J.P. Morgan’s Jeremy Balkin and Neha Wattas believe payments are eating the world – and introduce their POWER+ framework for understanding why.
Back in 2011, tech investor Marc Andreessen made a prediction. He claimed that by 2021, ‘software will eat the world’.
Andreessen was right. 2021 is here, and software controls both our physical and digital worlds. We don’t hail taxis on the street, we order them through our smartphones. We don’t rent films or buy box sets, we stream them. Food arrives at our door via an app. All of these industry disruptors are software platforms.
Crucially, the ability to move and process payments anytime, anyplace has become the rail upon which virtually every software platform we use relies on. So it should be no surprise that as global economies contracted in 2020, fintech grew. In Europe alone, fintech apps adoption and usage jumped by 72% last year, according to deVere data. In Africa, there are already at least six payments and fintech unicorns, and these $1 billion+ start-ups are only going to grow in number.
That’s why we believe that, post-software, the next big thing ‘to eat the world’, will be payments.
Fintech is redefining payments and meeting a software-based society’s needs
In today’s on-demand era, where cars, meals, childcare, entertainment, employees – basically every facet of everyday life you can think of – are ordered and accessed within seconds from the palm of your hand, these services must be paid for at the same speed and with the same levels of convenience.
It’s clear that fintech is accelerating payments innovation at speed. At J.P. Morgan, we have been tracking economic, social, technological and political shifts and watching how they play out in payments. We have created a framework for business to understand changes in financial technology and payments – and to survive and thrive within the new payments paradigm. It’s called POWER+.
POWER+ : Platforms, Online, Wallets, Embedded and Real Time
POWER+ identifies the overarching mega-themes driving change today in the payments industry – Platforms, Online, Wallets, Embedded and Real Time – and the micro-trends within them. These are fast-growing and deep value pools that are early-to-mid stage in terms of maturity: in 2020, of the $240 trillion in global payment flows, approximately $54 trillion could be attributed to these five themes.
The + represents the integration of Valued-added Services (+), which will bring these payment flows to life for consumers and merchants.
Even more change is coming
The whole point of innovation is to make payment feel seamless, integrated and natural, and perhaps that’s why it can be easy to forget just how much change we have witnessed over the past decade. More is coming. With rising adoption of artificial intelligence, quantum computing, bitcoin and stablecoin, and 5G – to name a handful of the technologies identified in our report – payments innovation in the next decade is going to move even faster.
Today, APIs mean any software company can offer payments and banking products and services directly to its customers under its own brand. Adding payments products is not only an additional revenue stream, but it has become central to software companies’ brand and profitability. Embedded finance enabled by banking-as-a-service (BaaS) could be worth $3.6 trillion by 2030. For customers, this means that payments and banking products and services can be embedded deeper into customer journeys, at the point of need.
Just as software disrupted and redefined the way we utilize physical industries, we predict fintech will fundamentally disrupt payments. Payments, in turn, will become the connective tissue between people, devices, homes, cars, and avatars spanning physical, digital and virtual worlds.
Every revolution is powered by something. For the industrial revolution, it was coal. For the digital revolution, it was software. We believe payments will power society’s next major technological advancements. Our POWER+ framework, and our deep-dive accompanying report, outlines how we got here – and where we’re headed next.
You can access J.P. Morgan’s Payments are Eating the World report here.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of J.P. Morgan, its affiliates, or its employees. The information set forth herein has been obtained or derived from sources believed to be reliable. Neither the author nor J.P. Morgan makes any representations or warranties as to the information’s accuracy or completeness. The information contained herein has been provided solely for informational purposes and does not constitute an offer, solicitation, advice or recommendation, to make any investment decisions or purchase any financial instruments, and may not be construed as such.
© 2021 JPMorgan Chase & Co. All Rights Reserved.
Jeremy Balkin is Global Head of Innovation & Corporate Development at J.P. Morgan Payments. He is an expert in the engagement of Millennials in the financial services sector and a multi-award winning author.
Neha Wattas is Head of Strategic Insights, Innovation & Corporate Development at J.P. Morgan Payments. She develops theses on emerging trends that are shaping the future of payments, and leads FinTech partnerships, investments and M&A deals for J.P. Morgan.
