Features of Successful Innovations

Financial Services Technology Revolution--Keynote at NASAA Annual Conference

In his opening keynote at NASAA, Bob Chakravorti gave an overview of the impact of FinTech firms on the financial services industry. He spoke about the how these firms are impacting payments, lending, wealth and asset management and alternative currencies. In addition, he discussed the role of regulation generally and the need for regulation to evolve.

Sujit "Bob" Chakravorti, "Financial Services Technology Revolution--Opening Keynote," North American Securities Adminstrators Association, Seattle, WA, September 24, 2017.

FinTech and Digital Transformation of the Financial Sector

In his presentation in Madrid, Spain in April 2017, Bob Chakravorti discussed how the financial sector is rapidly changing because of new products and services brought to market by FinTech firms. Specifically, he discusses certain market segments where new entrants are reducing market frictions. He puts forth how incumbent financial institutions should respond new entrants.

New Payment Technologies: Back to Basics

In a commissioned paper, Chakravorti identifies eight necessary attributes for successful payment innovations. Payments can be made via fiat or crypto currencies, bank credit or deposits, or funds transfers on the books of non-bank payment providers. Most of the focus is on technologies aimed at improving intermediated retail payment transactions either by increasing their reach, convenience, merchant sales, or decreasing costs for end-users or payment providers. While there have been extraordinary technological advancements that will lead to significant changes in the way we pay for goods, the basic attributes necessary for successful payment innovations has changed little over the last few decades.

Why Invest in Payments Innovations?

Chakravorti and Kobor provide a framework to study the creation and adoption of innovations by payment providers and processors. The authors identify several motivating factors for banks and nonbanks to invest in payment innovations. In addition, they discuss the evolutionary process of payment innovations from inception to commoditization and recognize that innovations differ in the time necessary to evolve from proprietary technology to commoditization. Finally, the authors consider a snapshot of various payment innovations at different stages of development. The authors’ main conclusions are the following: Payment innovators are more likely to be successful when they target niche markets. Banks often use innovations to add value to a bundled product offering. Payment networks and processors leverage their connectivity when creating or adoption innovations.


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