Difference and Differentiation: What next for investment platforms? - Paper - Page 19
Chris McCullam:
Spending my pension in 2043…
In 2007 contactless payment technology was
introduced to the UK market, at the time, for credit
cards only. 14 years later, according to UK Finance6,
debit cards accounted for 48% of all payments in the
UK and 32% of all payments were made by contactless
methods. Projections for 2031 suggest over 2/3rds of
card transactions will be contactless (Figure 12).
Debit card transaction volumes
Total: 40,352
2021 (millions)
19,506 (of which contactless 11,470)
2031 (forecasts) (milliuons)
Total: 46,273
24,119 (of which contactless 16,997)
Figure 12 - Debit Card Transaction Volumes
By 2014 you could make contactless payments using
both Android and Apple mobile devices. UK Finance
estimate 32% of the adult population were registered
for at least one mobile payment service in 2021
(Figure 13).
Adoption of Open Banking is also expected to
increase the prevalence of account-to-account
payments rather than use of a card or similar.
Against this backdrop then, when I’m 64 (well 67), is
it feasible for me to expect to be running my financial
life with a single financial platform? Something that
can seamlessly connect my day-to-day spending, my
regular commitments such as utility bills, etc. with my
invested retirement savings. When I want to spend
some money on something, could this be deducted
from my ‘platform cash account’ rather than needing
to move a specific amount from one digital ledger to
another at a specific point in the month? Algorithmic
assessment of my spending patterns and cashflow
forecast could also then do a respectable job of
working out how much I need to disinvest, and when,
to meet my regular obligations and the predicted
irregular spending.
The early steps and building blocks are falling into
place to allow this. Banking infrastructure services such
as Clear.Bank provide virtual accounts at client level
to platforms now; Hargreaves Lansdown have built
a cash-hub to connect different savings institutions
with their platform, and providers such as HyperJar
allow segmenting of balances and linking of payment
services. An extension of Open Banking into broader
financial sectors would mean that my personal financial
platform will do the heavy lifting of connecting my
different savings and investment vehicles together and
give me that central, holistic, view of my net worth and
where it is going. Could this be delivered to me by a
single ‘product provider’? Quite possibly. Would I want
it from a single provider? I’m not sure.
Proportions of registrations for mobile payments
60%
60%
50%
40%
44%
36%
30%
29%
20%
22%
10%
0%
12%
16-24
25-34
35-44
45-54
55-64
In 2021, Faster Payments
and other remote banking
overtook Bacs Direct Credit
as the payment method used
most frequently by businesses
to make payments
In 2021, 39% of all payments
made by businesses were
made using faster payments
65+
Figure 13 - Proportion of registrations for mobile payments
6
https://www.ukfinance.org.uk/system/files/2022-08/UKF%20Payment%20Markets%20Summary%202022.pdf
19
