Blog 1: Convenience isn’t just for London

In this first blog of 2020 I want to reflect on the consumer trend of convenience, and how I see it playing out in the world of payments.

As I’ve spoken about before, mostly recently at FinTechConnect in December, the story of 2019 in payments was that the trends that we’ve been talking about for some time are actually happening. In particular, there is a secular shift underway from cash to electronic forms of payment. We see this happening in the UK where, according to UK Finance, debit card volumes overtook cash in 2017 - in other words, we are well past the tipping point. The shift to debit being is driven by the dramatic growth in contactless, now at over £6bn a month, up 33% year on year. This shift is not only happening in the UK: other countries such as Sweden and South Korea are well ahead, whilst in the US where contactless has historically struggled, issuers are starting to rollout contactless cards and there is increased merchant acceptance. For example, the New York MTA has seen 3m taps per week in less than 6 months live on the subway, with all 472 subway stations planned to be contactless by end 2020. Clearly a change is happening and its implications are starting to be felt, for example through public discourse about Access to Cash in the UK.

I was prompted to pick up this topic again by a breakfast event graciously and professionally hosted by Odgers Berndtson. This event brought together a diverse group of payments leaders to talk about the future of cash. The topic prompted an unexpectedly lively debate with a broad range of views. One argument that seemed to hold sway was that the move to cashlessness we are seeing was largely a London phenomenon and that somehow the rest of the UK was ‘different’, that consumers displayed and expected different payment behaviours outside of London. Maybe it was because we were sat discussing this issue in the heart of the City, it felt convincing that what we were seeing was a London bubble.

This argument troubled me afterwards for a couple of reasons. First, it doesn’t chime with other data points (again thanks to UK Finance) that show that contactless usage is now similar in most UK regions to London (albeit with the North-West lagging a bit). Second, consumers, wherever they are, are just people like you and me - with needs, wants and expectations that in my experience are more similar than different. I recall when I was in Ghana a number of years ago with a group of retail banking network colleagues who told me that African consumers were ‘different’ because they liked queuing in branches…well you can imagine the results from the customer focus group and the surprise on those colleagues faces…

I fundamentally believe that what most consumers want from payments, at least at this stage of the economic cycle, is convenience (with security and control assumed). The reason they want this is that we expect ever more convenient solutions to help us live our complex and more digital lives. And in the UK these solutions are happening outside of and well as in London, driven by retail transformation, with payments embedded in them.

Take one example: we recently went to stay in rural Suffolk in the east of England. Although it’s about 100 miles from London and attracts a fair share of holidaymakers and weekenders, in terms of consumer infrastructure it’s a world away. A few buses a day and the nearest major supermarket is a 20 minute car drive. Yet change is visible here. At the end of the road used to be an unenticing local petrol station selling fuel from an obscure brand and with a shop seemly stocking a dusty collection of engine oil - and maybe a bottle of screen wash in you were lucky. Coming back this time, it’s been transformed into a shiny new Shell franchise with revamped forecourt, well stocked mini-supermarket and new hand car wash service. Seeing the increased footfall, it looked like a successful retail combination: fill up, have your car washed and grab some shopping at the same time. For the consumers in that area it makes sense because it’s simply more convenient: you can now drop in to pick up your dinner or maybe the few things you had forgotten to buy in the weekly shop, rather than driving 20 minutes or doing without. What I was seeing there was not the result of economic growth (with no visible evidence of regional economic outperformance) or a sudden influx of wealth into Suffolk – rather consumers taking advantage of new retail opportunities provided to them.

With retail convenience comes payment convenience. The revamped garage now has a new PoS device taking contactless and mobile payments. On limited observation, most customers seemed to be using cards, chip+pin or contactless, with a few using mobile payments. So they now have convenience in spending. That also opens those customers up to the opportunity for greater convenience is other parts of their financial lives, such as managing their money digitally, or getting rid of paper receipts using Flux, or saving whilst they spend as pioneered by FinTechs like Moneybox. This trend could take us to a world not just of embedded payments but also (as Matt Harris from Bain Capital Ventures has written) of finance embedded in all our service experiences.

So my takeaway from that trip to Suffolk was that we should be careful not to assume that because consumers are behaving in a certain way today, they don’t want or won’t adopt a new retail, payment or finance solution – they may just not have had that opportunity yet. As innovators, our challenge is to use deep expertise, design and technology to create compelling experiences that offer the chance for people to lead their lives in more fulfilling and more convenient ways.

Convenience isn’t just a trend for London: globally, nationally and locally, it’s a trend for all of us.