It’s Not About the Technology

I recently read the The Six Things That Will Change the Future of Payments.

Almost all of these changes centered on Technologies or Regulation- Cloud technologies, regulation around interchange fees, mobile and connected devices changing buying habits, new loyalty programs driven by technology, etc.

As the author, Karen Webster, CEO of Market Platform Dynamics mentioned,

There are six forces that will fundamentally reshape the way this sector operates over the next five to 10 years. You can bet all of the soft shell crabs in Maryland and salt water taffy at the Jersey Shore that these six forces will impact each and every player in this space in some way.

The driver seems to be the mash-up of connected devices, data and the cloud, which are dramatically accelerating the pace of change in an industry not exactly known for moving at warp speed.

But it got me thinking of why the same Venture Capitalists, Private Equity outfits, Vendors and others can’t necessarily solve the credit challenges in the market simply by making a better or different mousetrap.

You see, when it comes to credit, it’s about a lot of things other than Technology:

It’s about understanding liens, and covenants and bank loans.

It’s about understanding there is both a huge cost of origination as well as monitoring what you originate.

It’s about understanding Capital constraints in the Banking world today.

It’s about the Lender being prepared to give a decent Price for an Asset they want to Finance.

It’s about Customer relationships – so very important in this Transactional world.

It’s about understanding the Accounting implications of Inventory to Receivables to Cash.

It’s about understanding compliance issues, such as complying with Know Your Customer, Money Laundering, Bank Secrecy Act, etc.

You see, it’s about a lot more than just the technology.  This isn’t to say the technology isn’t important, and it is a necessary enabler for sure, but its not about just building a better mousetrap.  Heck just ask the Payment Graveyard, how many vendors didn’t realize the importance of compliance issues when it came to moving money.

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