Summary
- Primary driver of finicity/Plaid deals is not open banking, but in support of the “network of networks” strategy.
- The owner of the consumer directory, will rule payments. Tokens are the central battle field for trust networks (and payment network) consolidation as well as new services.
- MA lost out on the Plaid purchase, but is likely to end up far better off for it.
- The Visa/Plaid deal is likely to fall through as the retain consumer credentials for 5yr (claimed by class action).
- V/MA will likely own the payment token directory
- Visa is leading – 1B tokens issued by Visa (acquisition of BellID/Rambus)
- Mastercard Track successfully leads the market in global B2B Least Cost Routing
- V/MA have substantial hurdles in expanding the directory beyond payments
- Few direct consumer or merchant relationships
- Bank and Apple/Google leadership in Customer Identity/Trust
- Trust is the core of bank risk management (and Bank margin)
- Network effects decrease transaction costs for established services and increase value (acceptance). However they have the reverse effect on new services.
- Value/Margin is migrating to the ends of the network and many new networks are forming.
- The energy to manage participation in multiple networks is dropping (with Mobile). Enabling specialized networks that cater more finely to precise needs of each node.
- V/MA will see substantial growth in core payment volume with continued network effects and the breakdown of Payment silos.
