In late September, the Federal Reserve Bank of Chicago hosted the 21st annual Chicago Payments Symposium, a leading payments industry event with participants from across the globe. This year’s virtual event focused on Activating Next-Gen Use Cases (Off-site) and offered insights on the new technologies, use cases and worldwide trends that will shape the future of the payments industry.
New technologies bring new risks
Michael Froman, former U.S. trade representative, spoke at the event about four global trends with implications for payments. These include the acceleration of digitalization; artificial intelligence and other new technologies that increase both risks and rewards in terms of “vast new opportunities to provide choice and service to consumers, efficiencies to businesses and increased effectiveness to governments”; and new skepticism about previous assumptions that the world would become more integrated as part of an economic system based largely on Western principles of liberal, market-based democracy. He also discussed the rise of nationalism, nativism, populism, sectarianism and protectionism, which has led some governments to demand more control over local payment systems and payment data.
Central bank digital currencies (CBDCs) are a global thought-starter
It’s the payments topic that seems to be on everyone’s mind. The CBDC discussion featured panelists from countries that have already introduced a digital currency (the Bahamas’ sand dollar (Off-site)), are in the process of doing so (Sweden’s e-krona (Off-site)) or are researching the topic (the United States (Off-site)), plus a panelist from an organization facilitating digital payments for internet businesses globally (Circle (Off-site)). In addition to weighing benefits and risks, their spirited discussion touched on how CBDCs can both co-exist with other payment systems and advance financial inclusion.
Being proactive is key to keeping up with demand
During his fireside chat, Federal Reserve Financial Services Chief Payments Executive Mark Gould emphasized that the payments industry needs to be proactive about continued progress on everything from facilitating coin circulation to adopting instant payments in the United States. Gould said, “There will be more demand from consumers for instant payments and services, and financial institutions are going to have to meet those demands because, frankly, consumers have more and more options for faster payments.”
Innovation requires adaptation
Whether the topic was open banking, faster payments or digitalization, speakers agreed that rapidly evolving technology requires an extra level of diligence and preparedness. As Federal Reserve panelist Dan Baum emphasized, "One thing we have known from the beginning is that we expect, and have planned for, the fact that use cases will evolve over time."