News & Insights

When Josje Fiolet started at INNOPAY around six years ago, the transactional world was completely new to her, but she was intrigued by the opportunity to work in such a dynamic and ever-evolving industry which combines business, regulatory and technical aspects. Since then, on the company’s fast-track talent programme, she has progressed to the role of senior manager, with a focus on leading client projects related to digital identity, data sharing and payments. Here, she talks about a recent project in southeast Asia.

Who was the project for?

As a ‘for purpose’ company rather than a ‘for profit’ one, our client is closely interwoven in the Asian country’s payments landscape. It is involved in developing payments products and services together with industry players, but it also operates infrastructure such as the ATM network and payments systems. Moreover, it plays a role in realising the objectives of the country’s ten-year blueprint for the financial sector. The client was actually a consortium of stakeholders, with the participating organisations ranging from local, national and foreign banks in all shapes and sizes to non-banking participants such as third-party acquirers and FinTechs.

How did INNOPAY first get involved in the project?

We were initially recommended for the project by the Dutch Payment Association (DPA), which heard about our client’s plans through its participation in an international association for similar interbank organisations worldwide. We have worked with DPA quite often in the past, such as when supporting the development of the iDEAL online payment scheme for the Dutch banking industry. In fact, Australia is another member of that association and we’ve also successfully supported AusPayNet in the past, so we actually got recommended from two sides! Once we were on the shortlist, the client soon realised that – despite us not having an office in Asia – we were the natural choice as the worldwide leader in payment schemes with the most experienced consultants. We later heard that another deciding factor was our unique collaborative approach to co-creation combined with our transparency about which aspects we needed to take care of ourselves to maximise the value, and which parts of the project could be handled by local partners with our support.

What did the project actually entail?

Our client is aware that, to enable a digital economy, it is essential to advance the payment landscape towards ‘digital first’ or cashless. But in the client’s country, an estimated 95% of all retail transactions are still based on cash and cheques. Therefore, as part of the country’s ten-year blueprint, our client is keen to accelerate the shift to a digital transactional ecosystem by adopting e-payments. Our brief was to develop a vision and adoption plan for the next three years. We started on the preparatory work in October 2019, and then in early November a team of three of us flew to the country to work on-site. We were supported by a regular team of four back in the Netherlands, plus specialised subject-matter experts who flew in and out for important touchpoints with stakeholders as necessary.

We started off by conducting a thorough assessment of the current payments landscape in the country and elsewhere. We identified best practices in various different countries, including Sweden, Singapore, Canada and Australia as well as the Netherlands, and analysed how they could be applied in the local context. We also held lots of interviews and meetings with all types of stakeholders, from CEOS of major banks to FinTechs, to develop a shared vision and shape the story together. Our discussions covered how the world of payments is evolving and what our client could expect in the future – including the exponential growth of digital transactions and how payments are at risk of becoming a commodity. Looking a step further, we also touched on the ever-increasing importance of digital identity, privacy and data control, and the role of financial institutions in such services. By considering recent developments elsewhere, such as the European Data Strategy and the link to data sovereignty, our client is in a position to benefit from ‘leapfrogging’… to see where the world is heading and get it right first time by fully embracing the possibilities of the digital transaction era.

What was the biggest challenge in the project?

This was an interesting case because the local market actually already has a large variety of relatively mature e-payments products, but the current adoption rate is only around 5%. The transactional ecosystem is a two-sided market, which means you have consumers and merchants – two distinct parties with distinct needs – but you need both for a transaction to be successful. For example, there’s no point in a merchant providing a terminal for credit card transactions if no one has a credit card, and vice versa, which creates a kind of ‘chicken and egg’ situation standing in the way of adoption. The main challenge was therefore to change behaviour on both sides. Solving this challenge requires a specific approach with an understanding of the common laws of two-sided markets. At INNOPAY, we are very familiar with those laws and how to address them based on our inclusive, collaborative approach.

INNOPAY was recommended because of its unique collaborative approach to co-creation. Could you elaborate on that?

I mean that joining forces helps to overcome all kinds of challenges in two-sided markets. Our client’s aim is to advance the overall growth and prosperity of the country as a whole. This also means growing the entire transactional ecosystem rather than playing a zero-sum game in which one or two dominant ‘winners’ take it all, which is what we’re currently seeing in platform-based models. Our inclusive approach is based on setting up a scheme-based model based on mutual agreements relating to business, legal, operational, functional and technical aspects. Such a scheme provides equal access for all kinds of organisations, irrespective of their size – which is particularly relevant in a country with such a high number of smaller, local banks. This creates healthy competition based on better value propositions for end users (consumers and merchants) while growing the whole digital transaction market, creating a win-win situation for everyone. INNOPAY has a successful track record of creating and launching schemes since 2005, both in Europe and beyond. As an added benefit, this type of collaborative approach will make the banking industry more resilient against FinTech giants trying to enter the market.

What are the next steps?

The project came to an end in early February, but we’re keeping in touch with the client to offer support during the execution phase as necessary. We developed a very warm relationship during the project, and it was hugely rewarding to hear the CEO describe us as “part of their story” when we were saying our goodbyes.

Did you face any cultural issues?

The Dutch culture is less formal and hierarchical than many Asian cultures, of course; we took those differences into account, such as by holding more one-on-one meetings to build trust. We discovered that it could be just as important to listen to what people didn’t say as what they did. I think that our typical Dutch bluntness worked in our favour; the client was looking for an honest and straight-talking partner in order to make real progress. We have extensive experience of collaboration and co-creation projects in various countries, and the basic principles remain the same; it’s about carefully balancing stakeholder needs and interests, creating a shared purpose and guiding everyone towards the end goal by asking the right questions.

What were your personal highlights during the project?

I really enjoyed being immersed in a whole new culture for a longer period of time. But above all, this was a terrific opportunity to talk to so many high-level stakeholders from across the whole payments industry, to apply my knowledge from other markets and to gain new perspectives in this one – which will in turn help me in future projects, wherever they may be in the world!