Payments Solutions: when innovation plays “leapfrog”

Over the centuries, there has been a succession of payment solutions – shells, salt, gold, silver, paper money, bank cards made of rectangular pieces of plastic. Some countries like France have developed in a linear fashion, successively or simultaneously adopting coins and notes, scriptural money, bank cards (1967), before trying out electronic purses (1999) and contactless payment technologies (2010). For a long time, other less developed countries with predominantly rural societies only used cash in their trading. But the development of a region does not always follow a constant progression.

Advancing later but faster

Countries that are less economically and industrially advanced may make leaps in their development. At the end of the eighteenth century, the Industrial Revolution was born in the United Kingdom. In France and Belgium it started at the beginning of the nineteenth century but Japan and Russia only started their industrialisation process at the end of the century, drawing inspiration from successfully implemented techniques. By using the growth of one region as a model, other regions can often speed up their own development, even if this occurs at a later date. This was recently borne out in West Africa, Morocco and Turkey where the latest technologies, like mobile 4G telephone networks, are available, despite the fact that they skipped the transitional stages. This rapid transformation can also be seen in the banking sector where new technologies facilitate financial transactions and compensate for a lack of infrastructures.

Africa – from cash to mobile phones

Africa is often referred to as the “Leapfrog” continent. This refers to African countries’ ability to bypass certain stages of development and offer the latest technologies straight away. BNP Paribas is actively contributing to this development. In June 2014, the Group entered into a partnership with Orange to open new mobile bank services via Orange Money, a money transfer tool launched in 2009. This system allows customers at the BICICI (Banque Internationale pour le Commerce et l’Industrie – Ivory Coast), a subsidiary of the BNP Paribas Group in the Ivory Coast, to conduct “real time” bank operations, i.e. pay water and electricity bills, buy call credit. Using a mobile telephone, the procedure is simple. This service should be extended to other countries in which BNP Paribas and Orange operate, starting with Senegal. In Africa, the mobile telephone has become an important means of payment. Start-ups compete with each other to devise new ways of banking, developing applications that will gradually replace cash payments. In Kenya, M-Pesa has been adopted on a massive scale to pay everyday bills. SimplePay and its payment system via smartphone has become widespread in Nigeria where automatic cash dispensers are very rare. South Africa is starting to use SnapScan and its contactless payment solution, used by street vendors.

Turkey – banks with a long view

Turkey, an emerging power in the Euro-Mediterranean region, has also made a leap in its development. The urban population has more than tripled in sixty years, in a country where agriculture and industry have long dominated, well ahead of services. Economic openness is being implemented thanks to free trade agreements. Over the last decade, the range of banking services has improved with the development of branches and automatic teller machines (ATMs), and Turkey adopted contactless payment far sooner than France which, admittedly, is well equipped with classic payment cards. TEB, BNP Paribas’ joint venture in Turkey, invests in the development of new banking technologies. It is the world’s first bank to offer cardless cash withdrawal in its ATM network via its CEPTETEB application and QR code technology which can be downloaded to a smartphone for free. TEB makes the most of all aspects of innovation. In January 2014, it launched an application specially designed for Google Glass. Customers with bank accounts at TEB can put on glasses to find the nearest automatic cash dispensers and get directions to them. The application also allows them to contact the bank’s Customer Services by video conference.

China – a large-scale hothouse of innovation

The history of China is punctuated by major inventions. One of them was the paper money used at the end of the tenth century to offset the shortage of metallic money and facilitate trade. Since the 1980s, China has experienced enormous economic development which can also be seen in the abundance of its innovations. The banking sector is no exception: Alibaba, the Chinese equivalent of eBay, has revolutionised the country’s banking sector with Alipay, its online payment system. Numerous Chinese start-ups have developed applications for mobile phones, taking advantage of the country’s industrial sector to test new projects. BNP Paribas Group is taking part in this impetus enthusiastically, especially given that its relations with China go back a long way – in 1860, the Comptoir National d’Escompte de Paris (CNEP) opened its first branch in Shanghai. Since 2007, the Chinese megalopolis has been home to L’Atelier BNP Paribas which aims to test the most innovative technologies in order to think up tomorrow’s banking practices.