Wrapping up our interview series with Traxpay’s John Bruggeman, we turn to questions of risk and safeguards with new supplier payment models and conclude by examining how payments could change how supply chains look by 2025. Also see our first, second, third and fourth installments in this series as well. Enjoy!
JASON: Are we increasing compliance risk with new payment models? If not, what are the safeguards?
JOHN: I am so fundamentally opposed to that point of view. No! But first you need to buy me a bulletproof vest given that I’ve said this. Here is the thing … the reason that there is so much regulation in banking today is that because it is a black box. It is a gigantic hole and no one knows what’s inside, how it works, etc.
There would be less risk and compliance concern if there were total transparency. Our view is open it up. Give access to it – financial objects contain all data in real time and history in real time. Risk comes from incomplete information. Dynamic payments will tear down the walls that exist today and render the safeguards we’ve put into place irrelevant to managing compliance and risk given the complexity and possibilities that will be introduced into the supply chain.
JASON: It’s 2025. How has dynamic payments changed the B2B world as we know it?
JOHN: The first thing is banks will be unrecognizable … they may not exist as we know them today. Or they may exist but will be very different. If a bank survives in B2B without changing, it will be a survivor – or will just be hanging on. I think what you’ll see from a banking perspective is very much what we saw with Motorola, Nokia, Nortel or Alcatel. They forgot to look around them and the world innovated around them and then, in a matter of years, we don’t need these guys anymore.
You can easily turn the iPhone 6 into a bank – this is an example of what will happen in this world. New players are coming and emerging … no one thought of Apple as a device company or Google as the largest mobile company. No one will think of these guys as a bank until they wake up and go “Oh my God … they’re bigger than us.”
The market for payments and financing will expand dramatically in this time as well – it’s not a zero sum game. Laggards (think “too big too fail”) may use compliance and regulations as roadblocks to thwart new models, but they will fail. Network guys used the FCC to do it and largely came up short. Using regulatory and compliance angle as a sustainable differentiation is a hard preservation strategy. Banks must change in a B2B world or there’s going to be an awful lot of good real estate going on the market in world centers.
Spend Matters would like to thank Traxpay’s John Bruggeman for taking the time to sit down with us for a long chat – and putting his opinions on the firing line!