops That trust, enabled by the Airbnb Airbnb has seen increasing over the and attractions far removed from the payments experience, Shrauger said, course of the pandemic, can run usual “tourist traps.” Shrauger said that is an important cornerstone for the into the tens of thousands of dollars. more than $117 billion in direct host connections their platform makes Features such as Payless Upfront earnings had been created on the possible between Airbnb, the guest allow guests to break up the payments Airbnb platform since its inception — and host — and the many value- for their stays so that part of it is paid money that otherwise wouldn’t have added experiences that exist today in advance at the time of the booking found its way into the bank accounts and will likely evolve further in the with the balance paid out later, more of the everyday folks who have turned months and years to come. similar to the hotel booking experience demand for their home into cash. that guests are used to. “The foundation for everything we do In many ways, he noted, payments is is trust — it’s trust that we’re going to Rewriting The Future Of Travel the foundation of Airbnb’s business meet their needs today and be ready No one has a crystal ball to know because “payments is trust.” to meet the ones they or we haven’t with real certainty what comes next even thought of yet that will arise for the travel industry, domestically or For a global marketplace such tomorrow.” internationally, even as the industry as Airbnb to exist and function remains ever hopeful as demand efficiently, it needs to inspire trust — begins to slowly pick up. in the platform, in the host and the WHAT’S NEXT payments experience. Trust, Shrauger IN PAYMENTS: CONNECTED

5G ISN’T ABOUT THINKING OUTSIDE THE BOX — IT’S ABOUT BREAKING AND REBUILDING THE BOX

he only thing harder than now leaves a giant, gaping question to building new tools is be answered: What are we going to do knowing exactly what to with it? do with them once they’re Tactually built. That’s a complicated question, AT&T Director of 5G Center of JASON The development of 5G presents an Excellence Jason Inskeep told Karen INSKEEP excellent case in point. For the last Webster when the two sat down for Director of several years, we’ve been hearing 5G PYMNTS’ Connected Economy series. is coming, bringing a whole host of That’s because the changes coming 5G Center of Excellence capabilities that will forever change our to the market, and the kinds of shifts interactions with the digital world. Well, they will enable, are qualitatively 5G isn’t coming anymore — it’s here, different than what has come before. at least in its nascent stages, which

Previous iterations may not be super shiny, but the wait in a space for someone to walk fundamental change that is blurring of connectedness came care of customer experience gets better.” out and meet them. the lines between verticals is much the original equipment managers more subtle. (OEMs) who owned and operated It is the elevation of that customer As Inskeep noted, the technology’s the networks, he said. It was fairly experience that should be the “North capabilities are as myriad as they And it is important to keep in mind monolithic in its construction. The Star” that guides actions and decisions are impressive. For the retailer, the just how early we are in a process ending day of LTE and the early days of on a daily basis, he noted — a process challenge is in finding the right use that will itself be highly interactive 5G are qualitatively different than what that is as much tied up in building cases to delight and engage their going forward, Inskeep told Webster. came before, and they are much more the right processes as it is in putting current customer base and also This is an idea that is still very much software-driven and user-defined, the right technology into place. As attract new consumers. under construction, and the enabling creating all kinds of opportunities that powerful an enabler as technology has technology will create the playing field didn’t exist just two or three years ago. proven itself to be, it is still only that. It “We’re coming to a point in technology for innovators’ ideas. When building is the infrastructural ground layer upon where we can do just about anything,” a real city, the grid goes in before As Inskeep noted, 5G won’t just allow which iteration and innovation can he said. “The bad news, however, is the skyscrapers are constructed. consumers to move seamlessly and will happen. that we can do anything. So, firms And the same is true of a smart city between verticals on their increasingly need to measure where their current — the enabling technology is the omnichannel journeys so much as it Innovation will roll out across verticals use case is, understand their customer grid. The skyscrapers will go up as will actually change how they live in in a variety of different ways, expanding personas, because that’s going to different entities begin iterating on the those verticals. and developing over time. Connected guide them to what they want to do. grid infrastructure to build the next options enable access to healthcare in When it comes to transforming the iteration of the connected world. “The biggest thing I go back to is, don’t remote and rural enclaves on par with flow of traffic, we’ve come to a point just think outside of the box, try to what is offered in major metros. where it’s not a matter of if, but when “People get locked in on the parlor rebuild it because there are different and how.” tricks, the sexy object or the widget opportunities now that we didn’t have In retail experiences, smart cities guide that sells the idea,” Inskeep said. just three or four years ago,” Inskeep the consumer to the right commerce Transformation in the era of 5G and “But there is no sexy app here that’s told Webster. “We are always looking locations based on their intent and the increasingly super-connected going to prove the case. It’s how the at things like XR, VR and autonomous proximity to retail outlets that can consumer will come in many infrastructure creates experiences, robots — and those things are great meet their needs. With buy online, forms, Inskeep noted. The flashy regardless of the user. That’s the new and very shiny and exciting. But there pick up in store (BOPIS), the retailer expansions and technologies like concept that you’re talking about and are a lot of things that just by changing can walk out and meet the consumer augmented reality (AR), virtual reality looking to invest in it. Then the ideation how your mobile connects provide curbside as they pull into the parking (VR), autonomous robots and the like around how to share data becomes a big advantage. It may not be flashy, lot, instead of the customer having to catch a lot of attention, but the really easier.”

AI: THE CONNECTED ECONOMY’S UNSUNG HERO

ata is frequently said to be Jha, senior vice president and head the oil of information — of Brighterion, told Karen Webster in the necessary commodity a ConnectedEconomy™ conversation. without which the Dentire connected economy simply The good news, according to one cannot run. Because no matter the recent report, is that the C-Suite is SUDHIR issue — potential threats and privacy starting to get it — 78 percent of all JHA issues, connecting consumers to companies are engaged in widespread Senior Vice President new modes of interaction, making artificial intelligence (AI) initiatives, new integrations possible between compared to 65 percent before the and Head of Brighterion businesses — the emerging connected pandemic. economy is about data, as Sudhir

WHAT’S NEXT IN PAYMENTS: And that sudden rush of awareness a way that reconnected them to a verticals. Some examples include about the power of connectivity digitizing environment, Jha said. home appraisals being done by that data unlocks, Jha said, can drones instead of human appraisers, CONNECTED in many ways be attributed to the Some segments, like financial services, farms getting assessments of things pandemic itself — and how it forced were already a bit ahead of the game like fertilizer and food needs for their connectedness and data’s power to in this regard — AI investments with an crops, and credit evaluations to make bridge their gaps and quickly moved eye toward rewriting the infrastructure sure that more of the right people are from the background into the absolute of connectedness were already well matched with the proper credit limits. foreground for business leaders. underway even in pre-pandemic times. Retail players, on the other hand, have Use cases tend to spawn additional “To give credit to the companies, I gone from gingerly sticking a toe into use cases when it comes to AI, said think they all understood that AI was the water to diving in full force. Jha, creating connections between going to play a big role,” he said. “It systems and infrastructure that have wasn’t that they didn’t expect it, or that Historically slow segments never before existed, and creating they didn’t believe in the technology. like healthcare have remained interactions that are smoother, more But it was hard for them to justify a big somewhat “laggard,” Jha said, as seamless and also safer and more investment. So they could do small they’ve had to juggle a lot of priorities secure than they’ve ever been. steps, and there was a much longer over the last year or so. But even there, period where we were doing a lot of he noted, the captivating power of “There is always some mistrust in experimentation without a lot of really connectedness, guided by AI’s data- new technology,” Jha said. “And so big uses of AI. What happened with interpolating power, is starting to the more [AI] can provide value, the the pandemic was a ‘do or die’ kind of make a visible difference in how it is more we can provide these seamless situation. Prioritization became easier.” provided. experiences. Consequently, the more we can make the business commerce The digital shift necessitated the use And then, Jha explained, many of the as good, if not much better than, of AI, and widened the playing field things powered by AI don’t get a lot of physical experiences, we will have for organizations across verticals to headline coverage, but are changing more and more adoption.” rebuild their customer experience in the ways business is done across

Building Trust single entity or set of legislations “If you really think about it, technology and regulators, he said, but a team and AI, in particular, can stitch together But building that trust among effort between developers and multiple corporations very easily, consumers isn’t just a matter of government. Regulation isn’t going to where you don’t have to actually own commonality — it’s a matter of solve the problem, given how it tends every piece, but you can provide a building it in a way that respects user to fall behind technological innovation service,” explained Jha. “The model privacy. It’s about being transparent — but it can and likely will set the can be created in a way that the data with consumers and making it clear parameters that innovators can work stays with each corporation, but the when and how their data is being within to build the next generation of model actually can access those harvested and applied — but it has AI’s data modeling capacity, said Jha. data points and include them. I think to go further to ensure that the right as we can leverage the data from entities are harvesting the right data. Today, he said, as companies want to multiple corporations without explicitly expand their access to data, they must transferring and sharing the data and The weather app, for example, doesn’t also expand their firms via acquisitions bringing it to one place, that is going to need an exact location to access — the shoe company that buys an be compelling.” information for users in the same accessories firm and an apparel way that a navigation app does. startup to build out a conglomerate, This remains a new and emerging Simply entering a zip code should be for example. Part of that is driven by a area of research, Jha said, but one sufficient — and if apps are forcing desire to attract a bigger client stream that will hopefully emerge over the users to give up more specific and with more products, but part of it is next few years so that companies can personal data, that is something of a looking to grab access to a richer set share some data. In fact, the future misuse, said Jha. of data to build on. The acquisitions of the connected economy depends are necessary, said Jha, because on it, as it powers a lot of separate The more we can build into AI today’s AI models are built on unitary ecosystems being able to sync up and systems, the better the systems will data streams — but in the future, that act as one when it comes to serving run and be trusted by consumers. won’t necessarily be the case. the consumer in a way that delivers Building an AI system to that convenience without feeling intrusive. standard won’t be the work of a WHAT’S NEXT IN PAYMENTS: CONNECTED

CAR IQ TURNS THE CAR INTO A CONNECTED COMMERCE PLATFORM

ne of the goals of It’s the “and more” that becomes the connected intriguing. What if the whole car economy is to turn could become a payment vehicle? simple things into It’s a question that could not be left Opayment mechanisms. unanswered by the team at Car IQ. The company has developed what STERLING Homes, for example, will become it said is the first payment solution PRATZ connected commerce command developed for vehicles and passenger CEO centers. Appliances will become part car fleets that enables the vehicles to of the Internet of Things (IoT) payments transact directly with card networks, platform. And cars will connect their banks and service providers. Its passengers to everything from work to underlying technology is based on a entertainment and more. patented machine identity verification

WHAT’S NEXT IN PAYMENTS: process that enables vehicles to to a bank and figuring out how to merchant or with payment networks automatically initiate payments for create trust between a car and a bank. simultaneously. services such as tolls, fuel, parking and CONNECTED more. “It was a lot harder than one would And it works. Today, CarIQ has think,” Pratz said. “We spent many automobiles creating “thousands and As CEO Sterling Pratz told years developing identity verification thousands” of transactions at toll PYMNTS Karen Webster, Car IQ because we didn’t want to do it in booths and parking lots and paying for is all about using the power of a way that only Silicon Valley would brick-and-mortar services like tune- technology to automate fleet accept. We wanted to do it in a way ups, brake jobs and tire changes, he management. For companies with a that a bank or a payment network said. The No. 1 request Car IQ gets is large automotive fleet, handing out would accept it. And that’s a pretty for the ability to connect cars directly cards to all their drivers is “kind of a high bar.” to gas pumps, something the firm has pain” from a management standpoint, started doing, making it possible for he said. Fleet managers have software, A high bar the company managed fleet vehicles nationwide to connect but software that looks and functions to clear by rethinking the know your directly at the pump and pay without a a lot like an Excel spreadsheet customer (KYC) process — which credit card. and takes 30 to 90 days to accrue is about connecting a consumer to their vehicle expense and capture an account — and redeveloping it Not only is this a more secure payments that might have happened around a new notion of KYC: know experience for fleet drivers, who through third parties like toll booths or your car. This version of KYC analyzes know exactly what charges are being gas stations. all the data within a car and uses it made on exactly what vehicle with to create an identification based on far less room for abuse or misuse, But replacing cards with connected data features unique to a vehicle. they also get a real-time view of cards isn’t simple work; it required With its new notion of KYC, Pratz their expenditures instead of having about four years of effort around said, the car’s identity itself can be to endure a 60- to 90-day true-up rethinking what a payment looks like used to authenticate a payment process. It is why building the platform when one connects a machine directly and communicate directly with a was hard work, Pratz said. Persuading

B2B clients to use the platform, Right now, he said, manufacturers are customer. That’s what we’re allowing however, was not. caught between two choices when them to do.” it comes to connecting their cars, “The fleet guys really liked the product,” Pratz said. They can partner with a Big At the end of the day, consumer he said. “In fact, most of them were Tech player like Amazon or Google drivers and fleet managers want asking, ‘How soon can I get it? When to embed the tech, and then run the the same thing when it comes to can I start connecting my cars?’ The risk of losing the central part of the connected cars: ease of use and more fascinating question was, ‘What relationship with the customer. Or they convenience. So, when it comes time features did they want to pay? This can try to build it themselves, a tricky for the car to pay, there is no new task one surprised me: almost everybody feat for non-technologists that is more the customer has to complete, no was identical in the list.” likely going to end up with a feature app to download and no password that is a bit “clunky” and will probably to enter. The car identifies and Pay at the pump topped it for require a user to go through too many authenticates itself. everyone, with features like the ability steps downloading a new app and to pay tools, ability to register at the loading payment data into it. That means the roadmap for Car IQ Department of Motor Vehicles, the in 2021, so to speak, is all about scale, ability to pay fees and parking tickets, “The OEMs are very interested in this,” connecting more cars and enabling and the ability to pay for insurance Pratz said. “They ultimately want to more types of payments made from and maintenance services all nearly create a luxury payment experience the open road. Connected cars are universally making the list. for their customer that simply allows the future, Pratz said, and done right, them to push an icon on the dash and they will make the ride smoother for And while the potential for customers pay for something. And we’re definitely everyone. is vast and still being developed, as getting requests for that because the the company works more with original OEMs want to own and control the “The goal is payments can now be equipment manufacturers (OEMs), payment experience. And they want used to create a very personalized the wider potential for Car IQ’s version to offer a very personalized payment experience with the owner,” he said. of connected car tech becomes experience through their eyes to their WHAT’S NEXT increasingly apparent. IN PAYMENTS: CONNECTED

COVID-HARDENED BUSINESSES WILL LEAD POST-PANDEMIC CONNECTED ECONOMY

o focus only on the “The response has actually been outsized impact the amazingly and really fast. The fact that coronavirus inflicted on they got all this cleaning, turning the the travel industry would planes around, keeping passengers Tbe a mistake, CellPoint Digital CEO safe, getting these digital tracking Kristian Gjerding told Karen Webster features just shows that where KRISTIAN in a recent Connected Economy there is a will, there is an ability to GJERDING discussion, noting the importance of respond,” Gjerding told Webster. CEO acknowledging the many advances we’ve rapidly adopted for the benefit That ability was hampered somewhat of people and the planet. by the massive hit to their business

the pandemic carried along with it. The Innovative Future single process for the traveler to get streamline all of that into a single The airlines, he said, as they have everything they need,” Gjerding said. process. Looking at Uber and how it disrupted many times before, are going to have the taxi business nearly out of to redesign their footing in terms of Bundling in travel, he noted, is far The Brave New World existence over the course of a few consumers coming back. But those from new — but what is happening short years, Gjerding said, how it This pandemic is coming to an consumers will come back, he said, in the connected economy outstrips happened is very obvious. Taking a end, but odds are good, Gjerding because the reality is that you simply what we knew before. Being able to taxi was a lousy experience, calling told Webster, that this isn’t the last can’t see a Caribbean sunset anyplace book a flight and a meeting space for a cab company didn’t always yield pandemic we are going to see in our but the Caribbean, no matter how high business at the same time, or being a cab, paying with a card was often lifetimes. The new reality is that we resolution a video you look at. In many able to attach appropriate cancellation impossible and on the whole it was may just need to accept that this is causes, there is just no substitute insurance, or arranging to have all of a as far from customer-centric as could something we are going to have to be for being there — and as consumers traveler’s meals prepped and delivered be. Uber’s real innovation, he said, able to deal with that reality without come back, what we can expect to to their hotel room while they are was to recenter the consumer in the shutting down the global economy by see is “a lot of innovation.” booking the room. It also means being transaction — all they had to do was sending everyone home for a year. able to access necessary information enter an end address and a payment Innovation in booking, innovation in — what COVID-19 restrictions are in method, and Uber did the rest of the “I think we need to just accept the fact payments, innovations in loyalty — place at a destination, what cleaning work. that this is something we’ve got to be the industry is going to see significant protocols are place and all the other able to counter on a permanent basis, change, with artificial intelligence (AI) information consumers want and And that, in a nutshell, is the challenge and we’re not going to be able to keep putting the traveler at the center and need as they are booking travel that every business must face as the a society separated like we have done operating from a digitized perspective they can still have a very fragmented economy is restarting — how to center in the past year — we’ll kill everyone. where the simplicity of a transaction experience trying to put all together. the consumer in the commerce And I do believe that operators and the experience end-to-end is experience and leverage the who are capable of incorporating a going matter more than it ever has. The connected future of travel, he technology of the connected economy whole range of services and who said, will put all of these transactions to do it. can incorporate that in the entire “I think a lot of innovation is going into a single flow, manageable by a journey experience end to end are the to come into it. And I think that the consumer in a single place. Instead of “I know airlines are looking at all operators that are going to winning operators who have the bandwidth a bunch of disparate processes, the different kinds of ways to partner going forward,” he said. to go there fast will win in the end,” connected future of travel will better up for new services to be part of Gjerding said. the entire flow, so you create a

CHIPOTLE MOVES BEYOND THE BURRITO TO CONNECT CONSUMERS WITH NEW EXPERIENCES

here some people positioned to seize this opportunity, see chaos, others with its leading mobile presence, see opportunity. its contextual digital marketing It has been a activations and its personalized loyalty Wdefining characteristic of successful programs engaging today’s ultra-online companies during the pandemic, consumers. SCOTT during which consumers have come BOATWRIGHT to expect efficiency and convenience “We made investments early on in Chief Restaurant Officer more than ever. They have an active our tech stack specifically to ensure desire to engage with the connected that we were able to create the economy, as technologies work right access for our consumers to together to integrate disparate routines connect with our brand,” Chipotle into a seamless flow. In the restaurant Chief Restaurant Officer Scott space, Chipotle has been uniquely Boatwright told Karen Webster

WHAT’S NEXT IN PAYMENTS: in a recent interview, as part of Chipotle has been redesigning The company also recently announced PYMNTS’ ConnectedEconomy™ series. stores to better integrate into its intention to include mobile-order “... I tell you, we took inspiration away consumers’ increasingly digital drive-thru lanes, Chipotlanes, in 70 CONNECTED from Uber on ease of use, and then lifestyles. In November, the chain percent of new stores, building on stole inspiration from Nike around opened its first digital-only store, the success of its digital channels. customization to really create what which functions much like a ghost Boatwright noted that these lanes I believe to be a best-in-class app kitchen, except that it also has a were able “to create another access experience.” consumer-facing pick-up lobby. Even point for the consumer where they before this, the chain had started didn’t have to get out of their car,” The numbers certainly support separating its on-site order prep from adding that they allow consumers to Boatwright’s claim — by the end of its digital order prep back in 2016, by “get their meal in a matter of seconds.” 2020’s fourth quarter, the restaurant Boatwright’s estimation. He believes that these digitally chain’s digital sales had grown 177.2 integrated drive-thrus are a “game percent year over year, and loyalty “The goal there was to create a unique changer.” membership had more than doubled experience that wasn’t disruptive to over the year, growing by 10 million to the traditional experience inside of our “We now consider that that digital reach 19.5 million enrolled members. Chipotle restaurants, which I know a drive-thru of the future,” said lot of brands are facing today, and it Boatwright. “And I know there are a Designing Around Consumers’ creates a friction point, not only for lot of brands today that are larger Evolving Needs the consumer, but also for the team that have your traditional drive-thru “The brand started as this fast casual member,” said Boatwright. “I think experience that are entrenched … and I concept, traditional in-line or in- it was fortuitous … that we had the think they’re going to struggle.” cap restaurant model,” explained ability to see where the consumers Boatwright, “and it has evolved over were going … and begin to place Meeting Consumers Where the last several years to really meet investments … to ensure we met the They Are the needs of the consumer where they needs of the consumer.” This goal to “meet the needs of the are.” consumer where they are” extends beyond store design and the Chipotle

app experience. It has also involved in fashion, we’re showing up in sports loyalty space, customizing the digital contextual marketing activations — and entertainment.” experience based on consumer data. for instance, partnering with e.l.f. Cosmetics to create burrito-inspired This focus on meeting consumers’ Boatwright told Webster that “the goal makeup, engaging beauty-conscious needs across digital channels has is to really get our light and medium consumers at the e-makeup store, been enormously successful, as users to a higher frequency.” He added and collaborating with global gaming evidenced by the company’s strong that this goal became especially sensation Fortnite to create in-game digital performance. Boatwright noted, relevant in the last year, as the app’s branded experiences. “When you add in the fact that we’ve user base grew about two-fold to 20 leveraged technology in such a unique million members. By offering this user Of the latter, Boatwright said, “I don’t way, and that our team continues base a data-optimized, individualized know that there’s a better consumer to drive innovation through our experience, the restaurant chain to really target. It’s a growing universe technological platforms to ensure that can play to its strengths, building of people who are fanatic about the we have a best-in-class experience relationships and driving loyalty. things that they want in their life. I that is frictionless for our guests, I think Chipotle has a natural extension think we’ve created a pretty significant “We’re thinking about, how do we to the gamer that is obviously probably moat, if you will, around the business personalize the experience, right?” spending more time in front of their TV today.” Boatwright said. “And so we’re working sets or computers than they probably to take it beyond a commerce should, but are also looking for, you Personalizing The Experience platform, to an engagement know, brands that they can engage PYMNTS research has found that platform, where when you come with … This is just a natural extension personalized digital ecosystems into our program, we can tokenize for us to reach a consumer that as a are key to driving digital ordering, your experience and then tailor the lot of a lot of affinity for the Chipotle meeting consumers’ expectations, experience specifically for [you] ... You brand already.” encouraging restaurant customers feel like the brand is talking to you to spend more each month personally and meeting your needs He added that the company is and even converting infrequent in a really unique way … [which] I WHAT’S NEXT “endeavor[ing] to create a brand that’s think is a core competency of our IN PAYMENTS: customers to loyal fans. Chipotle CONNECTED a lifestyle brand … we’re showing up has always been a leader in the organization.”

THE CRYPTO ECONOMY PREPARES FOR ITS BROADBAND MOMENT

here has been no shortage in technology, connected devices, of economies in the software, payments and cellular payments and commerce technology make it possible for people business to discuss and businesses to connect with Tover the past decade. We’ve had the each other and do business via any internet economy which morphed into device, an in any digital or physical JEREMY the digital economy that results from location safely, securely, and in real ALLAIRE the billions of online interactions that time. Unfortunately we have had the CEO happen every day between devices, pandemic-driven economy, which will consumers and businesses. We have hopefully continue its evolution to the the connected economy, coined by post-pandemic economy. PYMNTS, in which the innovations

But are we ready for a new economy? “There are key pieces of infrastructure “For the last hundred years or around the world that acknowledge Jeremy Allaire, CEO of crypto- that have to fall into place that kind of so, we’ve lived in a world where this as a legitimate, fundamental exchange Circle, told Karen Webster light this up around the world,” he said, there’s been a significant amount of infrastructure -- and how people in a recent conversation that we’re for cryptos to reach their “broadband government ‘management operation’ should deal with the highest risk headed to a tipping point with what he moment.” over some of these key pieces of the issues.» calls the crypto economy. He sees it economic system,” said Allaire. in its early stages and well on its way We’re getting closer to using cryptos Now, as then, individuals and toward ubiquity. more widely to transact, he said, As Allaire noted, it was inconceivable businesses are voting with their pointing to recent announcements that an individual in one part of the dollars and their attitudes, and the “You could see how powerful the such as the one by Visa to adopt USDC world would be able to use a device crypto economy is taking shape with Internet was, and that it was likely to as a settlement technology across and broadcast, live, to anyone else in speed, said Allaire, existing at present become much larger,” said Allaire. “You its core network. PayPal, in another the world. as a $ 1.5 trillion phenomenon (as just needed some breakthroughs in example, has said that it will accept measured in market cap). Circle’s technology and societal acceptance bitcoin for merchant payments. As “Governments around the world in own USDC stablecoin, he said, has before the real economy and Internet neobanks and leading digital wallets 1996 would have said, ‘over my dead through the past 12 months done half economy were sort of ‘mashed.’” – the Venmo users of the world – body. We control the airwaves. We a trillion dollars of payment volume on latch onto cryptos, this economy will control and give licenses This is my blockchain. As he put it: There’s a new economic scale rapidly, he said, with or without country, these are my rules,’” he said, system that is being built from the intermediaries. “but ultimately people voted with “That’s about half of PayPal’s total ground up on top of public blockchain their dollar and they voted with their annual payment volume,” he remarked. infrastructures. And just like with Voting With Dollars and attitudes…The government institution any other economy, there are various Attitudes is a vessel for society. And so it will To get to that ubiquity that we’ve forms of portable units of trade, of Governments, particularly central adapt to what society deems to be a seen with the Internet, the crypto commerce, of exchange for goods banks, are grappling with what it better form of organization.” economy is going to need the same and services, in this case ranging from all might mean (some of those improvements in infrastructure bitcoin to various stable coins, to “high priests” of economics, he Along with the technological that brought into being the mobile smart contracts. said, are even lashing out against infrastructure, he added, the regulatory device that connected to broadband cryptocurrencies with downright fear infrastructure is improving too. “Policy and enabled the business model and hostility). structures are taking shape all innovations that surprised us all.

WHAT’S NEXT IN PAYMENTS: “We’re looking at infrastructure “You’re seeing the birth of interest rate financial institutions who must abide changes that are unfolding right in markets where people can borrow by consumer protection and anti-fraud front of us -- right now – for the and lend through a machine on the mandates. Along the way, he said, CONNECTED crypto economy,” he said. internet,” he told Webster. “And that’s global prosperity can be improved really dramatic…it opens up access through programmable Internet Blockchain 3.0 to financial services, potentially, to far commerce, through smart contracts, Welcome, then, to Blockchain 3.0, more people than have had access and the fruits of intellectual property which is taking shape right now, which before.” development yet to come. Allaire said are “widening the pipes” much in the way that broadband did As to that access itself: Though the By the end of the decade, he for the Internet. conventional wisdom holds that predicted: “We’ll live in a world where a the crypto ecosystem needs no large portion of the Internet economy “All of a sudden you can build apps middlemen, Allaire maintained that is transacting in a new global digital that hundreds of millions of people “intermediaries are going to be really currency, where financial services are can interact with. You can move value important because most people don’t delivered by autonomous software in milliseconds for a fraction of a want to run their own data centers. machines running on the Internet,” penny. And so the breakthroughs that Most people don’t want to worry he told Webster. “We’ll see a larger are possible, that people imagined about archiving and backups and the percentage of the commercial becoming possible, are now arriving,” cryptographic keys that go on with relationships that exist between he said. [digital] money.” businesses executed in code, enforced by machines running on, on this The tech and regulatory tailwinds Today, the firms that act as infrastructure.” are driving the innovations, such as intermediaries, who act as the stablecoins and non-fungible tokens, custodians that provide a bridge that point to methods of monetization between the existing banking system that were one mere flights of fancy. and the crypto world ae regulated

DICK’S SPORTING GOODS BRIDGES THE BRICKS AND CLICKS RETAIL DIVIDE

ixteen months into also rolling out a line of House of Sport the pandemic-fueled experiential stores with turf playing digital shift and the role fields, climbing walls, batting cages, of the physical store is yoga classes and a host of other Sundergoing a relevance makeover of features designed to make the store its own, with forward-looking brands more than a place to simply purchase J.P. and retailers re-visiting their brick- fitness equipment. WHITE and-mortar strategies to make a more Senior Director of Technology, cohesive, inter-connected shopping As Dick’s Senior Director of Technology experience. for Stores and Omnicommerce J.P. Stores and Omnicommerce White explained to PYMNTS, the store Dick’s Sporting Goods, for example, is is hardly a sideshow for Dick’s, it’s the not only building new locations, but is centerpiece of the retailer’s business

and will remain so, even in the wake complement to shifting consumer down into its data and find new ways create within our stores and online,” of shifting consumers purchasing preferences toward the digital space. to connect with customers. Those White said. preferences. Doing that, he said, will be about customers, he noted, are a rather leveraging technology to create widely varied group. Though Dick’s Some of those are emerging now, In fact, he noted, the company’s 700- digital experiences that bring in collectively refers to its customer he said, noting the sudden spike in plus physical stores are an important more customers with a full unified base as “athletes,” the reality is those interest using contactless payments part of that Dick’s journey into the omnicommerce experience for Dick’s athletes represent both parents in store has seen in the last year as digital arena. customers. coming in to get their kids’ first set consumers concerned with their of cleats for the rec league soccer health prefer not to fuss with pin pads. “Stores are just such a critical Critical to that expanded team, and dedicated cross-trainers Some options, such as buy now, pay component of our overall strategy omnicommerce vision, he said, is seeking specialized equipment for their later (BNPL) — through Affirm, Afterpay and to our organization. So even Dick’s partnership with payments firm routines. or Sezzle — are growing quickly. throughout the early onset of COVID Adyen. Announced earlier this year, the Not quite fast enough to be called a here in the States, we were able to deal will allow Dick’s to build a more Prioritizing Personalization “dramatic shift,” White said, but fast leverage our store network as a key fully unified commerce experience, White said personalization remains enough to be notable and worth fulfillment mechanism for ship from he said, so consumers have the same top of mind for both of those distinct keeping up with. store,” White said. “We were able to shopping experience online, through customer personas, and the many rather quickly spin up our curbside an app or in-store. others, and developing mechanisms Because the education of the last pickup and our curbside return to help those shoppers feel seen and year and the great digital shift hasn’t capabilities, leveraging that store “With this partnership we feel very understood “while also not achieving been to abandon the physical world of network. The truth is, we wouldn’t confidently that we can iterate based a kind of big brother is creepy factor” commerce as a zone of hopelessness, have been able to fully be as fully on consumer demands, based on is a critical priority, and one that is he said — the lesson was that being responsive to the markets and to the market conditions and really build enhanced by the retailer’s loyalty and nimble and ready to do more and do larger shifts in trends without them.” solutions together that will allow us to rewards program. things differently is everything. meet our customers’ needs as they Staying The Course With New continue to shift,” White said. “We’re going to continue to invest in “To really get ahead,” he said, Partnerships those programs to drive a deeper “we learned to build things into The plan for 2021, he said, is not to Because that shift is underway and understanding of our most valuable experiments and through that change course when it comes to its almost certainly guaranteed to consumers and athletes, and then use experimentation identify where the focus on stores, because they are continue, he said. Building into the that information and their preferences things that matter and where it makes so critical, but to expand what the connected economy, he said, has and their feedback to help identify sense to invest more and invest next.” company can do to make them a given Dick’s an opportunity to really dig what other experiences that we should

WHY IT TOOK A PANDEMIC TO BRING HEALTHCARE INTO THE CONNECTED ECONOMY

t took a pandemic to of U.S. consumers had accessed bring healthcare into the healthcare and their doctors through connected economy. Before a connected device. In 2019, doctors the pandemic, the ability of started to warm to the technology, Ia consumer to access a doctor via with 77 percent saying they had used a connected device was minimal. telehealth, but only sparingly, 1-2 times HILL In 2018, the American Hospital per month. FERGUSON Association endorsed the expanded CEO usage of telehealth and noted that the Enter a global pandemic. practice needed additional research The U.S. Centers For Disease before it could treat many disease Control and Prevention had reported states. For that year, about 25 percent that telehealth usage spiked 154

WHAT’S NEXT IN PAYMENTS: percent by the time the pandemic services. In May, it announced payments and pricing transparency. had become a serious health issue at a merger with Grand Rounds, a Doctor on Demand provides its the end of April 2020. Now 41 states platform that helps guide patients to services through employers and health CONNECTED are actively pursuing new regulations medical care and help them navigate insurance companies and also offers to keep the connected version of insurance and payment issues. The them to individuals. In all instances, healthcare going after the pandemic combined company can provide Ferguson said, the consumer knows fades. more than just a video-consultation what the charges will be and can pay platform; it can also provide patient those through a range of payment While the pandemic may have care and wellness services. options, including Venmo and PayPal. prompted the expanded use of This pricing transparency is key to telemedicine, it certainly seems like it’s “We have a very robust mental health maintaining customer loyalty and here to stay. Patients have discovered practice and a very robust primary making the entire telehealth system the ease of a doctor’s visit from the care practice,” Ferguson told Webster. more consumer friendly. comfort of home rather than drive “And now with our merger with Grand to a facility, park and then wait in a Rounds, we have a concierge that can “So we’ve all been to the doctor and room with other sick people to be get you an expert medical opinion. paid a co-pay and then gotten a bill seen. Beyond simple convenience, It can provide you with healthcare two months later for several hundred though, there are other elements of navigation across the whole spectrum dollars,” he said. “Healthcare shouldn’t telemedicine being built out to make of your questions around health care, work that way. There shouldn’t be it a more attractive healthcare option. whether it’s how much a patient’s surprise bills. I mean, if every time As Hill Ferguson, CEO at integrated deductible is to what’s the best place you shopped on Amazon, you made virtual care provider Doctor On to get a hip surgery and how much it a payment and then you got a bill Demand, told Karen Webster recently, will cost.” a few months later for some other the connected healthcare economy amount would you continue shopping can’t stop at telehealth as its crowning Getting Transparent there? You wouldn’t think about it. You achievement. Ferguson said that beyond offering a wouldn’t be inclined to engage in that total health experience on Doctor On type of activity.” Founded in 2012 as a telemedicine Demand, other services had become company, Doctor On Demand is part of its business model. One of now moving to include more the top additions has to do with

Location, Location, Location “We definitely see ourselves as a train and demanding better solutions national practice for primary care and — something, he says, that often Everyone is familiar with the frustration behavioral health,” he told Webster. drives innovation and the growth of of having to wait days or even weeks “And, you know, that’s really a new companies like Doctor On Demand. to get an appointment to see a doctor. concept for most people because Still, a change in payments will be Furthermore, customers who live in healthcare traditionally has been a very critical, and with Medicare being such rural areas where a trip to the doctor’s local thing. With us, you can keep going a large part of the system, things could office might take hours could choose back to the same doctor, no matter take time. to skip care for issues they view as whether you live in Texas, Oklahoma, minor. Ferguson says his platform Colorado, New York or wherever. This “The biggest opportunity for our does away with that, offering another national brand for primary care and healthcare system is to try to figure reason why consumers are sticking behavioral health is really what we out ways to reform the payment with the telehealth system. see ourselves building as something models, such that providers are portable for a consumer.” incentivized to keep patients out of Furthermore, he says, in today’s the hospital, off medications and mobile and work-from-home world, Prevention away from chronic diseases,” he people are moving around the country concluded. “And these are the things more than ever. Before telehealth When asked about telemedicine that traditional doctors don’t get paid platforms, when a family relocated to moving into the preventative care for, but what drives behavior is the another state or city, it usually meant arena in addition to being able to economic incentive structure. So giving up their primary care physician provide critical care and services to you do need payment reform to give and finding a new one. Now, Ferguson the ill, Ferguson said the change in providers the incentive to encourage says, patients are free to keep the the medical system at large is coming people to live healthier lives. I think doctor of their choice on the platform but will likely take time, perhaps up every doctor wants to do that and no matter where they live, helping to five years. He says that currently, great doctors do it anyway. But as them gain more consistency in their employers are driving the change long as you have a system that’s healthcare. This aspect of Doctors because they see an annual hike in encouraging activity to deliver care and On Demand is a key part of how the healthcare claims between 8 percent WHAT’S NEXT prescribe medicine and do surgeries IN PAYMENTS: company views itself. to 10 percent and that’s not letting them get enough for their healthcare because that’s the only way you can get paid, that’s what you’re going to spend. The result is that employers CONNECTED are getting on board the wellness get.”

WHY FABRIC’S CEO TELLS RETAILERS TO STOP CHASING THE DIGITAL CONSUMER

y the numbers, the scope percent of those ordering food more of the digital shift is often from mobile apps plan to stick impossible to ignore. with it even when the pandemic is passed. B According to PYMNTS latest consumer survey, 62 percent But the numbers only tell part of the FAISAL of consumers that have shifted more story when it comes to the change MASUD digital are shopping for groceries more coming to retail in a post-pandemic CEO often from home due to the pandemic world, Fabric CEO Faisal Masud told and plan to stick with it. Eighty-three Karen Webster in a conversation for percent of those who’ve shifted to the PYMNTS ConnectedEconomy™ telework want to stay home. And 77 series. What the numbers fail to

WHAT’S NEXT IN PAYMENTS: capture is the size and the scale of consumer behavior. But what’s next Grocery’s Great Regrade the shift that retailers still have in front is coming more quickly than anyone While the shift in grocery has been of them. The post-pandemic retail could have anticipated even a year CONNECTED profound and will require some major landscape will be a good deal more ago — and that has triggered a sense rethinking across the entire segment, demanding than many are anticipating of urgency across retailers. According Masud said, there is a certain amount at this point. to Masud, retailers now need to create of realistic perspective that needs “a more multichannel connected to be applied to the segment. The “In retail, there will have to be pretty commerce experience,” which starts majority of groceries are purchased in significant changes post-pandemic,” with asking the right questions. physical stores. While the experience Masud said. “It can’t be what we’re is digitizing and expanding across seeing today, where the stores add “Am I serving the consumer? If they’re channels, its destiny is not to become things, and you can pick it up while shopping in the store or online, do I a “majority digital” business. you’re in the car. I don’t really see that offer a single seamless experience?” as a big deal; that’s been happening he said. “Because we do see “I just don’t see a path anytime soon, in Europe and other places for a very that omnichannel shoppers have a where all of a sudden online grocery is long time. I think Southeast Asia is way 2.5 to 5 times more propensity to be 75 percent of the purchasing path,” he ahead of the rest of the world and on attached to the brand.” said. “I don’t see that happening.” things like payments. I would argue that the U.S. is even a bit behind than And while there are no single- But Webster pointed out that some the rest of the world.” serving silver bullets, there are some parts of grocery — cleaning products, hard-won lessons from segments paper towels and consumer packaged Behind and almost out of time like grocery and major players goods (CPGs) — are items consumers to catch up. Masud said from like Amazon and Walmart that are at have learned they don’t need to his perspective as a CEO of a least pointing in the direction of what physically touch before buying. They headless eCommerce platform, the will start separating the winners from are just as easily shipped to their front reality is the next 12 months will look the losers as the economy becomes door, which is where the real challenge like the last 12 when it comes to increasingly connected. to digital grocery lies — in the logistics

of hitting that balance, Masud said. Creating Connectedness From to focus on their core competency and Consumers want the variety and Core Competence not get too distracted by competition. diversity of products to be in that There’s a lot of chasing. Walmart has The future capturing the potential in basket either online or in-store in order been trying to chase Prime all day the connected economy isn’t going to to make the math work properly. long. But Walmart stands for low work the same for every player, Masud prices every day. Like that’s their moat. said. Amazon, with a two-decade head “Otherwise, the math is completely And they kind of got distracted from start, is clearly emerging as a winner upside down,” he said. “What I do see that.” in the great digital transformation is grocers will have to wake up very because it has been running so far quickly here because that delivery to And those distractions can be ahead of everyone else. Among one of your door is a real challenge from a harmful, he said. Brands need to think Fabrics’ value propositions is to help business perspective. Yes, you want from a consumer perspective and level the playing field, giving retailers the consumers to shop whatever they “continue to double down on your core access to an application programming want, but economic viability is an competencies” instead of trying to interface (API)-based platform that entirely different issue.” offer everything. can give them the ability to launch products and features faster every The future of grocery is still physical “A lot of retailers talk a lot about data week. stores, but it’s also going to be dark and being able to see a single source stores that focus on closing the last- of truth from unified data on a single But at a high level, firms like Walmart mile delivery gap without disrupting consumer,” he said. “And we always can’t compete against Amazon while the flow of commerce in store, he find that big data is a big buzzword, trying to chase them, as it has thus said. but when it comes down to actually far proved to be an incredibly losing using the big data, not everybody’s strategy, Masud said. doing it right. It’s one thing to have the data. It’s another thing to actually “Chasing Amazon is what’s holding utilize it the right way that is actually Walmart back,” Masud said “They need serving the consumer.” to have their own ideas. Brands need WHAT’S NEXT IN PAYMENTS: CONNECTED

CONNECTED ECONOMY MUST PASS THE ‘MOM’ TEST

onsumers, amid the It used to be the case that the daily pandemic, have garnered minutiae of financial life — banking, an appreciation for all paying for things, investing, hailing a things digital. They’ve also ride — were all separate activities, Cgained an appreciation for simplicity. requiring navigation of, say, physical interactions or different apps. BRUCE And also: When it comes to using data, LOWTHERS banks and other providers are going to Lowthers explained that we’re all in the President, Banking and have to pass the “mom test,” as Bruce midst of massive behavioral change, Lowthers, president of FIS, told Karen and we want to streamline the way Merchant Solutions Webster in a recent installment of the those interactions happen. Digital front ConnectedEconomy™ series. doors, and the platforms that bring a

broad range of activities together, are is a strong force. As individuals, we find extend their reach and to craft Data Is Critical more valuable than ever. a methodology that works for us as these ecosystems. There’s no real way Beyond payments, said Lowthers, we navigate any number of daily tasks to pinpoint whether the giant social the ability to interact with apps and In fact, we’re willing to change our — including the day-to-day details of media firm, the ride-hailing company ecosystems with the device of choice behaviors if we’re nudged to do so financial life. or the payments platform will be the has been a key enabler of behavioral by example. If we trust who’s doing pivotal player to serve as the epicenter change. The intelligent consumption the nudging. Thus, said Lowthers, a Lowthers noted that FinTechs and for a connected economy. and use of data will be key in fostering huge opportunity is opening up for traditional firms alike can take a cue new consumer behaviors. firms (FIS among them) that seek to from the trends emerging in certain As Lowthers said, it is the entity advance how the world pays, banks, countries (super apps like Grab, that finds a way to keep consumers No matter the ecosystem, trust is invests and does any number of for example, or buy now, pay later or businesses at the center of the critical, he said. Consumers need to be things in a seamless continuum — not options), whether they are innovation- transaction that will find success. able to trust companies — banks, for just for consumers, but also for the or regulatory-led. A decade ago, real- “These are the ones that will ultimately example — with how their information businesses that exist within connected time payments began taking root win,” he predicted, “because [the is collected and used, in a way that ecosystems. in Asia and have spread throughout connected economy] is becoming monetizes that data for the provider the world, coalescing in a range of more and more about the experience.” and makes life simpler for end The connected economy is no uniform different domestic RTP schemes. customers. endeavor, he said. Platforms can The experience, he said, is enriched enable easier movement between By and large, Lowthers said, “now, by having payments embedded As Lowthers said, only a bit tongue in those activities, and COVID has been you’re starting to see that rapid into different applications, evolving cheek: “It’s a simple concept of ‘would an impetus for us to change our acceleration into eCommerce, and as application programming my mother want her data used that habits. the exploration of different thoughts interfaces (APIs) have come onto way?’” around how, why and when you the scene and made it easier for Uneven Evolution execute transactions during any given developers to innovate. Lowthers But beware the mindset that one day.” pointed to FIS, which has developed size fits all or that the rise of the several platforms that, horizontally, connected economy is a global event. Against that backdrop, any number encompass banking, investing and As Lowthers told Webster, the world is of Big Tech, FinTech and traditional eCommerce, interconnected in the evolving at different speeds, and habit players are vying for a way to cloud.

EMBEDDED FINANCE PAVES THE ROAD TO THE SUPER APP

e’re in the midst It’s all part of a series of first steps on of a sea change a digital journey that differs from firm in the connected to firm as they create platforms that economy. The shift eventually bring together people from Wis underway from apps to ecosystems, around the globe. with a single digital front door as point EMMALYN of access. The app, then, gives rise to No more hopscotching between apps, SHAW the super app, which lets consumers then — to the benefit of consumers Managing Partner plan, manage, spend and click their and small and medium-sized way through everyday tasks spanning businesses (SMBs), yes, but also the money management, commerce, even firms that serve them and endeavor getting something to eat while hailing to create sticky relationships. In the a ride. latest installment of an ongoing series

on the connected economy, Emmalyn She pointed to WeChat and other shopping and to payments (and most Those are among the most immediate Shaw, managing partner at investment companies in China, where the recently, through Google Play, banking). and crucial benefits that accrue to the firm Flourish Ventures (where the evolution has always been mobile Walmart has seen its eCommerce end users; the companies themselves portfolio of companies includes Chime first, where connectivity enabled initiative explode and has been staking get access to underlying data that can and Propel, among several others), told messaging, and online communities a position in healthcare. help them craft new, customized, even Karen Webster that there’s no straight took shape. WeChat, she said, quickly hyper-targeted offerings. The platforms line or simple template to get to the figured out the transactional element Want more examples? Grab’s starting must be flexible enough, she said, so super app. As she noted, PayPal’s that would make those communities point, of course, was ride-hailing that people can develop new offerings starting point and progress has been sticky, in part by offering QR codes. (as was Uber’s), but adding wallets on top of them in a bid to serve the markedly different than Grab’s, which into the mix has become the glue end user — an open ecosystem, she has been different than Google’s. “The defining factor was when they connecting the various points of said, that can give rise to mini-apps. added in the wallet,” she said, merging contact within the ecosystems as they With a nod to what ties those and messaging with finance, and eventually emerge. Amazon, she said, a marquee Forward-thinking, digital-first firms, she other firms together in pursuit of the creating what might be called “social eCommerce name, has been striving said, need not strive to own everything end-to-end digital journey, she said, money.” to cement its own physical presence in the ecosystem — they can choose “the global trend that we are moving in brick-and-mortar. instead to forge partnerships with toward is around embedded finance.” To be sure, the ubiquitous layer need other providers. Walmart, she said, She noted that financial services have not start with finance (though it Asking The Right Questions has benefitted from the evolution of increasingly become a feature of non- leads in that direction), Shaw was As the firms seek to scale those a “closed garden,” but she cautioned traditional platforms as they seek to quick to point out. One need only interactions and transactions, she said, the infrastructure must remain open build retention and lifetime value of look at Google to see that, with its the platforms must ask themselves so that ecosystems can embrace the the consumer relationship, across dominance in search, or Walmart’s key questions — constantly. innovation that’s required to benefit channels, of course. position in brick-and-mortar retail end users. to find evidence of the ‘ubiquitous “What are the unique products and Payments are fast becoming one of wedge” that brings consumers and services that otherwise in the absence Data’s Role the ubiquitous layers of commerce SMBs to other adjacent, ancillary of a platform you wouldn’t get, what Data, of course, plays an important and interactions that ultimately drive services. Search, she said, had existed are the better pricings and products?” role in making those connections and business. Along the way they enable long before Google, but Google did it she asked. building competitive moats. companies to understand consumer better than peers and added ads and behavior in a deep (and real-time) way. email before, eventually, moving to

WHAT’S NEXT IN PAYMENTS: “Understanding data and insights and embracing technology as it is evolving.” services and a real need to kind of being able to identify what the natural Public-private partners are critical, she think about the monetization layer.” path is for that [super app] evolution said. CONNECTED and then monetizing that and creating Successful platforms, she said, have different business models on top of Thinking Big been utilizing AB split testing, which that can be extremely powerful and As a guiding philosophy, the problems enables firms to test separate versions defensible,” said Shaw. “If you have and frictions the platforms seek to of web pages or app features to see an unusual or unique business model, address must be large enough to bring which have optimal conversion rates that’s very hard for others who don’t consumers and companies alike to or UX. have it to try to replicate. It’s incredibly the table to create new ecosystems. sticky, and the switching costs are high Among the burgeoning problems “They’re constantly testing what’s right,” for the consumer or [SMB].” that we’ll face on the other side of she said, “and they don’t wait until it’s the pandemic, she said, ties in with a foregone conclusion that they should She cautioned that there can the need to reskill — and specifically, be switching or adding services.” And be downside, too, if these same upskill — workers. We’re moving into the feedback can come pretty quickly. companies are not vigilant about a new world of data and automation protecting privacy data protection. and there is going to be a massive As she told Webster, “Technology displacement of jobs and skills, she enables us to do all of this much more With a nod to Flourish’s own predicted. thoughtfully and strategically. And I principles, Shaw said, “we believe think the ability and the technology fundamentally that there is this “I think we’re going to see a massive shift with FinTech and the enablement concept of fair finance. We do want shift toward leveraging technology layers are creating a lot more easy consumers to be better off in these and online courses across a series access for even the smallest startup kinds of solutions. We want them to of sectors, some of which we may to start to explore, for example, ‘how feel like there’s transparency and trust not even know at this point. It will do I add lending as a service?’ We’re in these platforms. We want regulation be a combination of marketplaces going to continue to add layers to find to be forward-thinking and really being where you›ve got demand, you›ve got the best value for the consumer.”

FORWARD RETHINKS THE SPIRIT AND INTENT OF HEALTHCARE

here is perhaps no other “The things that actually matter for sector in which the your long-term health tends not to be ConnectedEconomy™ can what we engage in tactically in day- bring more benefits than to-day healthcare today,” Forward Co- Tin healthcare. The ability to integrate founder Rob Sebastian told PYMNTS› patient records across providers, CEO Karen Webster in a recent ROBERT simplifying payments, using biometrics interview. «So I think if you change SEBASTIAN and artificial intelligence (AI) to the framing from not talking about Co-founder manage wellness promises to improve healthcare, but instead talking about care and deliver improved health health, you’d actually define the outcomes. problem very differently.”

WHAT’S NEXT IN PAYMENTS: Effective Incentives Sebastian believes one way to cut The Forward Take On Tech through the incentive issues is to It’s been reported that investments That basic definition of “health and leave only one in place: Patient health. CONNECTED in healthcare startups reached $80.6 healthcare” colors Sebastian’s take Insurance payments to doctors as billion in 2020. As Webster pointed on some of the key issues affecting an incentive has been removed. out to Sebastian, in her experience the healthcare space post-COVID-19. Forward doesn’t take insurance, relying covering the space, many of the The first is the usage of technology instead on a monthly fee which, at new companies are trying to solve to transform the patient-caregiver the moment, is $150. That has freed for access and affordability, which relationship. the company up to focus on its goals can uncover the inefficiencies in of incentivizing health rather than how doctors are incentivized to treat “We have all kinds of sensors that help pleasing providers. The traditional patients. While allowing that huge us understand your body, your lifestyle, healthcare system, he said, is not amount of capital is flowing into the your exercise patterns and how you’re incentivized to care about patient business, Sebastian sees an even sleeping, plus the fact that we have satisfaction. bigger upside. machine learning that can massively outstrip a human’s ability to interpret “And the reason is because they aren’t “The last year has really proved to all those signals,” Sebastian said. “And paid by you as a patient, they’re paid be a moment of reckoning for the then you build a database as though by insurance companies,” he said. “And healthcare system at large,” he said. you’re trying to teach computers what that means is they’re not actually “It’s a system comprised of really good medicine, not how to bill insurance. motivated by whether or not you people with really great intentions, but Then you have a chance to actually thought it was a fantastic experience, I think they’re often using the wrong be with someone in the key moments or whether or not you thought that tools and working for companies with in their life and develop some deep your health outcomes were better. the wrong incentives. And so from insight about what they care about.” They’re motivated by whether or not that perspective, I want to see more they filled every slot in the calendar investments in something that I think In addition to health monitoring with billable events. The by-product of of as literally one of the biggest, most and analysis, Sebastian also said that is, I think, that we as consumers important industries in the world. I the healthcare world could benefit have [been] conditioned to accept think this is a place where you have a from stealing another page from scraps from the table.” chance to truly, you know, positively the technology sector: psychology. impact humanity if you get it right.” He points out that an incredible

amount of research and development During the initial visit, which lasts focuses on short-term diagnosis and goes into such things as how to get about an hour, a full biometric scan is treatment for what is usually a minor consumers to click a button and run which, along with blood analysis, condition. “Health,” he said, should be wonders why that energy isn’t directed can test for more than 500 unique very different. It should encompass into something more meaningful, biomarkers. After that visit is complete, a patent’s entire activity and lifestyle, like helping a person live a better life. patients work virtually with their including diet, exercise and sleep. “That’s kind of a tragedy when you Forward primary care physician to Health, he noted, is very different than think about,” he said. “You take all develop plans based on their biology healthcare. that knowledge of psychology, user and goals to become as healthy as behaviors and design patterns, and they want and prevent the diseases A Different Outlook you apply it to something trivial. Well, to which they may be prone. Home Once the focus is on health, not what if you took all of that talent and monitoring equipment keeps an eye healthcare, the customer experience said, ‘let’s actually apply it towards on important markers and if more lab moves to the forefront and the getting you to do something to live a tests need to be done, Forward can consumer takes active control of his or longer, better life?’ “ dispatch a team to the home to gather her health. samples. A Focus On Improving Sebastian said he doesn’t want to Outcomes Forward’s tech-heavy, health-first stake his company on whether it gets Better outcomes are an area at the is well-timed for millennials. In a paid by insurance. He wants it and center of Forward’s primary care chain. 2019 survey from Harmony Healthcare the entire industry to succeed or fail It aims to connect consumers to those IT, it was revealed that 45 percent on product quality, outcomes and the outcomes with a model that focuses of those aged between 23-38 had customer experience. on what Sebastian calls health been putting off a health issue and 41 rather than healthcare. The Forward percent of them had been doing so for With that in mind, technology and experience begins with a visit to one over a year. And while 76 percent had a healthcare access and affordability go of the company’s 11 centers. A new primary care physician, 73 percent said hand-in-hand. Technology, he said, is infusion of $225 million in Series D they went online for medical advice the key to taking a completely bespoke WHAT’S NEXT rather than turning to their doctor. IN PAYMENTS: funding will help expand the number service at present and scale it for the of those locations. It goes back to Sabastian›s original future. philosophy: defining healthcare as the CONNECTED occasional doctor’s office visit that

HOMEBUYING MAKES ITS BID FOR THE DIGITAL-FIRST ECONOMY

s anyone who has been It was the process of buying his first through the process can home that inspired HomeLight CEO readily confirm, buying a and Founder Drew Uher to launch his home can be a stressful firm and introduce technology into the Aordeal. Between finding an agent, market. He and his wife almost lost finding a home, navigating a bidding out on their dream home because DREW war on a property, making an offer and their lender couldn’t close on time, he UHER getting the whole deal signed, sealed said, and the entire closing process Founder and CEO and delivered, it has been a decidedly itself was “a mess and a headache.” analog and frustrating process.

“The problem that I started with said. “This advice is really valuable, but financing process is nailed down and continues to heat up. As of the time was the agent matching problem. so is understanding the negotiating that the funds are ready to go much of this writing, inventory is tight and We basically started the business by dynamics, where one simple move faster than a traditional real estate sellers are suffering from a bit of helping buyers and sellers find the can mean the difference between process. fatigue. The normal seasonality of best agents in their area in a data- 5, 10, 15 or 20 percent of the home the market has been disrupted as driven way, with a focus on agents that price, which dwarfs a couple of Meanwhile, HomeLight’s trade- consumers have suddenly been would sell their homes faster and for percentage points here and there for in process eliminates the classic prompted to closely reexamine the more money,” Uher said. commissioning.” contingency where the buyer has to concept of home. sell their current property before they HomeLight was always conceived Keeping Local Expertise can buy a new one, explained Uher. Another such reevaluation is poised as a tech platform for the real The goal of bringing high-tech tactics The trade-in option gives homebuyers to happen soon, as vaccines roll out estate market, a concept that was into real estate isn’t to replace the a guaranteed place to sell without and COVID-19 recedes into memory. often called “harebrained” in the firm’s agent, as their specialized knowledge having to wait for a buyer of their own. As Uher noted, HomeLight is incredibly founding days of 2012, when having a will always be an important part of the bullish on what will likely come tech startup in real estate seemed like process. The goal is to augment the “We think it’s crazy that in 2021, there next – including how it will continue an incongruent idea. But even as the agents’ efforts with a suite of tools that are still contingencies in real estate to advance technology to turn a digitization of the real estate market enhances and improves the process transactions,” Uher said. “Contingencies historically stressful process into one has since gotten a lot more traction, for the buyer and seller by removing on getting a mortgage, on the that consumers can honestly say is and as HomeLight has expanded its the traditional friction points that can appraisal, on selling another property delightful. suite of digital tools, its goal isn’t to slow down or even derail the process. — all of this creates uncertainty for remove the real estate agent from the the seller and massive friction in the “We’re bullish on the economy and process, as other entrants in the space HomeLight’s Cash Offer product, for process.” job growth, which we think will help have attempted to do. example, allows a consumer who support a robust real estate market,” needs a mortgage to still make a cash And that friction can be minimized by Uher said. “A year ago, in late March of “If you’re buying or selling a home, we offer on a house, which makes their tapping into connected technology 2020, I would have been a lot more believe the best outcome involves offer more competitive and increases and opening up consumers’ options muted and uncertain. But right now, hyper-local expertise — someone that their chances of securing a lower price. when purchasing a home, said Uher. we see nothing but tailwinds for the knows every home on every street, Using HomeLight’s technology and He predicted that those options will market.” the other agents in the market, all the tools, the buyer can make sure the get increasingly important as 2021 service providers and so on,” Uher rolls on and the real estate market

FROM BNPL TO WALLETS, RISING PAYMENT OPTIONS CREATE CLUTTER, ADD FRICTION

ayments have long been As these connected ecosystems the conduit for new and emerge, new intermediaries are different experiences emerging as well. These intermediaries in commerce. Look no can serve as the gateway to new Pfurther than the past year as proof as experiences — perhaps even contactless payments, digital banking influencing and incentivizing how JIM and digital wallets gained significant transactions are done, at least over the McCARTHY traction. Cryptos, too, of course — and long term. President bit by bit, we’re seeing the rise of the super app, where transactions are In an interview with Karen aggregated, secured and presented to Webster, Jim McCarthy, president the consumer in a more user-friendly of digital payment infrastructure mobile fashion. provider i2c, acknowledged that

WHAT’S NEXT IN PAYMENTS: intermediaries are emerging that transactions is marked by broad Ebb And Flow have made it their mission to make potential. Amazon, for example, has That was then. consumer payment interactions been bringing buyers and sellers CONNECTED across these increasingly connected together for a long time through a It’s an evolution that has a prologue. ecosystems less friction-filled. Those seamless marketplace, marked, of PayPal fashioned a center of gravity intermediaries, according to McCarthy, course, by one-click ordering. in a walled garden known as eBay — are in the proverbial driver’s seat. To be gaining the consumer base to break sure, the role of the intermediary is not “[Amazon] knew that they needed free from eBay and ignite a consumer/ a new one. But in the brick and mortar to own the payment rail, and take merchant network across the web. model of commerce, incentivizing the friction out. And that led to a consumers to try new payments and bunch of other really smart things like But with the emergence of buy now, rewards options was a bit of a heavy authentication and understanding the pay later (BNPL) and other options, lift. customer,” he said. McCarthy said, there comes a point where conversion at the point of For example, for Walmart and other Along the way, they’ve put the sale peaks and clutter can be the large retailers, even those with large customer at the center of the equation unfortunate result. (McCarthy said installed bases, he said, it was difficult (through, for example, their “A to Z we’re likely to see digital wallets to insert new payments (or rewards Guarantee” that covers timely delivery). consolidate to just a few major options) at the point of sale without Accepting any card, at least for now, players: “more than four or five, but introducing new friction. (An impatient the eCommerce giant has not wanted less than 50.” With its ability to protect queue of shoppers would snake down to incentivize the consumer to shift credentials and give consumers a the aisle while the consumer made preference to their own branded feeling of control, Apple Pay is likely to up his or her mind at the register). payments option or otherwise make remain a major player). But in the digital age, all stages of changes at the point of sale to nudge the interaction — pre-, during or them toward different (preferred) But, “there comes a day where post-transaction — incentivizing payment choices. alternatives appear,” he said, “and

we’re starting to see some of steering them into a space that works have given merchants new ways to those alternatives with real-time well, or at least cooperatively.” The convert sales beyond what might be payments with cryptocurrencies,” “unknown” buyer/seller relationship seen as the classic, clunky point of he said. Amazon and other without an intermediary is problematic sale options seen in brick-and-mortar intermediaries — armed with the (though stablecoins, he said, “are fairly commerce. consumer’s trust — may start to well trusted when they’re pegged” to influence those payment decisions in some underlying value). Of the emergence of the connected ways that the incumbents may not economy, said McCarthy — the when like. He noted that even with the advent of and the how of it all — “people are bitcoin, there had been an explosion very impatient when you’re in the “We’re entering a new phase here of exchanges and wallets that moment. It takes a while.” It took where the choices are appearing, nonetheless use Visa or Mastercard as Visa 60 years, you know, to get to the tools exist, this mega kind of an on- or off-ramp. We’re also seeing its current standing as a network of eCommerce/app players will have a lot announcements where Visa treats networks. ATMs didn’t get connected of trust and a large consumer base to crypto akin to just another kind of fiat through switches for 20 years. Debit work with,” he said. for settlement purposes. Traditional took 20 years to become mainstream. rails, he said, can help create a New networks can take shape, of connected experience. But, according to McCarthy: give it course, without intermediaries — a key time; this will happen. “Whether you’re selling point of decentralized finance Building Trust the marketplace or the super app,” and cryptocurrencies. In forging new commerce ecosystems, he told Webster, “you’re going to build it all boils down to trust, he said, and payments into the heart of what you’re “It’s a threat, but I wouldn’t call it in many cases, intermediaries can doing … you can’t have a connected existential,” he said, “like a lot of things build that trust. With technology at economy without payments at the that were threats in the past, the the point of sale, those intermediaries heart of it.” incumbents do a good job of at least

WHAT’S NEXT IN PAYMENTS: CONNECTED

B2B PAYMENTS SHOULD RESEMBLE A CONVERSATION

hen we think about And while that is all good, Ingo Money the major advances CEO Drew Edwards told Karen Webster the connected when they sat down to discuss the economy has made, emerging connected economy, and Wparticularly over the last 15 months has removed a tremendous amount of the rapid onset of digitization, the of friction from the consumer DREW advances that get the most attention experience, the forward evolution of EDWARDS are consumer oriented. Powered often the connected economy has largely CEO by payments, the emerging digital been limited to consumers. economy has thus far been about connecting consumers to remove “Most of the innovation in the last friction. 50 years has been about how I, as a consumer, paid companies. But

companies are still mailing me checks, that can become the basis for layering insurance disbursements, and the like, going to share in the revenue stream,” right?” Edwards asked. “The worst time other services and capabilities. are “the low hanging fruit” in that they Edwards said. of all, is that B2C and B2SMB payment are opportunities to transform the process that takes weeks, costs a As Edwards noted, turning a payment process for the payer and change the Incentives are also a powerful and bunch of money and it is just friction, into a digital experience means a two- experience for the receiver by giving persuasive tool. It’s why Edwards uses friction, friction, end-to-end.” way conversation gets going, one that them options. Apple Pay, because in combination tends to delight the recipient when it with the Apple Card, he doubles up The good news, Edwards said, is the offers up a trusted process that ends Overcoming The Resistance his rewards. It’s why his employees jig is mostly up for the “most time- with them getting instantly paid. One of the challenges in bringing favor their AmEx cards, he said, to consuming payment process out B2C and B2SMB payments into the build up frequent flier miles. It’s why there” as their weeks-long payments “And then at the end of the day, you’re connected economy fold, Edwards consumers have bought into the processes are cut to seconds in a also acquiring new believers in that noted, is the resistance they continue connected economy so powerfully — way that delights recipients as well process. Everybody that gets paid to run into from firms, particularly it reduces the friction in their daily lives as senders and offers the potential says, ‘Wow, that was cool. How do I larger ones, when it comes to being and gives them their time back as a to “create an environment where new do that again?’ And that then feeds on part of a payment ecosystem. They like reward. business models can come out of it.” itself,” he said, adding that a financial the idea of transforming how they pay institution can use digital payments to people — but often with the defeating He noted that business payments are Opening Up To The acquire small business customers. stipulation that their recipients are simply the next natural evolution point Opportunity their recipients. The companies don’t for the connected economy to take There are many problems with paying There are many areas in B2B want to share them with any other hold — because the conversations by paper checks: they’re slow, easy payments where transformation player connected to the system, which that connection enables allow firms to steal and expensive to produce. will be challenging, he said, areas Edwards noted is “contrary to the to recreate experiences and build new Another significant issue is that checks like insurance, healthcare and even real possibilities” that this change can revenue streams. aren’t versatile, looked at in the context sports betting, all of which are highly enable. of an economy that’s becoming more regulated and cause innovators in “The opportunities exist and we are connected around them. those spaces to move cautiously. “But if there’s economics involved, like only starting to see them emerge, but if a recipient is willing to pay for speed they are still mostly covered up with Unlike a digital payment, a check isn’t However, the overall market trend or pay for choices, then you can create friction and time-consuming slow a conversation — it’s the end of a is clear: anywhere where there’s a reasons for those companies to buy processes. This is just a natural place transaction. However, a digital payment recipient and they need the money into the ecosystem because they’re for an ecosystem to evolve,” Edwards can be the start of a two-way dialogue faster is a potential use case. Items going to get more customers or they’re said. between the sender and the recipient like payroll, supplier payments,

DIGITAL PIVOTS HELP JOHNSON & JOHNSON’S SUPPLY CHAIN STAY RESILIENT

n many ways, Johnson & chain, while also forcing it to evolve Johnson was at the heart of the to be more digitally driven, like many COVID-19 crisis. other channels during the pandemic.

I Not only was the company racing The company’s focus on improving against the virus to deploy a vaccine, its supply chain netted it the No. 3 SARFRAZ but it was also supplying medical spot on Gartner’s Supply Chain Top NAWAZ facilities with critical gear and working 25 Index for 2020, which was an Head of Digital Transformation, to keep the supply of consumer goods, improvement of five spots from its like cough syrup and fever reducers, 2019 ranking. Supply Chain flowing. All of that tested J&J’s supply

WHAT’S NEXT IN PAYMENTS: The company’s robust supply chain applications that have long-lasting who weren’t able to be on site due solutions no doubt played a role in impact rather than working in silos.” to travel restrictions. Using smart its strong first quarter earnings that glass technology like Google Glass, CONNECTED were released in April. Its ability to One of those applications includes combined with opening higher security ship products helped J&J increase its leveraging complex algorithms to clearance levels and employing robust worldwide sales by almost 8 percent, identify unusual ordering patterns cybersecurity measures, allowed distributed across its consumer health, from large clients like governments scientists to fine-tune equipment by pharmaceutical and medical device and medical centers. It also used looking through the eyes of someone divisions. digital risk-simulation modeling to in the factory. predict how its supply chain would Strong Foundations manage with the staffing shortages Track-and-trace sensors also played brought about by the pandemic. The into J&J’s digitally resilient supply In speaking to PYMNTS CEO Karen company was able to model such chain during the pandemic. Sensors Webster, Johnson & Johnson’s Sarfraz things as whether a factory could run equipped with GPS, temperature- Nawaz, who helps drive the digital at 30 percent to 40 percent reduced monitoring ability and impact monitors transformation of the company’s capacity, or what would happen if were included with shipments, supply chain, said two things factored products couldn’t be shipped on their allowing supply chain managers to not into the company’s successful normal schedules. Such modeling only know where their shipments were transition to more of a digital supply helped J&J also keep operating costs at any given time, but also if packages chain operator. low by not over-ordering or under- had been dropped or if delays caused ordering raw materials. temperature fluctuations that could “First, it’s necessary to create a have impacted quality. The company foundation that’s really robust and Another digital supply chain pivot that is now pairing this track-and-trace resilient, where from a technology the company made in the past year technology with intelligent automation standpoint, we are fruitful,” he said. was to allow workers at manufacturing that could automatically trigger alerts “We were able to support building plants to connect with engineers

if, for example, a plane leaves without “Having deep expertise and a focus conditions where you have to operate, an important package on board. on execution from a technology and the availability of technology standpoint is important, but then capabilities in these regions and how Beyond J&J’s efforts, supply chain comes the culture side — being able we enable it. So, I think that’s another visibility has become a hot topic to nurture talent internally while area that probably requires a lot more across the healthcare manufacturing attracting new points of views,” he said. work. industry at large. Just last “So, we are really focused on these month, FourKites, a startup that foundational aspects that helped us “And then we talk about innovation supplies freight-tracking software, progress faster through the last year and change. How do we have a strong announced that it had secured $100 in this journey while trying to keep the innovation process for bringing in tools, million in a Series D fundraising longer-term vision intact.” capabilities and talent, especially for round, which effectively doubled its legacy organizations? That’s a big area capital raised to date. The company Room For Improvement to focus on in terms of processes.” now handles a significant portion of the supply chain tracking for Cardinal Looking forward, Nawaz said there Health, which says it supplies nearly are even more enhancements and 90 percent of all U.S. hospitals and improvements to J&J’s digital supply more than 29,000 U.S. pharmacies. chain to be deployed.

Nurturing Culture “I think we’re in a good place and marching forward in the right direction So, the technological components of in terms of being able to tap into J&J’s digital supply chain resiliency are technologies around machine learning clear — but what about the second or analytics or intelligent automation,” aspect of the company’s digital he concluded. “But there’s also the transformation? Nawaz said it’s simple: institutional environment that we people. work with, the various geographical WHAT’S NEXT IN PAYMENTS: CONNECTED

FASHION WHOLESALERS WALK THE RUNWAY INTO THE DIGITAL-FIRST ECONOMY

escribing something as “With the pandemic people a “learning experience” realized you can’t buy the old- or “character building” fashioned way anymore. Digital is is rarely a good sign. It’s required,” Joor CEO Kristin Savilia told Dalmost always a sign of a bad situation PYMNTS in a recent conversation. being described politely, or bad “The pandemic has shown a light on KRISTIN behavior being evaluated after the fact. the fact that we were doing things SAVILIA But some educational and character- wrong. We were traveling too much. CEO building experiences can’t be avoided, We were having too many events, but and for players in the B2B economy, we still were doing things on paper. the learning experience of the last year The way we’re doing payments is also when it came to digitization was a long very antiquated, with paper, invoices, time coming. or email invoices, offline payments

are also a big miss. These problems We need to start using it right now,’” that this is a way to extend the length But other things like trade shows, were all brought to light, and I think Savilia said. and reach of your event,” Savilia said. runway shows and the physical side the permanent reboot and change “So physical events will still matter, but of the fashion business, she said, that we’re going to see is actually really The Gift Of Urgency the fact that you can extend it with are going to come back. Joor will exciting.” And what they realized at Joor at digital is here to stay.” once again take up its hybrid role that point, she said, is that this “right of connecting the digital plane of Which is not to say that a rebooted now” was going to last for a while. Joor has learned a lot, and enhanced commerce to the physical through his world will be a wholly different one. There weren’t going to be events in its offering a lot around things like presence at real-world events once Joor, which provides a digital platform the summer or fall, and all of these payments in this rarified year of they open up again. But, she noted, for fashion brands and fashion retailers fashion brands and merchants large digital-only transacting. With its digital it will be a different environment that to meet and transact, started its and small needed a way to transact invoicing, she said, Joor has managed comes back, one more enabled by existence as a hybrid platform built for that was totally outside the physical to help brands speed up the wait for and driven by the data that brands business customers interacting in the environment. Joor needed to be ready getting paid for goods from being a and merchants have had access to for real world at fashion events like trade to offer its clients something new. few months to being a few days. All the first time as a direct result of their and runway shows, and beginning of that was accomplished, she said, diving into the world of digital. to edge into the world of digitally Which, she noted, is how the idea by adding on a bulk invoicing tool that displayed and purchased goods. for Joor Passport was born — making makes it easy for brands to click and “I’m optimistic,” Savilia said. “I think it possible for brands to create send invoices out to every firm they we’re going to do it right. I think that The pandemic, which shot down digital events and easy for small and are tied to when merchandise ships. selling in the wholesale world is closer all those physical events, created medium-sized businesses (SMBs) to Those are the kind of changes on the to actually happening near when it’s explosive growth for Joor as brands easily log in to a single point for the back end that the entire B2B space going to hit the selling floor. I think and retailers went overnight from 12,500 on Joor’s platform. In 2020 needs, she said, because if the last 12 there’s some changes that are going to experimenting with digital to diving in alone, Joor hosted 17 shows and in a months have demonstrated anything, be really positive. So I think we’re going head-first out of necessity. six-month time period, it had 15,000 she said, it is that running back end on to come back and folks just are going retailer shopper events from 130 Excel spreadsheets and using paper to be adopting digital across the board, “After those first few weeks of countries, and those clients purchased invoices is just unworkable in the because that is where this needs to uncertainty, we got a lot of inbound 500,000 items. modern world. Those are the sorts of go.” phone calls from our brands who all things, she said, that were banished by use Joor saying, ‘You remember that “What we taught the industry and the the pandemic and should never come virtual showroom thing you told me trade shows [that] have all renewed back. about, you how does that work again? with us and plan on using us forever, is

CUSTOMER EXPERIENCE WILL DRIVE SUPER APP FUTURE IN THE US

he connected economy is Max Neukirchen, CEO of merchant evolving in the U.S., taking services at J.P. Morgan Chase, told its cue from the super Karen Webster that there’s some apps that have taken root catch-up to play here in the States, Taround the globe. Those super apps – involving a shift in merchants’ in Latin America, Asia and elsewhere – mindsets toward how they mesh the MAX have been able to bring together far- physical shopping experience with NEUKIRCHEN flung daily activities (from ride-hailing purely digital ones. CEO of Merchant Services to banking) and mass them behind a digital front door that ties together “There’s a real push toward the physical and digital channels. emerging super apps in the United States and in North America,” said

WHAT’S NEXT IN PAYMENTS: Neukirchen. “Ultimately, it will come Along the way, the digital strategies – of trust (and a longstanding history down to a question of customer indeed, the mindset underlying those with many of its corporate clients) that experience – who will be able to strategies – have been shifting. The is hard to replicate. CONNECTED bring together the different parts of challenge is out there for everyone, the connected digital commerce he said, and the small businesses The Key Questions and economy in a way that makes it face the same issues of merging “The important question that many seamless for consumers to meet all the physical and digital into a good merchants are grappling with is how their needs.” experience as the largest firms. The to design the digital engagement with good news is that a broad range of their customers,” Neukirchen noted. The omnichannel experience (which solution and service providers (J.P. “Because it is very important from a underpins a super app), he said, Morgan among them) can help client loyalty standpoint, but also … because should be focused on the journey companies build compelling digital payments actually plays a critical role – not the channel. That philosophy offerings that span fulfillment, fraud in all of this.” stands in stark contrast with the fact management, inventory management that consumers find the physical store and onboarding functions. As he told Webster, payments shape to be the least satisfying channel, and significant parts of the experience that that merchants are still investing in Neukirchen pointed to J.P. Morgan’s customers have at the most critical buy online, pick up in-store offerings own offerings that help markets and time of engagement – during checkout (intended to drive foot traffic), with merchants collect money, and also in the digital world. The payments part wholly different consumer experiences help suppliers and providers get paid of the equation has now become a in each. under one roof, where they also can topic of discussion and consideration tap credit lines or get help with KYC not just for the treasurer, the finance There’s been a ripple effect that and onboarding validation. department or the CFO, but also for has shocked the merchant services product development, marketing, the ecosystems and helped online That holistic, one-stop-shop, he said, tech team and even the CEO. marketplaces emerge into what positions J.P. Morgan well against Neunkirchen described as “a central FinTech and even Big Tech competitors As merchants are re-examining their phenomenon to the connected who have been jockeying to help craft digital journeys, there is the potential world, where buyers and sellers and omnichannel experiences – and the to bring a more eCommerce-like consumers come together.” bank has the added competitive factor experience to brick-and-mortar retail,

so that physical stores function less as online – and as a result, they’re eager could be the companies that own the a simple destination for foot traffic and to pay with biometrics or leverage last mile of the customer journey. more like a center for innovation. other high-tech offerings to make commerce a bit more seamless. To that end, it’s not just about As Neukirchen noted, the omnichannel connections, but about smart experience merchants provide to their As the lines for consumers blur connections – and data are the critical customers becomes critical as an and ultimately become invisible, differentiators. Data, said Neukirchen, increasing number of consumers order Neukirchen said, merchants must can help firms anticipate the needs something online, and then want to decide who owns the consumer of customers along a continuum of exchange those items at the store – or experience, and then figure out services – setting the stage for the they browse something in-store, but what must be done to make the customer to prefer that solution above opt to order it at home, online. journey seamless. But as the all others. lines of commerce blur, so do the “So the question of how to make the lines between stakeholders in the It’ll be interesting to see how various channels – digital and in- ecosystem. Neukirchen said that companies compete for customers’ store – work together from a purchase firms have traditionally organized attention as the connected economy standpoint, and also from a servicing themselves along various points in the grows, maintained Neukirchen. and ongoing experience standpoint, channel – the firm, for example, that is a big priority for many of our owns the stores, or the app, or the “It’s no longer the case that you merchants,” he explained. product. onboard a consumer on your solution or your app once, and then you’re It’s been a mixed bag so far, he pointed “Consumers don’t think that way,” done,” he said of the merchants out, where the typical experience of he explained. “They want integrated and providers. “Consumers will be a customer showing up in a store, experiences, and they want companies connected in many ways, and we’ll pulling up an app on their phone, to basically stitch those solutions have choices. And then it will be a generating or accepting a code, and together in a seamless way.” That constant competition for who provides then paying at the point of sale has approach, over time, “will differentiate the easiest, smartest and most trusted WHAT’S NEXT been challenged in many ways. Simply the winners from the losers in a given connections.” IN PAYMENTS: put, nowadays, customers expect the segment.” The winners, he predicted, CONNECTED same simplicity in-store that they have

FINANCIAL SERVICES MUST ADOPT ‘OUTCOMES-BASED APPROACH’

he great digital shift has But a third of users surveyed have brought us all onto our signaled dissatisfaction with their mobile devices. But mobile banking apps. Those stats as we become ever signal some room for improvement. Tconnected with financial services firms through phones, tablets and laptops, LendingClub CEO Scott Sanborn told SCOTT banking has lagged a bit. As PYMNTS Karen Webster that financial services SANBORN research has shown, roughly 45 can get a boost from embracing CEO percent of account holders use online an outcome-based approach to and mobile channels for banking most banking that leverages the device as or all of the time. a conduit for improving consumers’ financial health rather than focusing

WHAT’S NEXT IN PAYMENTS: on discrete banking services. “The to the house. Now, it’s all about another for a mortgage and yet biggest thing they have to do is move the mobile banking interaction that, another for an auto loan, for example. organizationally to a ‘customer-first’ increasingly, should “deliver on the CONNECTED mindset powered by a single view of customer-focused outcome” that the The technical debt is a challenge in the customer,” he told Webster. individual wanted from the bank in the crafting the connected ecosystem, first place, according to Sanborn. said Sanborn, where a financial To get there requires grappling with institution (FI) might serve as a single legacy technologies (read: technical He termed this outcome-based point of contact. Banks have grown debt), moving beyond the branch approach a “know-me experience” that through acquisitions, and have had to experience and harnessing data to stretches, end to end, across a banking embrace multiple legacy technology create a personalized experience. app, where financial services providers systems. “Silos form around products can anticipate the consumer’s as opposed to customers – and that As Sanborn has said in past immediate needs, as well as what makes it harder to stay focused on company earnings calls, banking they might need down the line. After them,” he said, with a holistic view. is no longer defined by a place all, said Sanborn, the online banking where people go, but is about what experience matters for everyone, but By way of contrast, explained they do. “Banks spend a lot of money what matters within that experience Sanborn, digitally native firms such on advertising, but at the end of the can be wildly different depending on as LendingClub have been able day, experience is a huge driver of the day or the use case. to organize their efforts with the choice – and a big driver of choice has customer in mind, and always at the often been convenience,” he noted. That outcome-based approach has center of design. That’s helped in part yet to crystallize in financial services, by the collection of 140 billion data The pandemic has shaken up just which is why so many people have cells over 14 years. what it means to have a “convenient” different relationships with a slew of banking experience. Convenience used providers, taking a bit of what they LendingClub’s customer base might to be about the branch, and about need from each of them. They might be defined as “highly banked,” he said, having a branch in close proximity use one bank for checking and savings, but they are not getting the most

they could get from their financial still use cases that require person- money on an auto loan, putting those products and services. He pointed out to-person contact, he said, online savings automatically into a separate that the company’s business model financial services marketplaces like account that grows over time and is predicated on helping consumers LendingClub’s have been evolving improves their financial health. get better control over their debt – into connected economy ecosystems. and boost their credit scores in the The holistic approach can also help process. “The marketplace has enabled us LendingClub reach out to Gen Z to assemble a ‘funding ecosystem,’ consumers, for example, who thus far A Hybrid Approach – For Now with everything from regional and have relied on Zelle and Venmo as The fact that LendingClub has a community banks that will provide their sole conduits of online banking. number of avenues for customer capital for loans to high-credit quality “As they move forward and further interaction – via phone and chat, consumers, to asset managers and into their financial lives, they›re going said Sanborn – speaks to a hybrid hedge funds that are willing to take to need more from their bank,” he approach that still remains critical. on more risk in exchange for a higher told Webster. “They›re going to need In some cases, customers are not yield, so we’re able to serve a broad help and support on a variety of other ready to go 100 percent digital yet range of customers” powered through services … You’ve got to both align (indeed, some loans, such as auto data underpinning every interaction, he around the customer and create loans, still must be done with physical said. incentives for the company that paper, even if they do not need a “wet align with the customer outcomes, signature” done in a branch setting). Beyond credit activities, said Sanborn, as opposed to only the company’s data makes it possible for LendingClub financial outcomes.” “Is it possible to be fully digital? Is to help consumers with spending and it desirable for all customers? Not saving. The customer who comes to yet. But it’s sure headed that way,” LendingClub to pay off their credit card said Sanborn. Though there are debt can also be prodded into saving

WHAT’S NEXT IN PAYMENTS: CONNECTED

MALL OF AMERICA ON THE CONNECTED MALL’S FUTURE

he mall and its uncertain According to estimates, 25 percent future in the era of digital of America’s roughly 1,000 malls will transformation has been close over the next three to five years a topic of conversation for — a process accelerated, but not Tthe better part of the last five years. created, by the pandemic.

JILL Is the mall dying? Does the mall have But the Mall of America is not most RENSLOW a future? Does anyone still need the malls. The largest mall in the United Executive Vice President mall? States by size, the 5.6 million-square- foot space is home to two hotels, a The questions have swirled, and few 7-acre theme park, 500-plus retailers, have predicted a profitable future for a medical center, schools and even a most malls, which have been largely COVID-19 vaccination site in operation written off as relics of the retail past. at present. With all that going on

and so much planned, the Mall of the past year as the mall had to make Ideally, Mall of America would like to And for all the ink spilled on malls big America is something of a species sure all the changes were coming find a way to level that playing field and small, and speculation on how unto itself, Executive Vice President Jill across in a timely manner. by offering a single digital platform they can save themselves from the Renslow told PYMNTS. through which their merchants can coming digital apocalypse, Renslow “The desired end result for all of us easily hook into offering those digital said the answer is surprisingly simple. “Even though the mall is in our name was the same,” she said. “We wanted upgrades to their consumers, she Do new things with the technology as the Mall of America, we are so to get reopened. We wanted to be said. That’s an improvement for at hand; be willing to experiment. much more than that,” Renslow said. successful in the long run, which small retailers, but also for larger Consumers are going to change and “We really look at how to diversify meant we had to be creative in the ones because a more unified digital are changing already, and the mall our property. … [there are] even short term of what that would look experience for consumers is ultimately can see that today as consumers development opportunities as we like. We focused on our digital tenant a better one. start to return. Instead of trying to look to expand. Because being 5.5 hub for communication that allows fight a change that can’t be stopped, million square feet isn’t big enough. our tenants to be able to either from Given the choice, the typical consumer malls can change themselves by We want to contribute and bring new a web browser or through an app be going to the mall to pick up items getting more connected and more experiences to our guests.” able to be connected with us. And so, from a few stores will prefer to make interestingly experimental. we can put out communication in a a single stop and see all their orders That isn’t to say the last year hasn’t timely matter no matter what it is.” from the mall loaded into their trunk “Take risks, try new things,” she said. been a setback or a difficult period at once than having to stop at five “Don’t be afraid to fail. When you fail, for Mall of America or its merchants. Connecting MOA To Digital separate storefronts to complete their you’re pushing yourself, your team, Renslow said she still remembers the Technology shopping journey that day. your company, to try new things. And precise day in 2020 when the entire Leveraging a digital platform no matter what happens, you’re going world “turned upside down.” March 18 encourages thinking more directly It’s why leveraging digital and its to learn from it. And it just makes was the day management knew the about how its consumers and connection to its massive merchant you stronger. Consumers are looking mall would be shutting down, without retailers can be connected, she base is so firmly “on the roadmap” for that — they’re expecting change, much idea as to how long that period said. eCommerce efforts are largely for Mall of America going forward, they’re expecting new things. I really would last. It was incredibly difficult merchants’ own doing and creation she said. Finding a way to “unify think the future of retail, especially and a time period that required in house, a reality that means larger that shopping cart” means a guest in the brick-and-mortar space, has tremendous collaboration and merchants have the edge when rolling experience that is even smoother and so much opportunity, and we really communication between the mall and out services like buy online, pick up more seamless. look forward to the months and years its extremely large roster of tenants. instore (BOPIS) or curbside and other ahead.” While communication is always digital upgrades. important, it was even more so during

MARS SERVES CONNECTED EXPERIENCES TO CREATE SWEET CONSUMER JOURNEYS

n today’s connected economy, connecting formerly disparate businesses have the opportunity products, activities and technologies, to create digital entry points guiding consumers through the that grant consumers access experience from beginning to end. Ito whole ecosystems of related services and capabilities, integrating Mars (of confectionery fame), for JASON themselves seamlessly into instance, looks at consumer behavior THOMSTATTER consumers’ daily routines. before and after the purchase of Head of Digital Commerce their products to understand how Leading brands are leveraging their its products fit into their lifestyle, products to create a compelling identifying areas to engage with commerce journey for the consumer,

WHAT’S NEXT IN PAYMENTS: consumers and tailoring the product online shop expected to justify its traditional retailer and just purchased journey to these patterns. place in the eMarketplace. a bag of M&M’s. It’s giving [consumers] a different way to connect with the CONNECTED “It used to be, if you had great “Getting into value props, initially, we’re brand and … a unique, more modern practices and great marketing and looking at that around, ‘How do we approach, or a more customized a great product, you’re good to deliver a unique experience for our approach, to interacting with our go,” Jason Thomstatter, head of consumers for our specific brands?’” brands.” Digital Commerce at Mars, told Karen Thomstatter explained. Webster in an interview, as part of Leveraging Data To the ConnectedEconomy™ series. “And As an example, he cited the M&M Understand The Consumer I think now it becomes much broader digital and brick-and-mortar Journey than that, right? You have to have that experience. Online, consumers can To provide an end-to-end consumer overall experience, and you have to be order customized candies that would journey, you need to understand able to be tying that into the end-to- not be possible in a physical store what is happening on each end, in end way your consumer’s operating environment. In stores, consumers addition to understanding consumers’ and interacting with the brand on a can experience the M&M brand in a behavior at every intermediate stage. day-to-day basis.” more immersive way, engaging more For Mars, its these D2C stores — the immediately with the products. unique experience each provides, and Creating Omnichannel consequently the unique behavior that Experiences “We’re taking those experiences each prompts — to learn more about Even in the last year, during the most and really putting those together its consumers’ needs and habits. severe months of lockdown, Mars to really give consumers a has never taken eCommerce for unique omnichannel experience, “What we’re able to do is actually granted, Thomstatter said. Instead, whether you’re in the store or whether leverage those different value props the company makes a point to be you’re online,” said Thomstatter. “And to deliver great experiences across crystal clear on the value proposition you’re able to actually experience all of those types of channels,” associated with each direct-to- the M&M brand in a very different said Thomstatter. “And then from consumer (D2C) initiative, with every way than if you went into a a data perspective, certainly you’re

able to leverage that data in this A Dog’s Eye View Of The By creating this suite of connected type of ecosystem to really serve our Connected Economy products and services, Mars is able consumers in the most efficient and to forge deeper relationships with One way that Mars engages in the best way possible.” consumers, becoming an embedded connected economy is through part of their lives. its Mars Petcare products and Additionally, he provided an example services. Through the entry point of outside of Mars to show how a Thomstatter noted, “I think, the more brands that carry dog foods, such company leverage its online presence you understand that [consumer as Pedigree and Royal Canin, the to collect insights on consumer journey] as a business and brand, the company embeds itself in dog-owning behavior. Thomstatter pointed better your ability will be to serve your consumers’ daily routines. From to Disney’s mobile experience, citing consumers better and really give them there, with Mars’ veterinary brands digital features like wait time tracking a great end-to-end experience, and providing additional services, such for ride lines, PhotoPass, and mobile ultimately if you do that really well, you as pet healthcare, tailored wellness click-and-collect options for the parks’ can grow your business and drive a lot plans, telehealth and even Wisdom restaurants, as key ways that the of value.” Panel D2C dog DNA tests, the company collects information about company offers a comprehensive pet consumers’ in-park behavior. care experience.

He reflected, “What I saw happening “I think what we’re doing across the there was really interesting because board there is really delivering some all of the data they’re able to collect, unique experiences,” said Thomstatter, they’re able to then understand trends “…and then, you know, we’re digitizing of what people are buying, and I’m the way you interact with those brands sure they’re able to then predict what as we move forward.” ultimately those consumers are going to be purchasing when they come in the park additional times.” WHAT’S NEXT IN PAYMENTS: CONNECTED

MASTERCARD SAYS TRUST PLUS TECH WILL POWER THE CONNECTED ECONOMY

sually when people say And in the face of an environment something “isn’t what it remaking itself, Mastercard has had used to be,” it’s not meant to recreate itself as well, Mastercard’s as a compliment — the Executive Vice President of New Uimplication is that whatever it is now is Payment Flows Ron Shultz told Karen less than it was before. Webster when he sat in to talk about RON the connected economy. The firm is SHULTZ But that implication to the side, the no longer what it used to be, either, EVP of New Payment Flows world we live in as 2021 is approaching he said, and the goal is to become its halfway mark is objectively not something more. what it used to be — it is now more connected, more digitized, faster- “We’ve evolved very much from a moving and more global than it has company focused on building safe ever been. and secure credit and debit networks

and card products, to one that’s now market offering new and better digital lose) than most firms admit, and the most friction will be the winner in an a multi-rail business,” Shultz said. front doors to the various parts of the benefits of these collaborations far increasingly connected economy. “We’re focused on bringing separate connected economy, he said. outweigh the risks. It would be foolish instances all together in one suite of to slow down their pace of connecting As Shultz pointed out, consumers solutions or one application.” Comrades In Collaboration for fear of losing out. don’t really care about payment platforms; they care about paying While there are a lot of ways to pay for Mastercard does not view those “What those new entrants are doing is their bills and being able to complete things in the world we live in — cash, players as competitors or as a very interesting, and I suspect they’ll secure transactions where and when ACH, real-time payments, peer-to-peer disruption risk to its network but as continue to rely on those trusted they want. (P2P), mobile wallets — he said the comrades-in-arms building the new names and networks, especially when digital consumer is being poorly served digital ecosystem, Shultz said. In the it relates to payments and financial Merchants care about getting paid on as they try to manage multiple tasks emerging connected economy, trust is services,” he said. time and want to ensure that the data separately with different credentials tantamount yet uncommon at many that flows along with the transaction and passwords to access various FIs. It is often through partnerships with allows them to eliminate outdated mechanisms for payment. other companies that Mastercard manual processes that slow them Partnering with FinTechs gives mainline is able to improve experiences for down. The overall approach for Mastercard players like the card networks an consumers, billers, merchants and as it evolves alongside the connected opportunity to expose the market to corporations, he said. Consumers are always going to care economy is to bring all of those different and better solutions in both about trust, which means Mastercard separate mechanisms together in one consumer and business payments. “So, we’re pleased to partner with will have a big part to play in helping easily accessible application, built to them and bring our assets and to build the connected economy for work for the needs of the consumer But many have wondered if all of this capabilities to the table because that quite some time, he said. as well as the business payment collaboration creates a risk to those just enriches the overall experience or ecosystem. The idea is to bring all of mainstream players offering a direct environment in payments.” “One thing is for sure: One size doesn’t these options together under a single connection to their large customer fit all, especially with the consumer,” trusted banner so that users don’t bases, and that they might use those Teamwork Approach Shultz said. “So, they’ll make payments have to go to multiple places to make connections to essentially make them and conduct commerce in lots of all the transactions happen. obsolete. Winning isn’t always about different ways for many years to come. competition, he said, and it’s becoming And we’ll partner with all the relevant That work will certainly be While Shultz conceded that disruption clear that the collaborative path that players and deliver on that need a collaborative effort, involving and disintermediation are always a delivers the best service to consumers because there’s still a need for trust the innovative financial institutions risk, real consumer trust is much or businesses and alleviates the and security. And the expectation will (FIs) and FinTechs flooding into the harder to build (and much easier to always be there.”

BANKS AS THE TRUSTED ‘GLUE’

ig Tech and FinTech As the connected economy takes firms are busy creating shape, banking, payments, commerce their own connected and merchant ecosystems are ecosystems while striking all striving toward linking up, Bup relationships with banks, making communicating with one another traditional financial services firms part through digital channels. And there’s DOUG of the system, too. Google stands as a a common point of contact: the BROWN prime example, with Google Pay and customer. SVP and GM, Google Plex. And in other parts of the financial services landscape, FinTechs Digital Banking are trying to enable banks to become, well, more like FinTechs.

WHAT’S NEXT IN PAYMENTS: Putting The Customer At The Breaking Down Silos Retailers and banks have not exactly been digital-first verticals – they’ve Center As Brown noted, value is unlocked relied on physical branches and CONNECTED In an interview with Karen when silos are broken down, and brick-and-mortar establishments Webster, Doug Brown, president the consumer is at the center of – but the great shift wrought by the of NCR Digital Banking, said that for it all. He said banks have a unique pandemic has forced them to increase banks and merchants, focusing on advantage in accelerating the evolution their reliance on digital channels to that commonality can turbocharge the of connected commerce systems engage with their end customers. omnichannel commerce experience, because they “oversee” consumer cementing individuals’ loyalty to relationships within all parts of that “What we’re seeing now, more than merchants and financial institutions ecosystem. ever, is that digital-first need not (FIs) in one seamless flow of data and mean ‘digital-only,’” said Brown. “It’s a interactions – from browsing the aisle “If you ask who has the best position digitization of the whole experience, (virtual and otherwise) to making the overall, I would vote for the banks wherever it happens. We’ve seen payment. and credit unions – because they it in retail, and most recently with are the stewards and trusted sources restaurants, with order online, pick Data, of course, underpins it all, but of data and information on the up at the curb. We’re seeing banks getting it right – really crafting the consumer,” said Brown. embracing that model, too,” with ecosystem itself – depends on far contactless interactions at the ATM, for more than the technical underpinnings With a wealth of data on hand example. of ensuring that information flows about how individuals pay, and how between parties. There’s any amount they want to pay, the traditional FIs Along the way, said Brown, all of competition to get that data serve as a fount of insight for retailers. stakeholders – especially banks and captured and flowing, and to gain But up until recently, sharing that data retailers – are grappling with the customers’ attention and share of has been a challenge. challenges of cybersecurity, data wallet. protection and even getting more fully online in a streamlined manner.

Partnerships can help enable and There are different modes of Looking Ahead expand that digital presence. Brown incentives, Brown noted. There’s the A few years from now, Brown said, we pointed to NCR’s acquisition earlier classic rewards model, which can may be talking about neural banking this year of Terafina, which, billed lure consumers with discounts, but – but along the way, he predicts as a digital-first banking platform, the digital age can enable a “blended that we’ll see a rapid acceleration helps with account opening and experience” that benefits everyone of demand for digital journeys onboarding across digital, branch and – the timely payment helps the from consumers, faster technology call center channels. merchant, the reward is savored by enablement (particularly with Cloud the consumer, and the bank gets the API) and the connection of ecosystems Beyond The Tech benefit of increased transactions. that not all that long ago did not seem But bringing together those far-flung possible. parts of the ecosystem, said Brown, “This is where the power can be unleashed when brought together involves far more than just getting “The world is wide open,” he said more deliberately between banks new technology into place. As new of the joint and mutually beneficial and retailers,” he explained. “You get models evolve, another hallmark of relationships between banks and credit for being a great, loyal customer, the connected economy has been, retailers. “And as we look at the and the service handling aspect is and will be, collaboration. horizon, it’s going to get pretty improved.” interesting.” Connections across payments, commerce and banking, he said, Collaboration has an inherent hinges on cooperation and shared advantage in making sure that firms’ incentives between banks, retailers efforts are not duplicative, and that the and their customers, in a coordinated consumer feels comfortable that their model that taps the value and unique data is secure and their time spent delivery conduit of each of those on an app – or omnichannel retail entities. experience – is both valued and economized. WHAT’S NEXT IN PAYMENTS: CONNECTED

DATA COMES UP SHORT IN KEEPING FRAUDSTERS AWAY FROM THE CONNECTED ECONOMY

s eCommerce has For the enterprise, though, the digital- exploded, payments have first economy has increased become more than just the number of card-not-present transactions, and more transactions. That development has Athan just the last point of interaction presented a challenge in ensuring that between merchants and consumers. good customers and transactions are JACK Payments have emerged as a force getting through and that conversion ALTON multiplier to drive new businesses and rates are as high as they can be, while CEO to help firms monetize data, as new the bad actors are being turned away. commerce ecosystems are constantly being forged and expanded.

WHAT’S NEXT IN PAYMENTS: That challenge is important to the As retailers are taking consumers yes to our high-risk customers … it continued development of the digital- into new adjacencies and finding really comes down to tapping into a first economy, and was a key topic in a opportunities to engage with them in new source of data,” said Alton. CONNECTED conversation between Karen Webster new contexts, said Alton: “Everybody’s and Neuro-ID CEO Jack Alton for looking for new sources to try to Against that backdrop, AI- PYMNTS’ Connected Economy series. replicate these human interactions and machine learning (ML)-driven From Alton’s perspective, actively that we used to have” in brick-and- models need the taps and swipes to monitoring and analyzing digital habits mortar settings. detect the behavioral interactions that – via taps, types and swipes – can consumers have with brands every help secure connected ecosystems Replicating those interactions depends day. These interactions can tell the and help merchants fine-tune their on one thing: data. Simply put, third- brand something new every day — offers and products in real time. party providers or credit bureaus whether the consumer is enjoying the At a high level, the role of data and look at historical data and then try experience, are frustrated or might be artificial intelligence (AI) in making to predict the future. The process trying to mask their identities. those ecosystems smart, safe and determines whether customers are monetized can be viewed through the low-risk or high-risk — or whether Drilling down into those interactions, prism of a single question: How are we they are who they say they are. In an said Alton, firms can see where doing so far? in-store setting, verbal and visual cues consumers are abandoning the would help retailers make decisions engagement, at the point of Alton sees a need for improvement. about risk in the literal blink of an eye, onboarding or beyond, before As he told Webster, firms that have enabling them to forge relationships committing to transact with that migrated a large percentage of their with their customers on a daily and enterprise. It may be one document businesses online have had to keep long-term basis. that needs to be uploaded, or a step- their “fraud guards” up. As payments up during the login that proves to be have moved up and to the right — “And when you talk about the ‘secret one step too far for the consumer. exponentially so — there have been sauce’ to get us back to that point, to plenty of opportunities to improve the where these collisions [failed sales That type of analysis takes the friction consumer experience and root out conversions] aren’t occurring, where away from fraud prevention teams, fraud more effectively than what has we’re not saying no to our good said Alton, so they can systematically been done to date. customers and inadvertently saying go about reducing friction for their

genuine customers. They can also an in-person intervention, said Alton. Neuro-ID also offers its clients a route the appropriate level of friction He gave an example where a Neuro- Friction Index Dashboard that can help for customers who may not be ID customer, an online lender, was them gauge the seamlessness of their interacting with their data competently asking a consumer what their annual customer journeys and smooth out (and thus throwing up red flags to income was — but the borrower was any rough spots, Alton noted. the companies). Beyond merely asking the lender to look at their hourly battling fraud, said Alton, there exists income. “We have customers that are the opportunity to “nudge” the would- leveraging the technologies that have be customer toward completing their “There was a lot of hesitation, there experienced a doubling conversion online journey and improving a firm’s was a lot of pausing,” he said of that of points in their customer journey drop-off rate. online interaction. “There was a lot that used to have 30 or 40 percent of manipulation of the answers, so abandonment,” he said. “You have “The challenge has been figuring out that without really understanding one chance to make a great first when to do that and who to do that the question and the context, it may impression. That’s not just in person — with,” said Alton, adding that “we have looked like fraudulent behavior. that’s true digitally, too.” have been looking at the behaviors In fact, it was just a person who was of genuine customers, finding out confused, and trying to do the math where there’s frustration, hesitation or on extrapolating their hourly wage to indecision, or where people are getting an annual income.” But adjusting for lost or confused.” such activities — and reducing the friction in that data field — means the That’s the appropriate time to nudge drop-off rate was reduced by about 40 them forward, either with a chat or percent, said Alton.

WHAT’S NEXT IN PAYMENTS: CONNECTED

‘IT’S COMING UP PAYMENTS EVERYWHERE’

or shift is never an easy thing to do. It consumers’ payments and means that all of that new potential commerce behaviors, a year opportunity for consumer businesses of hanging out at home and out there has come with a heaping Fhaving to relocate almost everything side-order of complexity and stress to online has not been an entirely bad that will need managing for a long time LIZA experience. to come. LANDSMAN General Partner On the bright side, it has created “There is so much complexity in our an opportunity for consumers to daily lives these days that I think experience different choices via that the quest for simplicity and growing digital ecosystems. But a fast ease of use is going to be with us

WHAT’S NEXT IN PAYMENTS: for a long time,” New Enterprise the experience risks falling behind the risk of failing from not understanding Associates (NEA) General Partner Liza curve by ignoring them. them is far from hypothetical. Landsman told Karen Webster. CONNECTED At this point, she said, “it’s coming “Never underestimate when you are NEA is a venture capital fund that up payments everywhere.” And the entity handling payment flow the focuses on technology and healthcare. where payments go, firms are seeing potential for fraud to occur inside your The quest for simplicity in those areas more cohesive, pleasant and secure system,” Landsman said. “The level is a critical investment factor. As experiences follow. of attractiveness of your business Landsman told Webster, NEA is seeing to bad actors when you are moving the connected economy accelerate, Embedding Payments Properly money goes up exponentially. And powered by payment capability that The problem with payments isn’t that may be a risk that you had not is embedded in the background more that they don’t automatically add really thought about previously or and more commonly across verticals. tremendous value and function for not really hardened your system for In healthcare, back-office technology, the firms that add them, Landsman or thought about structurally either retail inventory management and said, as there are so many examples from a staffing or an infrastructure other areas, embedded payments where they clearly do. The challenge perspective.” capabilities are adding value and reach is understanding from the outset that for the firms that integrate them. building payments capability is harder There can also be a risk that when than flipping a switch and letting the embedding payments, firms will Embedded payments are being transactional good times roll. It is a overlook how high consumer used by many of NEA’s clients. good deal more complicated than that, expectations have become, she Think Starbucks, Landsman said, something many players don’t realize said. They’re looking for a process since the way it embeds payments until they actually find themselves in much harder than clicking a button into its mobile app is a useful way to the business of trying to manage a and a biometric fingerprint scan to visualize the concept. Every company payments flow. If payments aren’t a authenticate the transaction and keep that can incorporate payments into company’s core business, which in the it moving along smoothly. vast majority of cases they aren’t, the

The Growing Range What has become increasingly clear, Beyond finding new ways to make no matter the size of the firm or the it smoother, more secure and more Small- to medium-sized businesses vertical it is playing in these days, convenient for customers themselves, (SMBs) have historically been is that the inherent trapped value she said, there isn’t a magical single underserved by technologists and opportunity to access it creates path answer for leveraging payments because they are at base a very hard entirely different business dynamics, into an expanding role in the demographic to address given how she said. The plans for tapping into it connected economy. fragmented and resistant to change vary. that they can be, she said. But the “There’s a strong desire, whether pandemic has fundamentally changed Players seeking funding in you’re a consumer or a small business the segment which is growing — and healthcare tend to enter with more or middle market or enterprise to quickly. fully developed platforms with buy a solution instead of a tool,” comprehensive solutions sets. she said. “And I think it’s a very “We’re now at an all-time high [of SMB FinTech players tend to start with powerful trend because we see a lot formation],” Landsman said. “They’re more specific use cases with visions of great companies that have great growing at a faster rate than post the of expanding concentric circles technologies, but the correct first Great Recession. And this generation and addressing an enterprise scale question to ask is almost always going of small-business owners are much audience with the solution. to be, ‘So whose problem are you more likely to be digitally native. And solving?’” so, we’re seeing huge ecosystems or large numbers of companies pop up to serve that ecosystem.”

WHAT’S NEXT IN PAYMENTS: CONNECTED

NORTHWESTERN MUTUAL THINKS OUTSIDE THE BOX TO MEET CONSUMERS’ REAL FINANCIAL NEEDS

e all know leather book, the adviser shakes the the standard client’s hand and sends them on their financial planning way, with a plan to “see where you tableau: The smart are” in a year or so. They might check Woffice containing the eminent adviser, in occasionally, but interactions with a holding the leather-bound folio of financial planner are generally few and SOUHEIL the future containing “The Plan.” The far between. BADRAN lifetime plan for financial wellness EVP and COO — home to the 401K, investments, It is traditionally a fairly hands-off etc. that will make sure the client is world, Northwestern Mutual Executive adequately funded over the course of Vice President and Chief Operating their life. After a quick run through the Officer Souheil Badran told

Karen Webster in one of PYMNTS’ At base, Northwestern Mutual’s that financial advisers working in to really serve a client’s financial ConnectedEconomy™ conversations advisers, in combination with their tandem with that tech is the best needs. The question in the connected — and the best-laid, leatherbound advanced digital experience, aim to way to actually help consumers. The era, said Badran, is how to make it as plans often wander off the prescribed help clients achieve the best possible combination of insurance and simple as possible. The competition is path. financial security outcomes by investment is ideal, said Badran — to build the easiest experience across leveraging the tools of both investment because managing risk should be part the board, whether the customer “You may have had a life event and and insurance. Badran noted that the of any long-term financial plan, and is collecting a refund or insuring a changed your direct deposit. A child firm’s financial advisers are trained to unknown factors can easily set a plan business — and to find the right set may have been born. One of your kids work with their clients to cut through off course. of partners to make one’s offering has left the home and now you’re the clutter and and ecosystem more useful to the an empty-nester, or somebody is In fact, he pointed out, we all got a consumer. getting married, et cetera,” Badran build financial plans that uniquely very real-time lesson in 2020 with explained. “Those are signals that it meet their needs for today and the onset of COVID-19, and spent the In the connected economy, Badran might be time for a client to revisit tomorrow. majority of the year reacting to well- noted, what it means to help a their financial plan, but without having laid plans being utterly decimated. customer manage their financial access data, those changes wouldn’t “Our clients come first, and we’re here Every aspect of our daily lives changed lives is changing and expanding be known until the next scheduled to help them achieve a lifetime of overnight — and consumer demand — and improving. Because with call. So, we’re trying to be more financial security,” he said. “So when rewrote itself. The embrace of things connectedness, clients are increasingly proactive.” we think about client experience, like instant payments, mobile wallets able to drive their own financial destiny it’s focused on bringing that and food delivery platforms weren’t and Northwestern Mutual is about as far comprehensive planning to life in daily invented by the pandemic — they from a startup as one could get — decisions to meet lifetime goals, and were already on the rise before then. better manage their money. founded 164 years ago, the firm has on delivering better outcomes and But COVID-19 radically accelerated its DNA in the insurance industry. deepening that loyalty.” digitization, transforming it from “Ultimately, our aim is to create a But it’s long since expanded into the a nice-to-have to a need-to-have different experience for insurance and world of investments and is now The focus for Northwestern Mutual virtually overnight. investments,” Badran concluded. the fifth-largest broker-dealer in the is to find a better way to leverage its industry. When asked if it sees itself advisers and its digital technology And with that overnight change, as an insurance firm or an investment to create a better, more curated Northwestern Mutual has seen the house, Badran had an interesting customer experience. For all the power entire market start to think more response: It’s both. technology has, the firm believes comprehensively about what it means

B2B FASHION MARKETPLACE ADDS PAYMENTS TO MEET INDUSTRY CHANGES

ack before the digital- The concept of visual merchandising first economy became a literally made iconic department primary force, brick-and- stores like Macy’s, Lord & Taylor and mortar retailers staked Saks Fifth Avenue. But it arguably has Btheir claim to the curious customer on been lessened by eCommerce with their windows. In fact, as global retail its design demands on cramming HEATH consultant Debra Templar famously as much product onto the home WELLS told her clients: “The first impression a page as possible. But no matter who Co-founder and Co-CEO person is going to get of your shop is one is selling to, Heath Wells, Co- from its windows, the front door and founder and Co-CEO at NuOrder told the outdoor signage. Many a decision Karen Webster in a chat for PYMNTS on whether or not to enter is going to Connected Economy Series, the basic be based on this first impression.” rules of retail still apply. An offering

WHAT’S NEXT IN PAYMENTS: has to be visually appealing. And yet brands to half a million retailers “We’re really replacing while that kind of thinking is readily doing roughly $1.3-$1.5 billion in B2B spreadsheets, that’s the thing no apparent in the B2C world, in the B2B transactions a month in transactions one believes,” he said. “The majority CONNECTED space where NuOrder operates? Not between parties. of retailers we talk to, $10 billion a so much. year retailers and they are managing The goal, Wells said, as the firm everything with Excel. It’s hard to “I think the unique thing about us continues evolving alongside the retail believe that’s how they do their is we’ve really taken the concept of marketplace, is to build out a two- buying.” eCommerce and applied it to the B2B sided network designed not only to side,” Wells said. “And if you see our provide the next revolution in retail What NuOrder has built is a full virtual platform, and go to our website, you procurement but to power the great showroom supported by a complex see it looks beautiful. I don’t see that sea change that is coming to the suite of ordering and, more recently, kind of same thinking in a lot of other ecosystem as a whole. merchandising tools they can offer B2B marketplaces. It’s either straight to retailers. The goal, he noted is lines of code or, images are all hidden Replacing The Excel to keep on delving deeper into the under multiple clicks.” Spreadsheet supply chain and unearthing and NuOrder didn’t start out as a solving problems as they go. The And while this observation can seem marketplace. It first existed more as NuOrder network is fully integrated basic, it has proven to be easy to miss. a digital catalog for retailers to search and connected such that that any To shockingly easy to miss. To build a through, but added payments services solution is designed to function with connected B2B commerce experience, in the back half of last year as it all of the other pieces of the platform, just as it in the world of B2C, became increasingly apparent that this no additional integrations or product companies need to make the online was in fact a desperate need across purchase necessary. buying experience a smooth, seamless the segment. He said his competition and easily navigable for retailer buyers became the Excel spreadsheets that Perhaps just as critical, he said, as shopping for inventory. And NuOrder massive enterprise scale retailers were offering the digital space to make it all has taken the design concept into using to manage their purchasing on happen, NuOrder is equally committed action. It connects roughly 3,000 the backend. to creating something of a digital

Rosetta stone so a host of brands The Coming Reshaping the time to be on a shopping tour for and retailers with their own esoteric 120 days a year. Connectedness, he In a pre-pandemic world, Wells told descriptions sets can communicate said, is changing the retail economy Webster, the average retail buyer spent via a lingua franca that connects them on both the front and back-end, about 120 days on the road looking all. he noted. The digital commerce for product and making their decision opportunity NuOrder presents is what on fashion collections months and “To really unlock a lot of the AI and merchants are going to need to keep months ahead. The pandemic largely the data science the first step is how up with the new pace of retail. shut that down, he said, and gave do we get everyone talking the same virtual commerce hubs like NuOrder a language,” Wells said. “We think the “It really will become a business in great push, he said, but buyers, he brand should still be able to use which there’ll be new drops every said, are going to get back out there their language. But then what should month or every few weeks,” he said. again. happen is we should all agree on a “And I think the customer is going to common language and a common enjoy that. And at the end of the day, But, he said, it won’t be the same. It nomenclature. That is our second we don’t want to be buying down won’t be the same weeks and weeks language - the same for every retailer jackets when it’s hot outside . We spent on the road sketching out and brand on the platform so we can really need to get back to, you’re purchases for collections shopped all map into this common language.” walking, you’re enjoying your Saturday half a year in advance. Because the afternoon, you walk into the store, apparel industry, is evolving beyond NuOrder, he said, isn’t the inventor there’s a nice shirt. You want to buy it seasonality. Consumers aren’t of this concept - but he said it so you can want to wear it tomorrow. interested in that long cycle, he noted, is positioned with thousands of It has to be like that.” and that means buyers don’t have brands and hundreds of thousands of retailers to motivate the creation and adherence to that common core commerce language, as those brands want access to all those potential WHAT’S NEXT retailer buyers. IN PAYMENTS: CONNECTED

TECHNOLOGY HELPS LOCKED-OUT CONSUMERS ACCESS LENDING

he problem of unbanked credit underwriting — because they consumers — those don’t qualify. They either don’t have without access to a enough credit history, or their credit checking or savings history makes them look like a bad Taccount — has remarkably improved, risk by traditional metrics. with over 95 percent of American JARED households reporting access to basic “Looking at the macroeconomic data, KAPLAN banking services, according to FDIC there’s a huge swath of the population CEO data. But the same data indicates that feel they’ve been abandoned, and that a little under 20 percent of the that doesn’t make any sense. The state population is underbanked and can’t of technology is too good to let this gain access to the full suite of banking go on,” OppFi CEO Jared Kaplan told services — particularly lending and PYMNTS in a recent conversation.

Those roughly 60 million people leveraging the power of AI-based and The Inciting Event their finances. That education content who lack access to systems need fully automated tools for consumer must be connected to its bank While there is sometimes a tendency new digital front doors, he said, acquisition and onboarding. In turn, products, Kaplan explained, because to believe that the underbanked are because the traditional credit scoring it can open up the competitive the goal isn’t just to help consumers credit-averse, Kaplan said that mechanisms used by banks simply landscape when it comes to serving access financial services one time, obscures the issue in some ways. don’t see them clearly enough to a class of consumers who have gone but over the course of their lifetimes. The event that pushed him into the approve loans or extend credit cards. underserved. And while there has That’s why the company is expanding firm in its early days, he said, was a been a push to move these services its tools for consumers with the OppFi call from a customer who was able But the problem doesn’t lie with the away from the banks that have been credit card, which is planned for the to arrange a loan via OppFi’s services potential borrowers so much as with historically uninterested in providing second half of this year. that allowed her to keep her daughter the traditional FICO scoring that is them, said Kaplan, banks do regulatory in school after a tuition hike. These are used to evaluate them. In Kaplan’s compliance and oversight better than “It starts with access, but there is life-changing events for consumers, mind, it simply doesn’t capture a any other player in the game — they still a whole lot more to do,” said he said, and ones that leave them complete picture of the consumers, just need an incentive to enter the Kaplan. “[We are looking to] build out grateful, loyal and more fully disposed their spending, their saving and the space. the more connected ecosystem and to building a long relationship. entirety of their financial lives. OppFi, demonstrate our ability to graduate he noted, offers banks an alternative And he believes OppFi can create one. customers from a more esoteric The underbanked are often regarded in credit risk evaluation that allows product to something that is more as an unprofitable sector, noted them to extend their services to more “Thus far, we haven’t seen much mainstream over time, by cross-selling Kaplan, but when tapping their customers. Their technology product from the traditional banks, and some traditional mobile banking potential over a lifecycle of leveraging is first centered on credit decisioning that’s where we come in. Now we services and other products that the financial services and tools, that that leverages artificial intelligence (AI) can power banks,” Kaplan said. “The customer deserves and needs.” equation looks a lot different. OppFi’s coupled with alternative data streams community banks and regional banks mission is bigger than just helping to “see through what we don›t think is are looking for ways to compete Because with tens of millions of consumers access personal loans — a very predictive metric to determine with the much larger banks. This is a underserved customers, there is an the firm helps them build the kind of someone›s creditworthiness,” said massively underserved market, and opportunity to do the right thing in credit history they need to fully take Kaplan. by getting into it, they can gain some financial services, Kaplan noted — in a part in the “financial mainstream.” market share, because they are the way that also happens to be the smart With that clearer picture in mind, he best-positioned to offer this product strategy for banks looking to build out Part of OppFi’s offering is educational noted, OppFi can empower banks with the best structure and the best a more competitive future. modules designed to teach people to extend credit to consumers who pricing.” how to budget and take better care of have lacked access in the past,

TRUST IS THE KEY TO ADVANCING JAPAN’S CONNECTED ECONOMY

here is a tendency And while that pattern may hold to associate cash- true in much of the world, it doesn’t based consumers with work all that well in describing Japan, developing economies and where the vast majority of consumers Tthe world’s unbanked population. have bank accounts in one of the world’s more developed and regulated RUSSELL The cash-based customer, banking systems and still show an CUMMER conventional wisdom goes, isn’t using overwhelming cultural preference for Founder and Executive Chairman cash from desire but from necessity, using cash to pay. and offered something better by the transformative power of technology to That preference, Paidy Founder digitize their funds, they will willingly and CEO Russell Cummer said in a jump at it. conversation with Karen Webster, has

WHAT’S NEXT IN PAYMENTS: meant eCommerce has developed “We just see all of these other things want a traditional credit product; they comparably slowly in Japan compared that are super mendokusai, and we want an easier way to shop online to the rest of the world because see an opportunity to either build without having to use one. CONNECTED there is so much friction, or what the something new to address it, or make Japanese call mendokusai, associated an adaptation to our existing product Moreover, Cummer said, as Paidy has with eCommerce transactions. that solves it,” he said. grown to 5 million regular active users, Consumers are either stuck waiting its ambitions have expanded in terms at home for a few hours so they can A Bridge Into Digital That Isn’t of what it’s bringing to its customer pay the delivery guy for their purchase, A Bridge Too Far base. or they have to run out to a physical Broken down most simply, Paidy store to supply the cash and pay such provides an easily accessible digital “We see that there’s a role for us to that they can log back in, prove it, and payment method for Japanese play, which is making people more actually finish their online transactions. customers that allows them to make and more comfortable with digital a payment in one click via Paidy — and commerce activity by bringing things Either way, Cummer said, it’s a lot of then travel to a convenience store or like subscriptions for digital goods unnecessary friction and harder than other physical location, present a QR and instant purchasing in terms of it has to be, and something Paidy is code for quick scan and hand over the eCommerce and mobile commerce premised on fixing in the Japanese cash for that payment. They can pay it without having to jump into using market. And not by asking consumers all in one lump sum or over the course a payment method that is kind of to do anything differently, he said, but of a few preset installments. a bridge too far for some people,” by meeting them where they are with Cummer said. “Because we’re letting their cash payment preferences and Paidy isn’t trying to hand Japanese consumers do exactly what they want.” providing a trusted path to making customers a product that looks like cash compatible with paying instantly a traditional credit product, he said, Consumers are managing their online. because what its customer base has budgets and paying in cash the way made quite clear is that they don’t they have strongly demonstrated

they prefer, while Paidy facilitates a of an attitude that trust can only be An Enhancement, Not A consolidation ladder that allows them extended to those who have proved Disruption to transact digitally and instantly in themselves worthy of it. Extensively. The goal for Paidy isn’t to disrupt over half a million digital destinations. traditional finance in Japan — a fact Paidy, he said, asks only for a Japanese that the number of banks on its board Trusting Is The Secret To phone number from consumers, and of investors gives line to. Paidy is Developing Trust then they are off and running, ready to grateful for the banks, the services and make a purchase from the word go, Paidy aims to offer a different, and stability they provide and the financial more or less. Obviously, as a payment radically upgraded, commerce services ecosystem they allow Paidy to firm security is priority one, and all that experience for its customers, but the exist in. He said the goal isn’t to disrupt ease of use on the front end requires a firm was still something new when it the banks, but to augment what they lot of smart security on the back end first entered the market 12 years ago can offer for consumers looking for a to keep fraudsters from attempting to in a conservative commerce culture better, easier way to transact digitally. known for being hesitant about take advantage of their trusting nature. adopting new payment ideas. Webster “I don’t think we’re a disruptor,” “For us, you don’t do anything,” he said. wondered how Paidy won the trust of Cummer said. “I think we’re a facilitator “We trust you. We do all of the hard Japanese consumers. certainly for merchant partners, work. We want to trust you, so we do. certainly for consumers. And if And then you start that relationship Cummer said the answer is simple there’s a role that we can play in the from trust, and people are delighted. if a bit surprising. Paidy built trust by ecosystem to take things forward Starting from trusting has been a offering it to consumers. Getting a card and then inspire others to also make huge differentiator, not only in terms account in Japan can be incredibly their consumer experiences better, I of the consumer experience, but that difficult, he noted, partially because of think that’s great. I would be extremely relationship with the consumer and very strict know your customer (KYC) satisfied as a founder, if that was part how it then goes over time.” regulations under which Japanese of what we were doing.” banks operate, partially growing out

WHAT’S NEXT IN PAYMENTS: CONNECTED

PAYPAL’S DAN SCHULMAN SETTLES INTO HIS ROLE AS CATALYST

t this point in the But there is still one company that connected economy’s defies category and doesn’t fit into lifespan, there are some a neat vocabulary. That company — new but still developing arguably the most dynamic creative Adefinitions. “Neobank” comes to mind force in the connected economy — as an online-only financial institution is PayPal. DAN (FI). “FinTech,” of course, is another SCHULMAN one. It is defined as a company that There are some words and phrases President and CEO brings financial services to consumers that do fit PayPal. It was a disruptive with a better and more innovative user force in the payments category when experience, but the term has lost its it launched its peer-to-peer (P2P) clarity due to overuse during the last payments technology in December year. Every company is, or wants to be, 1998. As corporate legend has it, a FinTech. when PayPal started to gain traction in

WHAT’S NEXT IN PAYMENTS: 1999 and 2000, credit card networks Since that time, PayPal has built a continue to be that force: its core were so unsettled that head hunters company that now has 377 million payment offerings, inclusive access and recruiters couldn’t keep up with active accounts, with 16 million of to the future of commerce and the CONNECTED the number of emails from legacy them added in Q4 2020 alone. And as development of a super app. company executives. “Payments evidence that it has transcended its network” also fits, as PayPal is still P2P roots, 10 million customers used Expanding The Core based on money movement. But PayPal in-store during Q4 2020, with At its center, PayPal — which has nothing fully captures PayPal’s spirit, $20 billion of total payments volume over 29 million merchant accounts — intent and business model in the coming from in-store transactions connects merchants to consumers current lexicon of the digital-first across QR, tap-and-pay and cards. and merchants to payments. As economy. In fact, the closest term Schulman pointed out, it has come a requires going beyond financial “The future?” Schulman asked long way from the online “buy” button, phrases – because in the connected when speaking with PYMNTS and has focused some of its late 2020 economy, PayPal is a “catalyst.” CEO Karen Webster for the and early 2021 efforts on expanding ConnectedEconomyTM series. “I think those core payments services, helping By the book, a catalyst is “an agent we’ve [obviously] come a long way merchants connect to technology that provokes or speeds significant from the button. We have a whole and the consumers who use it. For change or action.” And the term suite of services now that enable both example, PayPal expanded its global just might fit PayPal President and consumers and merchants to … move Pay Later solutions when it launched CEO Dan Schulman perfectly. From into the digital era and thrive.” its buy now, pay later (BNPL) service its start in 1998 to its sale to eBay in 2020, called Pay in 4 (Pay in 3 in in October 2002, the firm literally In his interview with Webster, the U.K.). PayPal was also one of the created the concept and execution Schulman made it clear that first non-bank institutions approved to of P2P payments outside of the regardless of what his company is accept applications for small business traditional payments networks. By called, PayPal has a very clear plan loans through the Paycheck Protection 2008, it had 150 million end-user to continue its role as a catalyst Program (PPP) in April 2020. Over the accounts. In September 2013, it bought for payments — but also as a force course of the year, PayPal facilitated Braintree and its then-developing that connects disparate elements PPP loans to more than 75,000 P2P platform, Venmo. In July 2015, it in the digital-first economy. During businesses. separated from eBay and became an the conversation, he focused on independent, publicly traded company. three areas where the company will

PayPal has also expanded its me?” he asked. “I think we’re seeing consumers access to the future of commerce platform for merchants. that in some of the close, but not payments comes in. With a digital Its standard online product, PayPal consummated, acquisitions that retail experience, said Schulman, a Checkout, has been expanded to people are contemplating. Look merchant can control coupons, loyalty include BNPL, Venmo and PayPal at Walmart teaming up with TikTok. points, type of currency and type of Credit. It has also been at the This is really about connected payment, including BNPL. It’s not the forefront of using its digital wallet for commerce, where consumers and form factor change that’s important, contactless payments, expanding its merchants are having to reach out he explained — it’s the change in the usage into mobile payment systems to each other. Because I don’t think value proposition that the form factor that can work in-store. PayPal Here we’re going to see people going to provides. enables merchants to turn a mobile 20 or 30 different retailers to get all phone or tablet into a portable these different things. I think retailers Those form factor changes have payment center accepting contactless need to come to them. They need provided some of the biggest payments that will include Apple Pay, to address their individual demand headlines for PayPal, and have given and will also accommodate more curve, and their need for customized, merchants and consumers access to traditional methods, like mag stripe. personalized offers.” two of the most potentially disruptive payment methods: QR codes and The way Schulman sees it, the trend Catalyst For The Digital crypto. QR codes, which PayPal rolled toward contactless payments and Economy out in May 2020, are currently being other touchless tactics, like curbside Schulman noted that within PayPal, integrated into Venmo. On March pickup, will continue beyond the discussions about merchants, 30, PayPal introduced Checkout pandemic. He maintains that digital especially in-store, center around tying with Crypto, which will allow PayPal channels need to be optimized in loyalty and data to the payment customers with cryptocurrency from end to end. And he agreed experience. In the past, merchants holdings in the U.S. to check out with with Webster that the next step for didn’t know much more than the crypto. merchants may not be the digital-first transaction amount and the type economy so much as the “bring it to of payment used. Deploying mobile At the time of its announcement, WHAT’S NEXT me” economy — but it might not be Schulman didn’t parrot the standard IN PAYMENTS: solutions provides more data and found in the usual delivery spaces. opens up new options for payments. lines about the potential of crypto as an investment, or about using CONNECTED “How do I go to where they are as That’s where PayPal’s connected crypto as a payment method for the opposed to having them come to strategy of giving merchants and chosen few. He foresees it as being

WHAT’S NEXT IN PAYMENTS: an inclusive, ubiquitous, everyday Catalyst For The Future In other words, PayPal’s role as a payment method. It’s part of his catalyst will meet at the super app. Especially since the belief that PayPal has been a catalyst The company’s future trajectory is CONNECTED company’s Investor Day, Schulman for change in the way that financial pointing that way, and it is in sync with has become something of an inclusion is taken from concept to Schulman’s sense of the ultimate role evangelist for what could be the action in the connected economy. of the connected economy. ultimate connected economy tool: the super app. Schulman, among other “This is something that can’t be “On the consumer side, we’re a tech executives, believes there are too overstated in terms of its importance consumer platform, and that has many financial apps and too much moving into this digital era,” Schulman tremendous scale — we can add friction for consumers forced to toggle said. “It can be a very exciting era. more and more services where between them. The super app, which It can be something that enables people can live a lot of their digital PayPal is in the progress of building, small businesses to not just survive lives on this app,” he noted. “And would manage payments, shopping, but thrive. But there’s the need for for merchants who clearly want to savings, investing, budgeting, crypto broadband everywhere, so people be in the digital-first economy, this and identity — all in one place. have that connectivity even in can be the operating system that rural areas and smaller towns. We enables them to move into a full, true, “No consumer is going to have 40 need to do training because most digital omnichannel experience. I want or 50 apps on their phone,” he told small businesses are used to only someone to ask us how to move into Webster. “We don’t want to use the serving their local community. When the digital world. Ask us how to sell same password for every single one of somebody puts PayPal into a small in multiple marketplaces. All of that them, even though we do. That’s why a business, 75 percent of their PayPal needs to be part of the products and consumer’s information is stolen every sales come from out of state. You can services that we extend to merchants two seconds, and that’s a disaster. still serve your local community, but on one side and consumers on And so there must be super apps now you can serve a much broader another.” that come together to consolidate all community and thrive as a result of of your financial instruments. And by that.” the way, those financial instruments include rewards points, and the ability to choose buy now, pay later, or even use QR codes.”

BRINGING MAKEUP INTO THE CONNECTED ECONOMY

uying makeup is a But that problem has been around challenging experience at longer than the pandemic, Perfect times. Corp. CEO Alice Chang told PYMNTS, as anyone who has ever tried to buy B There is no shortage makeup online or in a store knows. of options: lots of colors, lots of Samples aren’t always available, which ALICE presentations, lots of looks. And means consumers base their choices CHANG knowing what it will look like on a on promotional pictures in displays, CEO person isn’t easy, particularly in the which often show the products on era of COVID-19, when going into a a chosen model or celebrity. It’s not store and trying on a free sample is too helpful for the customer who is unfeasible and largely undesirable. trying to figure out what a product will Who wants to use public makeup look on their own face, Chang noted. during a pandemic? It’s a challenge that seemed like the

perfect use case for augmented reality In addition, Chang said the digital try- A Better Customer Portrait She said she believes that capability (AR) technology. on feature also enables the customer will continue to develop and deepen, When used in combination, AR and AI to have that same experience whether even as the pandemic passes into tech can begin to “know” customers “AR is not a new technology — it has they’re online, on an app or in a store. the footnotes of history, if only for the and see them better than they been in the market for over 20 years They can try on as many products as fact that more people will go back might see themselves, Chang said. — but the essential or must-have they want until they find the ones that to wearing full-face makeup again, For example, the technology can application hadn’t yet emerged,” Chang work best for them. while likely still remaining hesitant to simultaneously process skin shade, said. “And so, we started with makeup use public makeup samples or have skin color, eye color, hair color, facial and found that it’s the perfect scenario Moreover, the embrace of digital strangers at a store counter touching attributes, face shape and eye shape for AR technology. I believe beauty and AI means the merchants and their faces, especially when there is a to better recommend what kind of and wellness are the fundamental brands bringing cosmetic products better, safer, proven way to do it with product a customer might want or demands of every human being. And I to the consumer now have a better, much lower contact. need. think AR and [artificial intelligence (AI)] richer way to connect directly to is the game-changer.” those consumers and make product AR, for the brands that have rolled “Everybody has different skin recommendations to them. it out, is that better, safer option conditions, and the breadth of their The Touch-Free Future because, as Chang said, buying knowledge is usually limited to a “We need to connect the beauty makeup shouldn’t have to be an act of Fundamentally, AR allows consumers product or two,” Chang said. “With lovers and the beauty buyers with the faith. a completely touch-free way to try on data, brands can recommend the best brands. Previously, that was always makeup and get a realistic idea of how skincare routine and product lineup for done through the store. Now it is a particular color or product will look their users. I think this is a win-win for digital, and we can give the users more on them, she said. That ability to buy the brand and for the customers.” with confidence makes the makeup power to try before they buy, give shopping experience inherently more feedback and interact directly with the pleasant for the consumer, which brand on the products,” said Chang. often gives customers the comfort and confidence they need to buy more.

PHONEPE ADDRESSES MASSIVE SCALE OF INDIA’S DIGITIZATION

here’s nothing like a But for Indian consumers, the great shock to the system to shock that forced the digital shift break through inertia didn’t happen in 2020 but in 2016 and motivate necessary when in November, demonetization Tchange. The rise of the digital-first was announced to a population of economy during the past year is a 1.3 billion people who largely weren’t SAMEER testament to that as new financial ready for it. NIGAM business models and payment Founder and CEO methods gained traction at a scale By way of background, demonetization and speed that could only be imagined was the result of a new financial years before. policy Prime Minister Narendra Modi launched in November 2016 when he announced on live television that all

WHAT’S NEXT IN PAYMENTS: 500 and 1,000-rupee notes, roughly “So suddenly everyone had to transfer Digitization Replaces equivalent to about $10 or $20 would money, and we were basically the only Monetization be banned in four hours’ time. show in town,” PhonePe CEO Sameer CONNECTED But the opportunity beyond the Nigam told Karen Webster. infrastructure — the services and At the time, Modi’s move was meant offering that can be built over and on to do two things: wipe out the “home Within three months, PhonePe had top of it — lies in the true potential cash” savings the country’s citizens 10 million installs, he said. Within of digitization. For PhonePe it is about were stashing to avoid taxes, and bring four, it merged into India’s primary opening up access to other financial an economy that was 90 percent cash eCommerce platform, Flipkart, and services like insurance or mutual into the digital world. It caught the as of today, it has just shy of 300 funds or giving their customers access country completely unaware, and lines million active users. At a time when to a single point where they can shop, to withdraw other denominations of the Indian economy was desperate buy food and purchase traveling cash stretched for blocks. to be connected to new technology, tickets all in a single, simple format. PhonePe was the connector. And now But payments platform PhonePe was that India has become considerably He said further opportunities to ready. It was at the time the only more digitized, PhonePe is still one of advance the connected economy will non-banking app to launch on the those connectors between technology, be supported by coming changes to new unified payment interface (UPI) consumers and their money. the financial sector that will make it when demonetization happened. possible for consumers to sign on with The UPI is a system that combines “We believe that payments will reach investment accounts with the click of multiple bank accounts into a single a billion people,” Nigam said. “After a button from their phones. It will also mobile app (of any participating bank) mobile data and cheap smartphones, be seen in changes to the UPI that and introduced peer-to-peer (P2P) I think we will get there. And will make it possible for merchants to payments as well as digital wallets unless everyone migrates to digital set up subscription services for their to the country. This meant there was payments, the eCommerce markets customers. suddenly a massive population of cash [in] all these other categories won’t dependent consumers who needed to even really scale up. It’s almost an The most exciting change, although send money in a market that had just infrastructure issue.” one less likely to gain a lot of attention, banned cash. is a change to the bill pay platform

that will open up direct digital India or to a migrant worker who is building apps and platforms, and the payments in 50 or 60 segments stuck during COVID is unprecedented. market is best served when they aren’t nationwide so that even a consumer Because in the formal economy, pre- trying to do each other’s jobs, but to living in a rural segment will be able digitalization, the number of physical help each other do their respective to pay for their kids’ school, buy branches that people could visit for jobs better. insurance and pay their parking tickets an insurance broker or a bank, was all from their phone, he said. an absolute limit. This is a technology There is a lot of work to do still, he meeting India’s demographic need.” said. The Indian market is becoming Consumers’ ability to transact should increasingly competitive as players not be limited to physical locations, Addressing Scale And from around the world are looking to Nigam said. But in India’s cash bound Innovation Issues stake out their territory in the massive past, they were. A cab driver who Those needs, he said, will grow global market. It’s a territory where one wanted to get a loan to purchase increasingly complex as more has no choice but to really go big or go their car couldn’t because they consumers come flooding into the home because half-measures simply were paid in cash and had no way system, many for the first time, looking aren’t compatible with the market to verify their income. Driving digital to reap the benefits of participation itself. payments forward in India isn’t about in the digital world. Building the tools convenience for consumers as it is they will need will be a team effort. It “It’s just so fiercely competitive that in so much of the developed world. will require the continued support of you have no choice but to think about It’s about building capacity to do the government and regulatory bodies, building for the masses,” Nigam said. things that large segments of the local innovative players like PhonePe and “You can’t build for the niche of 5 or 10 population have lacked access to. traditional players like India’s banks, or 15 million and hope to get [a] $100 which are a critical partner in building billion exit or IPO listing.” “These things are just so revolutionary the nation’s digitized financial future. in India,” Nigam said. “For the first But, he said, there is a lot to be learned time, people in the heartland in rural The goal isn’t to compete with them and a lot of power to be picked up India are reaping the same sort of but to find the points of collaboration when firms are forced to think big and WHAT’S NEXT technology benefits or dividends that design for the massive bottom of the IN PAYMENTS: in features like co-creating credit [have] been available to so few of us in scores for consumers. Banks are pyramid when it comes to creating the web era. That level of customized good at being bankers, brilliant at it in a digital front door big enough for CONNECTED services accessible to a farmer in fact, Nigam said. PhonePe is good at everyone to enter.

WHY THE BRING IT TO ME ECONOMY NOW INCLUDES FINANCIAL SERVICES

he typical guiding principle based, needs wet signatures and is behind banking has been time-consuming. “by the bank, for the bank” — where financial “Going to the bank feels like an Tinstitutions (Fis) have focused on onerous experience rather than an selling products rather than building enabling one,” Pollinate CEO Herman HERMAN customer experiences. Spruit told Karen Webster in SPRUIT a Connected Economy discussion. CEO It’s a model in which, over the past several centuries, consumers have In the transformation to gone to the branch on an as-needed becoming digital front doors in basis. If you need a mortgage, then you financial services — where users go to the branch, or pick up the phone log into a secure app that offers a in a clunky process that is paper- continuum of services — banks are

lagging the ride-hailing firms of the And, he added, the switching costs are else “over here,” siloed in their Pivoting world, the eCommerce giants, the high. operations. Traveling with the consumer across broad platforms that let consumers various stages of their respective access everything from delivery to Going Mobile First “But I think data is actually the new financial journeys would represent a digital payments on an as-needed, on- personalization,” he said. That’s not to say that the traditional marked strategic about-face for Fis, demand basis. Fis are not cognizant of the threats said Spruit. posed by asset-light firms, which don’t Spruit explained that data is But as Spruit said, incumbent Fis have becoming so important, a bank should have to grapple with decades’ worth He noted that banks have historically two competitive advantages when it make sure at least 15 percent to 20 of legacy systems in place. He said made money largely on the errors and comes to jousting against digital-first percent of its general management the incumbent players have done an omissions of their customers, such as and digital-only upstarts. team is “data enabled.” He pointed to admirable job of embracing “mobile- when they overdraw on their accounts the fact that data can be leveraged to first” approaches to their customer or take out loans that may not have Those advantages boil down to speed up loan processes. A mobile experiences, where the journey starts the most advantageous interest rates. trust, and the fact that, despite the with the mobile device, with the app phone can offer up an applicant’s conventional wisdom that FinTechs address and see, through social that stands as a digital “front door” to Pivoting to a proactive approach and neobanks will eat traditional Fis’ media, how friends and family might a connected series of interactions. in which the FI presents those lunches, customer relationships at offer clues to spending patterns aforementioned timely and relevant those same incumbents have proved (illuminated by account data). Then, a The pandemic has boosted adoption offers and suggestions to users for to be sticky. lending decision can be made in just a of mobile banking, which has made it their consideration, may be a bit of a few seconds. easier for banks to continue to invest sea change. Those twin pillars give banks the in data collection and advanced wherewithal to experiment with their “You can see my behavioral analytics. There’s some dry tinder Take buying a home, for example, he product and service roadmaps without preferences,” he said. “You can see underpinning it all, where the data said. The process necessitates a range the fear that folks will vote with their my priorities in my life stage and even will be the conduit toward creating of services — perhaps a remodel or feet at their earliest convenience. suggest ‘next best’ actions, whether a tailored experience for banks’ development, security, even finding they’re saving actions, whether they’re members. agents or mortgages. An ecosystem “You do trust your bank,” he told spending ones, whether they’re buying can be fashioned that takes the Webster. “It is safe because of the now, paying later ones.” Consumers haven’t given banks consumer step by step through the regulatory environment and the capital permission to use that data, he said. process, from beginning to end. that banks have.” And banks think of data as something Data creates ecosystems where boundaries are ever expanding.

WHAT’S NEXT IN PAYMENTS: Done well, the fully formed, tech- financial priorities and life stages of Of those bank-led journeys, some of enabled financial services interaction that customer. the banks doing it themselves and powered by application programming some of the FinTechs and neobanks CONNECTED interfaces (APIs) and platforms can He pointed to the Commonwealth are actually making it easier or setting take a page from Alibaba’s book, Bank of Australia (CBA), where, examples for Fis to follow, he said. where 3/10/0 means a three-minute for example, mobile apps can tell online application gives rise to a mortgage applications what a house Compliance and regulations may be one-second decision (informed by is worth, who last bought it, what the viewed as an innovation impediment data points such as mobile phone applicant’s income can comfortably for banks, but banks need to be geolocation and social media support, and which mortgage advisors proactive when it comes to oversight, that establishes the legitimacy of might be at the ready to discuss it all. he said. the applicant), and there are zero manpower hours spent in processing The user may be hesitant to fully “Don’t be a victim,” he advised. “Work the decision, he said. embrace a bank-led interaction, but with the regulators. Show them why they’ll get there, suggested Spruit. it’s safe, show them why you’ve got the There is, admittedly, some heavy lifting data.” involved for banks to get to that level “Banks have got hundreds of of speed and automation, Spruit said. thousands of merchants, millions If banks don’t do that, they run the risk It’s been difficult to integrate several of consumers,” he said, adding that of becoming mere utilities, while the tech stacks to get a single, unified view “they’ve got 8 million consumers on customer service (and new users) go of the customer. their app.” to someone else.

But when banks do synthesize their Most countries have three or four big As Spruit told Webster, the banks data collection and analysis (with banks. So, by and large, they have 20 that think more deeply about the partnerships with firms such as odd percent market share each. holistic journey — “and no longer think, Pollinate), they can focus on the ‘Oh, I’m going to create some great view that does begin to take shape. “You’re going to have to make a heck product, and then we’ll throw it over They gain insight into the size of the of a lot of mistakes to have that taken the wall for some branch manager to customer’s family, how much they away,” he told Webster. sell to his local customers’” — will be earn, what their banking behaviors in a good position to build a new and might be — all of which can hint at the robust ecosystem.

APIs, INFRASTRUCTURE INVESTMENTS PLAY TO ‘WHERE THE PUCK IS GOING’

n the age of the connected take a long-term view, but the changes economy, streamlined wrought by backing the right firms can experiences — less time spent be seismic. in store aisles, ride-hailing for Ijust-in-time transportation, food on “If you think about just extending demand — translate into outsized that to something like IoT and being MIKE savings of time and money. able to take more and more friction PACKER out of daily transactions, commerce Partner As part of the continuing and payments … it’s really incredible ConnectedEconomy™ series, Mike to think about ‘if we unlock another Packer, partner at QED Investors, a hundred billion or a trillion dollars told PYMNTS that investors looking of opportunity cost value, what are to fund the FinTechs and digital-first we going to do with that time as a firms that make it all possible need to society?’”

Delivering a continuum of offerings to “If you look back over the past five wait for new infrastructure or they’re to evolve and maybe they all won’t end users requires the integration of years — maybe even 10 — it’s shown going to build it themselves. exist or, or maybe the sizing will be new technologies to make integrations us that APIs and their use cases a little different. But there’s going to smart, relevant and real-time, using are more powerful than anyone Build It be a place for them even as FinTechs advanced technologies and networks would have imagined,” he said. APIs “If you’re a company like Nuvocargo, continue to take market share.” Value such as 5G and artificial intelligence (application programming interfaces), looking to create more services and can be created through partnerships, (AI). he said, are akin to the tools that value-add in your platform for helping he said, now and in the future. go into firms’ “laboratories” that improve cross-border commerce To that end, the word disruptive gets allow companies to start to test, between the U.S. and Mexico, there Looking ahead at the overall bandied about a fair amount. tinker, and learn about new ways to are a lot of things, in terms of investment landscape, he told PYMNTS bring payments and commerce, in infrastructure, that are just not there,” that — in a world dominated by Disrupting With FinTech connected form, to broad new swaths he said. In the build versus buy debate, headlines tied to IPOs and SPACs — “It’s hard to define disruptive,” of the population. then, the decision comes down the amount of capital and activity that explained Packer, “and different people to: build. Doing so, he said, shapes is waiting in the wings is as big as it’s use it in different ways.” But to his It’s no easy task to design APIs that competitive advantages, because been in a long, long while. Some target mind, finding disruptive companies are simple to use (Packer said Stripe, the infrastructure, the products, the firms have found their markets, with and technologies lies with building among others, has done it right), services, can all be tailored to a key, a strong sight line to growth and to out FinTech — a market that is still in but building the complexity out of core audience. profitability. its early innings of creation. At a high the process is critical, especially as level, he said, that involves selecting emerging economies embrace digital- “If you’re an infrastructure creator right “They feel like they can tap the public smaller, fast-growing firms with strong first financial services. now in Latin America, you should be in markets maybe a little bit earlier than management teams and talent. But it high demand,” he said. “And if you can they had otherwise planned,” said also means finding entrepreneurs with In many of those countries, he create some really beautiful simple Packer. Other firms are more firmly vision, who are anticipating where the said — especially in Latin America, APIs — taking friction out of what’s entrenched in the planning and testing puck is going, so to speak, in financial where QED focuses efforts with most likely a very complicated process phases of their evolutions and may services. investments in firms like Nuvocargo, — you’ve got a product that’s going to not want to take some of that trial and but also has been active with players have some legs.” error to the public markets. There’s at least some commonality in the traditional banking space — across the payments space, noted companies have to choose whether That doesn’t mean that the FinTechs Of QED’s efforts, he said, “What we’ve Packer, at least in terms of technology. they’re willing to accept the current will kill the banks. Legacy banks will been trying to advise is ‘don’t sacrifice infrastructure, whether they’re going to continue to exist, in Latin America and your long-term vision just for a short- elsewhere, said Packer. “They’re going term opportunity.’”

DIRECT PAYMENTS INJECT INNOVATION INTO HEALTHCARE

ealthcare in the United of the pandemic last year, only 36 States is an undeniably percent of consumers were satisfied expensive proposition – with their healthcare plan. as of 2019 (the last full Hyear data is available for) Americans And it’s not an issue that’s limited spent $3.8 trillion, or a little under to a certain type of healthcare DAVID 20 percent of the nation’s GDP, on plan. When one digs in and asks GOLDHILL healthcare alone. It’s a high price to consumers about their experience Founder and CEO pay, particularly considering that very with the industry, direct-to-health few people actually like what they’re platform Sesame Founder and CEO getting for the money. According to David Goldhill told Karen Webster in one survey conducted in the middle a conversation for the latest edition

WHAT’S NEXT IN PAYMENTS: of PYMNTS Connected Economy of the economy, he said, suppliers insurance and what isn’t. It’s not about Series, no one is relieved that they get and sellers are dealing with insurance your healthcare experience or even a access to healthcare via the insurance companies not patients, ultimately therapeutic journey or path it’s about CONNECTED their employer provides. Employer- making it much more complicated for here’s what’s paid for by someone based health insurance exists a person who needs care to acquire else,” Goldhill said. because of a quirk of U.S. tax law not that care. There’s an enormous because anyone thinks employers amount of dysfunction around that It is system obviously in need of are particularly well qualified to be one major pain point, he said. fundamental change, he said. The making healthcare decisions for good news, however, is that change is their workers. Moreover, he said, the It also makes providers’ lives more coming, pushed by the pandemic that insurance experience is far from a complicated by making it that much gave healthcare the massive shove winner. harder for them to deal directly with it needed to become a player in the the patient they are attempting to burgeoning connected economy and “I know very few people who love treat. The system we have today – by players like Sesame dedicated their insurer or benefits administrator where care is offered to a patient to redesigning the front door to in terms of the role they play in their is decided by what an insurance healthcare to be something that is lives. The way we’ve architected company will pay for – kills creativity both digitally accessible and under the their role is mostly to say, ‘no,’ not in care. There are so many barriers in patients control. to say, ‘here’s how we can help the system that issue from third-party you.’ I don’t think there’s a lot of payment and the requirements of The Aspirin vs The Vitamin satisfaction with that sense of a insurance that providers have relatively When taking on fixing healthcare, front door to healthcare at all in this few ways for them to be innovative. Webster said, there are two possible country,” Goldhill told Webster. paths discussed. One is the aspirin “I’m a big believer that one size fits all approach – which relieves a specific The pain, from a patient’s point of solutions in healthcare for 330 million pain point in the system. The other is view, he said, issues from the fact that people is one of the problems with the vitamin approach which seeks to buying healthcare is both expensive the system. And the reality is that strengthen the system as a whole for and confusing in our third-party reliant the line between wellness and care better function. Sesame offers a direct system. Unlike nearly every other part is often defined by what’s covered by pay option for customers for medical

care in lieu of using insurance at all, patients combined with an improved possible and needs to be more widely Goldhill said. It started as an aspirin experience. The good bad news, he implemented. but, like most healthcare innovations, said, is the bar for creating a better has evolved into being a bit more of a healthcare experience in the U.S. is Because ultimately a patient’s care, vitamin in some cases. “extremely low.” An unfortunate reality, he said, should be driven by two main he said, but one that has set a host players – the patient I and the provider “But what we’ve seen in the past of innovators against it searching for they work with. The degree to which year is that by making things more pathways to improvement. the connected future and enable that convenient for customers, by direct relationship and take the third- enabling healthcare doctors and “And I think that will show a pathway party decision maker out of the driver nurse practitioners and clinics to do for even broader improvements that seat in the process, the healthier it can innovative and creative things, we’re are possible,” Goldhill said. help healthcare to become. also doing a bit of the vitamin,” he said. “We’re creating a better experience, Creating The Connections “It’s really not for me to say, what the a more customized experience, There are challenges in building a ideal system we should develop is an something closer to the patient’s new digital front door to medicine – ideal system that allows for much specific needs. We see people given the incredible sensitivity of the greater individualism, because that’s access our service just because it’s personal data involved. Consumers, the reality of, of a patient population of more convenient or it’s easier, less he said, are more concerned about 330 million people,” Goldhill said. complicated, or it’s even cheaper this data being private and protected paying out of pocket than it is with than any other kind. But that focus insurance as the co-payor.” on privacy today, he said, is playing out such that consumers can’t even And though he believes his company get access to their own I – making is wonderful and unique in many way, data a pain point for patients when Goldhill said they are also far from it should be a benefit to their care. alone in bringing innovative takes A better happy medium, he said, is WHAT’S NEXT on expanding care and access for IN PAYMENTS: CONNECTED

BNPL EXTENDS CREDIT LIFELINE FOR CONSUMERS IN THE DIGITAL ECONOMY

he rivalries in the financial Microsoft vs. Apple and even the services business are current one-up battle between Apple legendary. Companies and Facebook. and their chief executives Tback in the day made no bones Competition is a way of life in about their competitive obsessions payments. In fact, there’s a temptation CHARLES and their desire to be on top of the to treat it a bit like a horse race — YOUAKIM heap. There was Citi vs Chase; Sandy where every firm’s advantage or CEO Weill vs. Jamie Dimon. Or there was leap forward is interpreted as a new Goldman Sachs vs. Morgan Stanley; obstacle for their competitors. The UBS vs. Credit Suisse. And although more competitive the space, the they’re adjacent to the financial more the horse race framing tends to services business, it’s hard to discount dominate.

WHAT’S NEXT IN PAYMENTS: But maybe that winner-take-all Ripe For Expansion and one they are increasingly seeking spirit isn’t as important as it used to out and proving determinative in BNPL has been a rapidly expanding be. Take, for example, the buy now, their shopping decisions. This means, CONNECTED platform over the past year for pay later space. It is, of late, a very conversely, that it is becoming connecting consumers who might competitive space. It has dedicated something that merchants need to be credit-card averse, or younger new-breed companies like Klarna have. consumers uncomfortable with the and Afterpay. It has innovators like general concept of debt. BNPL has PayPal looking to make a name in the “If you’re a merchant and you’re also provided a connection point space. Not to mention the old guard competing against someone else in between merchants and consumers like American Express and Visa. But your space and they have our product looking for an alternative to credit as BNPL firm Sezzle’s CEO Charlie on their website, your competitor is cards or who have credit scores Youakim told PYMNTS Karen Webster going to have an advantage,” he said. too low to make them viable. As a in a recent conversation on the “And so I think that’s what makes it recent report from PYMNTS showed, ConnectedEconomy™, the idea that a must-have for the merchants. And 32 percent of consumers who there always has to be a definite the advantage is driven by the fact reported struggling to pay typical winner standing astride a field of that consumers do like this form of monthly expenses used BNPL losers might not actually be the best credit. And we all know when given solutions for their Black Friday framing for the situation. the option of waiting six weeks, what transactions in November 2020. Other happens is the customer might just research has shown that 48 percent “One tip, I always give business leaders, forget about it or find a different of consumers who prefer to use some especially like newer entrepreneurs product somewhere else, and that form of credit at the point of sale is that it’s not a zero-sum game,” leads to a lost sale.” (POS) — including BNPL — claimed Youakim said. “If you play it like a zero- they would not shop with merchants sum game, you’re going to create a lot Mobile’s Front Door that did not support it. of friction for yourself along the way. Sezzle does serve a large segment of It’s always a one-plus-one-equals- The way Youakim sees it, consumers, consumers who would find accessing three activity. And it’s, the more you don’t need BNPL, but they prefer it. other forms of credit something of a can do that, the more you’re creating, BNPL is, at its core, a more trusted and challenge. More than 50 percent of its expanding the pie for everyone, even transparent offering to the customer consumers have FICO scores lower competitors.”

than 600 or no score at all. These higher-priced goods from whom “People always ask us, aren’t you consumers are highly mobile — 90 consumers could need a slightly creating a chance that [customers] percent of Sezzle translation come in longer lending period. For merchants, might graduate out of your product via mobile — and are better-enabled he said, they’ve developed a new tool and go on to a credit card,” Youakim participants in the connected to the called Sezzle Spend which will allow said. “And my viewpoint is, I don’t care. economy. merchants to essentially discount their We’re going to try to win them over products, but in a way that is “hidden so they stay with us because they This means the question going forward though Sezzle.” can use the credit card within our for Sezzle is how does it build more system. But I think the right approach of those connection points and make The goal at Sezzle hasn’t changed, to businesses keeps on doing right by them count. That has included the even as the company has expanded your stakeholders and good things will introduction of new products like from its core BNPL offering into happen because they will trust you.” Sezzle Up which is designed to help being a commerce ecosystem that consumers improve their credit scores. gives customers a better way to find It is essentially the same product as new merchants and manage their its core installment loan, though this payments when it comes time to one is reported to the credit agencies. checkout. The goal remains as focused Sezzle is also, in partnership with Ally as it ever has been around giving Bank, looking to launch a light, longer- consumers better tools with which to term six installment product, to allow manage their financial lives. it to better serve merchants selling

WHAT’S NEXT IN PAYMENTS: CONNECTED

SHAKE SHACK USES DATA TO PROVIDE OMNICHANNEL CONVENIENCE, CREATE PLAYFUL EXPERIENCES

one are the days when channels working side by side and people went to grocery brands finding new ways to engage stores to buy food to consumers wherever they may be, in eat at home, they went person or online. Gto restaurants to eat a cooked meal brought to their table by a waiter, and Shake Shack, for one, has been STEPH there was not much in between. In evolving to meet consumers’ needs, SO today’s connected economy, the eat rolling out curbside pickup and Head of Digital Experience category encompasses a far wider expanded digital ordering options, range of ways to eat three meals a day launching in-app delivery, and using (or sometimes not eat them). Plus, machine learning and artificial the retail journey has become more intelligence (AI) to personalize the expansive, with digital and physical experience and stay in tune with

WHAT’S NEXT IN PAYMENTS: customers’ changing desires and person. Now, however, Shake Shack Granted, the restaurant’s physical expectations. Overall, the restaurant is looking to optimize its physical spaces are still digitally enabled. So aims to meet consumers in the and digital channels by focusing on noted, “We will always build in digital CONNECTED spaces they frequent, offering a the unique experience that each can elements into our physical space,” compelling consumer journey that provide. adding that features such as self- goes beyond the product itself. service kiosks offer customers “the “We actually think each channel has a experience of being in charge” when “[We] hope that the experience of specific advantage for the guest, and they visit Shake Shack locations. eating at a Shake Shack is so much might actually fall into specific use more than the food, but it’s rather cases for the guests,” noted So. “…There While Shake Shack doesn’t look to that elevated experience, and [that are things we can do in our physical provide the exact same experience it] makes you want to come back for space that are difficult to deliver in online and in-person, the company the experiential element even more digital.” does aim to create the same feeling so than the food,” Steph So, head of across channels. digital experience at Shake Shack, told For Shake Shack, the advantages of Karen Webster in a recent interview as physical retail include the person-to- “The brands that are successful give part of PYMNTS’ ConnectedEconomy™ person hospitality that the channel the guests the same feeling, whether series. “…We want to be wherever our can provide, greeting customers with a they’re delivering it in a physical format guest is. We want to be where folks are “smiling and friendly face,” while digital versus digital,” said So. “And the lines having fun.” retail can take advantage of customer are almost blurred in terms of whether data to provide a personalized [the customer is] choosing to start the The Evolution of Omnichannel experience and to offer customers journey in digital or in physical – the So noted that in the “early days of more information. So explained guests still end up having a really great omnichannel,” businesses approached that customers have been looking guest experience.” eCommerce as an online recreation for “more transparency around the of the in-store experience, looking to fulfillment side of their experience,” offer the same products and services with features such as real-time order online as consumers would get in tracking.

Engaging Consumers Through The ‘Eat’ Ecosystem experience and putting that into our dining experience, because they’ve Contextual Commerce As the restaurant and grocery voted with their wallets,” noted So. One of the ways the brand is taking categories blur into a larger “eat” “Those are things that really matter to advantage of the unique potential of ecosystem, the traditional idea them.” eCommerce is through contextual of the restaurant remains key to activations, offering experiences Shake Shack’s philosophy. In fact, However, the focus remains primarily beyond the traditional digital ordering So explained, when thinking about on the traditional restaurant journey. competitors, Shake Shack compares experience. As So noted, “As economy itself more to fast-casual chains and has started to come back, and as “We’ve actually started doing even fine dining restaurants than other the weather is improving and the contextual advertising within Waze, quick-service businesses. pandemic is starting to die down a and we love the idea of voice-enabling bit, we see a real desire by folks to that,” said So. “We’re working on drive- “We’ve never ruled out the idea of gather – so it’ll be really interesting to thru, so voice will ultimately be a big doing retail and thinking through how see where the balance comes back on part of drive-thru.” some of our products could end up that.” on a retail shelf. We’re certainly not The company has also been opposed to that idea,” said So. “We did This sort of communal experience offering content experiences for ShackBurger kits at the very beginning remains the company’s focus, and entertainment-seeking consumers, of the pandemic for folks to bring Shake Shack wants to remain clearly partnering with influencers and chefs home and cook.” distinct from the grocery category. whom, So said, “amplify both the fun aspect and the lifestyle aspect of our Shake Shack has borrowed from “It’s kind of a different environment,” brand, but also the culinary aspect.” retail the “grocery mindset,” focusing So explained. “It’s more social, it’s the brand’s messaging on sourcing more spontaneous. And especially To identify the best ways to engage transparency and on the quality of the for Shake Shack, we want our spaces with guests, Shake Shack uses ingredients. to continue to be these community consumer data from its digital WHAT’S NEXT gathering places.” IN PAYMENTS: channels to “segmen[t] the guests and “We’re kind of taking some of the the communication channel that the language and the cues that the guest prefers and delive[r] a message consumer is used to from the grocery CONNECTED that’s really relevant to them at the time that’s most relevant to them.”

SOUL MACHINES PUTS A DIGITAL FACE ON THE CONNECTED ECONOMY

hen you hear that In a very real way, that means Soul the company Soul Machines is putting a human face Machines makes — or lots of human faces — on the digital people, your connected economy. Wfirst thought might be that it is some kind of slogan, and that the company The most visible deployment of Soul GREG in some way makes human beings Machines’ tech has been through the CROSS more digitally active. But that would be World Health Organization (WHO), Co-founder and CEO wrong. The company literally makes where a digital person named digital people, like highly advanced Florence has been busy helping avatars, that can learn, coach, advise people quit smoking and dispelling and even speak in different languages. myths about COVID-19. The company’s

WHAT’S NEXT IN PAYMENTS: tech is also being used by Nestlé don’t like talking to people about our help guide them to the products that Toll House, where a cookie coach money problems or how we manage best suit their needs. It adds a missing named Ruth helps bakers create or mismanage our money, and we component to the online shopping CONNECTED better chocolate chip cookies, and fear rejection when we apply for a experience, taking it beyond the simple by Maryville University, where digital mortgage or a loan. One of the things “add to cart” functionality and making coaches named Emma and Mya help that we’ve seen over and over again is transactions much more interactive. students with such topics as financial that in any use case that might involve aid and personal assessments — just some form of judgment — like asking Cross calls this extra element to name a few examples. for a loan — customers prefer to “democratizing personal experiences,” speak to digital people.” and says Soul Machines can deliver The Impersonal Made at a scale that’s simply not possible Personal, With Fake People Trust Me, I’m A Robot with human employees — even While talking to what amounts to In addition to enabling difficult to the point of filling a gap in an a fake person might seem a bit conversations between consumers overburdened healthcare industry and impersonal, in a conversation with and brands or institutions, Cross said education system. PYMNTS CEO Karen Webster, Soul that one of Soul Machines’ primary Machines Co-Founder and Chief goals is to help build trust between “You know, in healthcare and Business Officer Greg Cross said the people and machines, which feeds education, we don’t even train enough opposite is true — especially when into the idea of putting a human doctors and teachers anymore,” he it comes to enabling certain kinds of face on the connected economy. said. “So this concept of digital people communication. As an example, he points to YUMI, being able to democratize personal the digital person used by skincare experiences means that people can “People actually prefer to speak to company SK-II. Not only can YUMI field interact and get personal attention and digital people in cases where they fear questions about skin that consumers specialized knowledge in a way that judgment,” he said. “As humans, we might not be comfortable asking has not been possible before.” don’t like speaking to real bankers. We human associates, but it can also

Digital Dawn At the current rate of technological “We think it’s really important that as advancement, Cross expects to see a society we spend as much time One day, Cross can imagine a world more advanced interactive digital thinking and talking about things in which a digital person could guide people coming online within three like AI and data privacy, the ethical consumers through a virtual version of to five years, perhaps even as life use of artificial intelligence and the their favorite boutique in a city across coaches or companions. Of course, regulatory environment for artificial the world. Such a world may not be all should digital people start playing such intelligence as we do about putting that far off, he said. roles in our lives, Cross is well aware of it to use and making it work for us,” the ethical and regulatory issues that Cross concluded. “There are so many “A lot of the enabling technologies are may arise. In fact, Soul Machines is lessons we can take from the social coming together at an incredibly rapid very concerned with advocating for the media era that highlight the need to be rate,” he said. “We’re seeing things like ethical deployment of AI to ensure that even more cautious and thoughtful in the progression of artificial intelligence the tech is rolled out with the least the AI era.” from machine learning to deep amount of friction and the greatest learning. We’re seeing conversational adherence to privacy and other ethical AI progress from natural language concerns. processing to natural language generation. We’re seeing synthetic That’s why he said Soul Machines finds voices capable of injecting emotion it necessary to be transparent about and prosody into them. The work we’re the fact that the interactions enabled doing with autonomous animation, the by this technology are with digital, not deployment of 5G networks, and the real, people. miniaturization of augmented reality and virtual reality are all converging.”

WHAT’S NEXT IN PAYMENTS: CONNECTED

STAND UP NY CREATES CONNECTIVE EXPERIENCES FOR CONSUMERS ISOLATED BY PANDEMIC

omedy, one of the most with mouths wide open—is far from connective forms of a pandemic-safe environment. So, in entertainment, relies on the past thirteen months, comedy has the relationships built had to adapt. Some comedians took Cbetween performer and audience, to parking lots, substituting laughs for between club and performer, between honking horns and flashing headlights. DANI club and audience, and among Others took to rooftops and yards, ZOLDAN audience members. Unfortunately for while some have been sticking to Owner comedy professionals, the traditional streaming this whole time. After all, comedy club experience—low ceilings, in today’s connected economy, there cramped tables packed into a small are more ways than ever to forge space, lots of drinking and laughing connections and create experiences.

WHAT’S NEXT IN PAYMENTS: One New York City comedy club has Connecting the Consumer to While these activations were able been especially creative: the Upper the Business to generate attention and create West Side’s Stand Up NY, which has valuable experiences for Stand CONNECTED For the church show, Stand Up held shows in parks, in subways, in Up NY’s audience, the restrictions NY tapped into the language and churches—wherever possible, amid remained a challenge. After New York symbolism of one of the most New York’s changing COVID restrictions Governor Andrew Cuomo allowed bars connective parts of many consumers’ and audiences’ changing comfort and restaurants to reopen, Zoldan daily lives—religion. In addition levels. grew frustrated with the continued to staging the show in a house of restrictions on the club. Stand Up NY worship, the show was called “Temple “We had about 50 people show filed a lawsuit, and the state lifted of Laughter,” and a pastor spoke to the up [to our first outdoor show], and restrictions. Now, the club has been audience before the comics took the it was awesome,” Stand Up NY open for weekend shows since April stage. owner Dani Zoldan told PYMNTS 2nd. in a recent interview as part of our “It was beautiful,” recalled Zoldan. ConnectedEconomy series. “Comics The company also became engaged “When a few comics dropped some were just really appreciative to be with its audience’s turn towards F bombs, you know, I looked at the outside and performing again, and community-mindedness with its pastor, and I was a little scared, but he obviously New Yorkers love being out, 11th Plague initiative during this past loved it.” and we just wanted a scale that as, Passover and Easter, connecting as fast as possible…My goal was 50 consumers to resources to give to To deepen the relationship between shows a week, and we did that. We organizations to fight hunger and the audience and the event, Zoldan produced over 500 outdoor comedy advertising the initiative with funny created an extended lore for the shows during the summer and fall.” clips from the club’s comics. Zoldan occasion. He explained, “We wanted explained that the club “wanted to put to write a Bible…When [people] go to Once the weather started getting some money into something that that a comedy show, they go to laugh, but colder, the club pivoted to the few would spread goodness” and that he I don’t think they really people really indoor spaces in New York without plans “to continue running those types think about just the mental health capacity restriction—namely, churches of campaigns.” benefits of being at a comedy show, and subways. Zoldan reflected, “It so that’s what temple of laughter was a very random, fun New York wanted to preach.” experience.”

Connecting the Business to feeling is especially important given However, an upside of this difficult year Technology how emotion-centric the business is. for comedy clubs is that they have actually begun to connect with each Communication is important for “It goes a long way, especially in a other in a way that would not have businesses at the best of times. business like this, where people come, happened without the pandemic. These past thirteen months, however, and they socialize and they laugh,” said amid rapid change and uncertainty, Zoldan. “…It’s all about relationships. “Before COVID, everyone was sort of it has been more important than You build a relationship with the doing their own thing and and focusing ever. To keep consumers’ up to date customer and it’s not only about them on their business,” recalled Zoldan. with the club’s shows and events, paying you…They forget about their “…I find lately, especially during COVID Zoldan took note of which messages problems when they’re here.” the younger owners are working more consumers were actually receptive together. We’re texting each other, to. The club signed up for messaging Connecting the Business to [and] we’re helping each other out.” platform Community to make its the Future communications more effective, In a space more connected than ever, noting the platform’s higher open rate Right now, though Stand Up NY’s and with consumers seeking out than emails. space has reopened, demand remains well below pre-COVID levels. Though connections with each other, Zoldan predicts that the future will be bright “I believe how we reach out to 55 percent of the state’s population for comedy clubs. [consumers] is really important,” added is fully vaccinated, many residents Zoldan. “…We want to try to connect remain wary of returning to crowded, “I believe live entertainment will always with everyone on an emotional level. indoor environments. be necessary,” he said. “And I think it’s We don’t want to send out, like, a really important for people to gather mass email to our 40,000 person list… “Now we’re only open three days a together as a group and whether it’s that doesn’t connect to anyone.” week—Thursday, Friday, Saturday, because the demand is not there yet,” at a restaurant or a bar or wine, or watching a comedy show or music, I To build this connection, the club said Zoldan. “Tourists aren’t in town, think that’ll be even more popular than looks to personalize its messages obviously. A lot of new Yorkers don’t WHAT’S NEXT before the pandemic.” IN PAYMENTS: and to be “super responsive” to social feel comfortable yet going indoors media outreach. Infusing the site’s to a comedy show. So it’s a little online presence with this personal challenging…but over time I believe the CONNECTED situation will fix itself.”

CREATIVE USE OF DATA IS SUBSCRIPTION SERVICES ONLY ‘MOAT’

he conventional wisdom Karen Webster that as much as tech that every business is a powerful enabler that facilitates needs a good “moat,” or creative commerce, tech in and of a competitive barrier that itself, will not keep protect you from Tsets them apart from the pack and hungry competitors. keeps predators at bay, is fine, as long BRIAN as that chasm you’re counting on is “Technology is not the moat. It’s the BOGOSIAN not based on technology alone. product that’s the moat,” Bogosian CEO said, pointing to the rapid development In our latest ConnectedEconomy™ of competitive ideas that emerge series conversation, sticky. in the shadows of every successful io CEO Brian Bogosian told PYMNTS’ launch or idea.

“If somebody is getting traction out Creativity, he noted, is enabled entirely continually build and rebuild their Bogosian said, are always looking for there in the market with a certain by the data that smart merchants offering for the subscription customer, better ways to package and bundle product or service, you can be sure can harvest from their subscription making sure it stays and becomes longer-term commitments with their there are going to be others looking to services and leverage to expand and increasingly relevant to their wants and consumers. emulate that and improve upon it,” he perfect their offerings to consumers. needs going forward. said, “so I think moats are kind of an But ultimately, he said, it all comes ancient term to use and I think they’re “Data is everything. Understanding your The Competition Factor down to the data — and how harder and harder to sustain in this customers, understanding what their Merchants, he noted, are going to need merchants leverage it to truly environment.” buying habits are, is absolutely critical,” to continue to evolve their offerings understand their customers and he said. “So the transaction happens over time, and anyone who builds a build the offering that will keep them Selling Subscriptions and you have the payment history. But successful offering will invariably find a engaged with their product or service But even if the idea of moats is you have more than that — you have competitor who will come along to try over the long term. becoming outdated, firms certainly everything about what types of things to provide what they believe is a better can — and do — leverage technology they’re buying and the things that they variation. That is ultimately good news “I think data that can enable to build a competitive advantage click deeper into to understand better. for consumers, he said, as they will be understanding your consumers is and persuade consumers to take the That provides you with tremendous the beneficiaries of a continual stream probably the most essential part of plunge and sign on to a subscription. insights into the habits and desires of of value being driven their way in the this entire chain of events,” Bogosian those consumers.” form of subscription services that said. “Understanding what people Of course, the underlying product are more varied, more affordable and want, what their preferences are, the still has to be good and speak to That insight into customer habits more convenient over time. frequency with which they could use a consumer’s needs, but sticky.io and wants is being used by the most something — it means everything. has seen “tremendous creativity” sophisticated subscription players, But it also means the pressure And I think platforms that provide from merchants in how to he said, plugged back right back into is on merchants to build flexible sophisticated analytics, analytics leverage subscription technology to the subscription offering to make subscription offerings that are that are highly flexible and tailored build an ongoing and continually it stickier and more useful for the designed to evolve alongside their to provide you with the insights into strengthening relationship with consumer. That heads off churn, the customers’ needs in inventive and your business and insights into your customers. bane of every subscription merchant’s unexpected ways. The smarter customers, is a tremendous value.” existence. But perhaps more critically, merchants playing in the space, he said, it allows the merchant to

DATA MAGNETS HELP CONSUMERS FIND THAT ‘NEEDLE IN A HAYSTACK’

n theory, the infinite unlimited choice all on its own isn’t aisles created by online all it’s cracked up to be, and it’s more shopping should be a win for likely to overwhelm the consumer customers, as they are no longer than delight them. Ilimited by the inventory a retailer can put on their literal shelves. Simply adding more choices isn’t a JULIE solution to digital shopping problems BORNSTEIN Unconstrained by considerations any more than adding more hay would CEO like physical space, the shelves in a make it easier to find a needle in a digital shop offer an endless choice of haystack. The solution to a needle in a goods for consumers to purchase. But haystack is a magnet, something that

WHAT’S NEXT IN PAYMENTS: makes it easier to draw the wanted customer, but we also have an While The Yes is new to the object out of the things that are algorithm that allows each user’s market, its CEO is not. Before The obscuring it. And eCommerce needs specific experience to work for them,” Yes, Bornstein got eCommerce CONNECTED that same sort of solution when it Bornstein told PYMNTS. “And so, it’s up and running for Urban comes to helping consumers navigate an eCommerce infrastructure with Outfitters, Nordstrom and Sephora, boundless digital shelves. an [artificial intelligence (AI)] layer and she came to the game ready on top that allows us to understand to upgrade the online shopping Attempting to step into that role each user, both by asking upfront experience by streamlining the of magnet in the eCommerce questions when they first log on and process of slogging through an infinite haystack is The Yes, an eCommerce then continuing to learn from each aisle to find desired items. marketplace designed to connect with user as she shops by ‘yesing’ and all types of fashion brands to provide ‘noing’ products that she does and Perhaps just as important, the system what CEO Julie Bornstein described doesn’t like. And we have this one-to- makes it easy for users to give “yes” or as a one-stop shopping destination one neural network that’s been built “no” feedback on the items they see, for consumers. With around 250 with each user, so the site experience further training the system to curate brands on the platform and the adapts to each user over time.” the selection of goods displayed to second-largest assortment of online the consumer, and over time showing fashion goods today, The Yes offers The net result is that the more the them more of the things they want. cutting-edge technology that enables user shops and offers feedback, they It’s that extra feedback from the consumers to navigate that supersized better the system gets at pursuing consumer that really sets The Yes assortment in a way that aligns with those infinite aisles for them, and only apart when it comes to customizing their actual needs. showing the things they will actually and curating product assortments, want to buy. Bornstein noted, because there is a “The idea is that we make the entire lot more to understanding consumers’ world of brands available to the

wants and needs than simply seeing that people have not been buying but for The Yes is to build something that what they buy. have been yessing — like dresses and can develop a lot of scale and bring heels — are starting to sell again.” many benefits to the brands that are That has become especially true in part of the network. the last year, where the company Consumers are price-sensitive, she has seen a real divide between the noted. For all the attention given Bornstein noted that brands have kinds of goods consumers are buying to building great experiences and been very excited about what The Yes outright and the kinds of things they beautiful product displays, the is building and about what will happen are “yessing.” consumer is looking for good value. next. They are excited to experiment with new ideas and modalities for “I would say what a lot of people “I think the vast majority of reaching their customers. have been buying and what they’ve customers are looking for value to been yessing are two different things,” feel comfortable making a purchase “I do believe that the industry is going Bornstein noted. “During COVID, in decision,” Bornstein said. to bounce back,” she predicted. “I think a world where people have been at there’s going to be pent-up demand home all of the time, most of the That can show up in many ways. For among consumers who want to spend things we’ve sold have been very example, The Yes is able to offer a on fashion and are excited to get logical — mostly comfortable clothing best-price guarantee because it works dressed up to go out again.” and casual clothing. But people have directly with brands. been yessing all sorts of things. And in the month of March, we’ve seen kind Shopping is different than it was a of a shift in what people are buying. year ago as stores and consumers This has been sort of a sign of the end are reorganizing their priorities around of the pandemic, as people buy things seeking and securing value in their that are more occasion-based. Things shopping journeys, she said. The goal

WHAT’S NEXT IN PAYMENTS: CONNECTED

VERIZON MAKES ITS BUSINESS CASE FOR 5G

We are the connected in the While such a statement might sound connected economy.” like a simple boast from a man who is an evangelist for his company’s That’s how Verizon Chief mission, thanks to Verizon’s steady “ Revenue Officer Sampath build-out of its 5G network, it’s Sowmyanarayan put his anything but. SAMPATH company’s role in an interview SOWMYANARAYAN with PYMNTS as part of the Hardly a week goes by in which Verizon CRO ongoing ConnectedEconomy™ isn’t in the news for its 5G rollout. Last series examining the way in which month, the company announced, it will borders between verticals are launch its 5G Ultra Wideband service being crossed on a regular basis by in New Orleans, Louisiana; Fresno and connective technologies. Riverside, California; and San Antonio,

WHAT’S NEXT IN PAYMENTS: Texas. This will bring the total number well. Sowmyanarayan said unlike First, it has to do with the technology’s of cities in which the super-fast, low- traditional mobile-enabling tech, low latency. Sowmyanarayan pointed latency network is deployed to 71. business use cases are driving the out that 5G is really more than just CONNECTED uptake of 5G even more than the faster 4G, and the fact that it has In the same announcement, Verizon consumer sector. dramatically lower latency — or delay said it is opening both the Memphis — than other tech makes it ideal for and San Antonio markets to its 5G “One of the interesting things about applications such as its use in hospital Home Internet, which functions 5G is that businesses know more imaging or on factory floors. as a viable replacement for more than consumers,” he said. “Typically, traditional internet access pipelines, what happens, especially in mobile such as cable or satellite. That ups the technologies, is that consumers number of cities in which the service get the technology first, and Second, 5G’s ability to handle large, is deployed to 33. That’s impressive business drags along. This time, it’s media-rich datasets across different progress in the two years since the fundamentally different. 5G is built physical locations is key to any company first rolled out 5G in Chicago, for business, and the consumer is business working in the connected considering that the infrastructure for going to get pulled along. So, typically, economy. the network needs to be built before it around, I would say, 20 to 30 percent can be deployed. of consumers know very well what And finally, he pointed to 5G’s lower 5G can do, but more than half of power usage as well as its enhanced Business Led businesses have a very good sense of security features as central to its Not only is Verizon’s 5G network what 5G could do for them.” appeal in enterprise settings. connecting consumers to the internet, but it is also being embraced in The reason 5G is enjoying such an other sectors of the economy as uptake by businesses is four-fold, Sowmyanarayan said.

Retail Rebirth in a retail setting into interactive “Some of it has to do with my own touchscreens. The project is currently personal style,” he said. “Ten years ago, While Sowmyanarayan points to being tested in Walgreens locations, when I was recently out of business projects in which 5G is being trialed in and Sowmyanarayan said 5G is a great school, I would not say kindness was different healthcare settings, such as way to handle the large amount of a management principle. There were to help hospitals keep track of their data that flows through the screens. other things; there was analytics, there own equipment, one of the more The tech, in particular, is perfect for was rigor, there was action. Kindness interesting use cases of the technology such “edge compute” cases in which was definitely not in there. But there’s is in retail. data processing is brought physically so much uncertainty in the world closer to the location in which that today in business and relationships at Sowmyanarayan said he believes that data needs to be used. home, that having that extra kindness as the pandemic recedes and leaves — letting people finish their thoughts, behind new digital consumer shopping Leading With Kindness for example — just makes for a much habits, brick-and-mortar stores will better workplace. And what I see is need to be more innovative in turning While technology is certainly at when you have a workplace that is their outlets into experiences rather the center of Verizon’s offerings, there, it has a huge impact on the than simply places to buy items. Sowmyanarayan said there is culture and how people get stuff He pointed to augmented or virtual something less tangible, but no less done.” reality as possible examples and important, at the center of Verizon’s said 5G’s low latency works for such operating ethos: kindness. It’s an applications. important reminder that human beings are first and foremost at the center of He also pointed to a partnership the connected economy. with Cooler Screens, a company that turns the front doors of coolers

WHAT’S NEXT IN PAYMENTS: CONNECTED

VOLITION CAPITAL LOOKS FOR DIGITAL-FIRST RETAIL PROSPECTS

he ConnectedEconomy™ They are less likely to offer digital has created new dynamics payments options and therefore for every segment of score lower than large firms in terms payments and commerce of customer satisfaction. However, Tfrom small- to medium-sized connected, omnichannel SMBs — business (SMB) retail to big box mass those that sell via online channels but JENNIFER merchants to venture capitalists. make most of their sales in stores FLEISS — perform as well as large stores Venture Partner And for retailers, it has become a in consumer satisfaction. Twenty- competitive flashpoint. PYMNTS Global six percent of these SMBs are top Shopping Index research, for example, performers, approximately the same shows that SMB retailers suffer share as large stores. from not being connected digitally.

WHAT’S NEXT IN PAYMENTS: As retailers both large and small begin But in addition to that, you have to businesses start to vertically integrate,” to entice consumers back to their have conversational commerce.” she said. “I’ve seen it in the healthcare bricks-and-mortar locations, Jennifer space where companies are thinking CONNECTED Fleiss, managing partner at Volition Such commerce includes newly about how they play into the financing Capital and co-founder of Rent emerging retail concepts like video element.” the Runway, said payments and shopping, in which someone with a digital-first technology can play a similar build to a consumer can try on Embracing an omnichannel approach role in creating what she called an clothes via a web feed, or someone works even more effectively in the omnichannel 2.0 business model. with similar skin tone can try on connected economy when flexible makeup, she said. payments are embedded at its core. Fleiss told PYMNTS CEO Karen Fleiss said a digital-first approach Webster that in addition to looking Payments can be a relationship- can open the door to not only more for a growth factor of 50 percent year building part of a company’s success, but more entrepreneurial over year, one of the key things she omnichannel growth strategy, thinking. But retail has taken longer looks for when searching for a new Fleiss said. She pointed to the to embrace this way of thinking than company for Volition’s investment way in which Venmo has created tech-first businesses, such as digital is that the organization has a firm a community around payments health and exercise companies that grasp on the connected economy via by adding a social component to were pushed to accelerate due to omnichannel operations, especially the mix, or the way exercise bike the pandemic effect. The sheer after the changes brought about by the company Peloton was able to unlock interconnected infrastructure of some pandemic. new consumer bases by bringing an retailers has made it hard for them installment structure to its payment to pivot. But the fact that consumers “Sometimes I think of it as cycle. were also pushed to change their omnichannel 2.0,” she said. “COVID thinking during the pandemic has certainly showed us that having both “I think you’re also seeing the world made the retail field ripe for this kind a digital component and … a physical of payments and financing enter of tech-forward expansion. component can still be very helpful. more and more categories as more

Sustainability and the other based on community, that women were stopping in after personality and creativity. There is work and using the company as Another component Fleiss said she room for both types of businesses to something of an upscale locker room keeps front-of-mind when searching exist, naturally, but Fleiss said ease of — changing out of their business for a new company to add to payments is critical to facilitate the clothes and into evening wear. As a Volition’s portfolio is its emphasis on latter. Providing checkout experiences result, the company began putting sustainability. that are fast, easy and flexible will out more hair tools and offering other enable consumers to visit multiple ways for their customers to freshen up “I think just everyone’s eye and mind sites to make purchases based on for a night out. is on how they can contribute to loyalty and sustainability, rather than making the world a more sustainable simply staying on one site because “It’s actually something I’m really place,” she said. “And whereas we’ve managing one cart or payment passionate about,” she said. “You know, seen it through organic vegetables transaction is simply easier than I think the best businesses are built and fruits and sustainably minded shopping at different retailers, each when you listen to consumers and cleaning products, et cetera, I think with their own checkout process. you never stop listening. So, no matter now we’re also seeing businesses how big you grow, you find — whether that are engaging the consumer to be Finally, Fleiss said she believes that it’s taking customer service calls or responsible for the world around us.” simply listening to the market and going into a physical store if you have remaining flexible enough to let it one — ways to look and observe your This growing focus on sustainability lead is a critical component of any consumer. Our world is moving so has the potential to pull the market successful connected economy quickly that it’s impossible to keep into two different directions, she business. As an example, she brought pace, unless you’re always on the front said. One is based on efficiency for up her time with Rent the Runway. lines, having a pulse on the consumer.” run-of-the-mill consumables like While there, the company discovered paper towels and laundry detergent,

WHAT’S NEXT IN PAYMENTS: CONNECTED

USING DATA TO ACCELERATE AUTOMOTIVE’S CONNECTED FUTURE

mericans have always reports that April 2021 sales of new had a love affair with cars are expected to be up 26 percent the car, which was over April 2019. They also report that first coined in 1961 as a tight supply of used cars has driven Apart of a television series designed to wholesale prices up by as much as 26 intensify that passion. The last 12-plus percent, and retail sales to date up by PAUL months have seen that love affair grow roughly 7 percent. HENNESSY stronger still, as consumers, en masse, CEO left the cities, public transportation It’s also driving consumers online and ride-hailing services behind. Work to make those used car purchases. for home and the desire to control That puts the connected consumer, their community environment drove not the car, at the center of the sale car sales to record levels. JD Powers — and a starting point for a deeper

WHAT’S NEXT IN PAYMENTS: customer engagement beyond the Shifting Digital Gears Vroom has the digital relationship and purchase and sale of a car. As online the data to tap customers when it Hennessy said that Vroom’s starting auto platform Vroom’s CEO Paul might be a good time to sell their car, CONNECTED point was, logically, about buying and Hennessy told Karen Webster to provide monthly vehicle valuations selling a used vehicle. The acquisition in a recent conversation, this or to offer additional services, which of CarStory gives it the ability to connected experience is far more the company is just beginning to think track market pricing for used cars, valuable than “buying a car” and much about — including logical, adjacent along with car histories and location more complex to execute than a markets around insurance, auto parts information. It allows Vroom to offer dealer with a website that also sells and service and even music choices. consumers optimized pricing for cars cars. they want to sell and those they wish Hennessy said that consumers today to purchase, including financing and “We’re seeing an evolution [in the used are really making their cars their warranties. car buying space], and it starts with homes now more than ever as cars a customer-centric philosophy built become synonymous with freedom “Immediately, when you say you’ve got on top of an eCommerce platform,” again — and the idea of connecting to a car to sell, we need to know a lot he explained. “It has to be customer- the customer and their car, and then about that car,” he said. “By tracking all led, and then the infrastructure must being a valued partner, is more than of the things that may have happened be built on top of an experimentation simply good business. to that car — and then marrying that and data platform. And if you don’t with data about the car’s market do those two things, it’s really hard to “The idea of us connecting customers demand, average pricing and location understand what’s working well and to their cars and then becoming a — we start to have a profile of the what isn’t.” valued partner in sending them tire car’s worth. That means we can give replacement reminders, or offering customers great deals.” Put another way, he said, it’s about the right services and products for serving customers well and then their location based on the season, Hennessy believes online platforms keeping score around that. becomes an interesting platform are better positioned to form long- extension that builld rich customer term relationships than those at brick- Vroom’s seen an 82 percent year-over- relationships,” he said. and-mortar dealerships. As he pointed year growth in eCommerce units sold, out, dealers interact with customers which translated into an 89 percent a couple of times and then may not increase in gross profits. see them again for four years, if at all.

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