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Comment: Far more focus needed on boring back-end

In an earlier article on the challenges of omnichannel retailing I drew attention to the fundamental change in the way we carbon-based life-forms (better described as 'phono-sapiens') are adapting in the new digital age.

No longer, it seems, do we have the time to fulfil that basic of human desires to 'hunt' in a physical sense (for goods and services), preferring instead  to spend our time hunting online through the digital channels that are available to us.

In response we see retailers developing engagement platforms that allow them to serve the 85% of UK adults who now regularly shop online. These platforms are nimble in design yet multi-faceted in scope aimed at delighting the consumer as well as seeking to lock the customer into an enduring relationship with their brand.

The relationship may be built upon the old world appeal of service and value but it must now be delivered in the digital space. This requires retailers to bring together all of the disparate functions of their organisations to reside under one digital umbrella, so that services can be provided seamlessly. For the digital customer it has to be as easy to return something and get a refund as it is to buy the thing in the first place.

In our discussions with the retail community it is very clear that payments operate as a very small element of this engagement, with the demand for simpler processes that can be integrated seamlessly into the background, becoming an invisible part of the interaction. Yes, payments must retain the same levels of security and guarantee but they should not interrupt or interfere in the primary relationship between the retailer and its customer base.       

Can the payment industry provide such services? The answer is of course, but it will necessitate a fundamental change and re-boot in the way the payment industry views its role in commerce, coupled with the realisation that when it comes to paying, the payment service providers brand is secondary to the customer's desire to get access to their funds or to a line of credit.

There are clear signs of this demand in the growing popularity of account-on-file services and single click payment engines embedded into retailers' digital platforms.

It is a truth also recognised by the European Commission, which in the revisions to the Payment Service Directive requires Payment Service Providers (based on its current wording) to give direct access to bank accounts and payment service initiation to third parties.

This is profound – especially when combined with the UK government's own desire, in wanting to create an open API culture, through the HM Treasury's open data/API initiative.

When looked at in the round this is about encouraging the development of new infrastructures that are more suited to the digital age.

Far more focus will need to centre on the boring back-end stuff (i.e. the underlying infrastructure itself) rather than having our heads turned or further distracted by the launch of yet another game-changing front-end solution.

If we start to accept that commerce is now part of a circular and much larger holistic digital proposition, and a 'platform-play' as being recalibrated by the retailers, then we have to work out how we share and exchange the data that allows these differing and concurrent parts to co-exist and interconnect.

Work needs to be done to develop the common interoperable data standards that will ease this process and remove the duplication that we see today, creating the somewhat clunky and outdated user interfaces that are a remnant of the physical shopping experience yet remain a feature persisting in today's online purchasing experience.

Instead, we must learn to make better use of the information that is available in the digital space, whether it be to identify and authenticate a customer, or to target them with the latest offer or reward.

Look to the world that Disney Inc has created through development of its Disney MagicBand which has opened up a world of seamless interactions and accessibility to their theme parks and supporting services.

It begs the question of why can’t the same aspiration be converted when using our connected device to unlock a world of carefree shopping in our lives as ordinary consumers?

Could opening and sharing access of a range of digital assets, across different platforms regardless of ownership, be the catalyst to help accelerate the delivery of a wholly new   retailing phenomenon of universal commerce with the demise of the traditional point of sale?

This is a world where multiple points of interaction could access the same core platform that in turn could make call-outs to whoever, wherever and whatever it takes to serve and satisfy the needs of the customer.

In a microcosm, no company or individual better personifies this ideal, nor has continued to seek to try to articulate this vision, than Natalie Massenet, executive chairman and founder of The Net-a-Porter Group.

When asked to describe her company – her response is telling: "We’re a technology company, a media company, a retailer and a service company all in one," she says.

All of this makes the case for real cross-industry collaboration, to bed-down and focus on doing the boring bits well; formulating and agreeing on the standards and codes of conduct that underpins and helps implement an information technology infrastructure that fits the bill for commerce in the 21st century.

Here the government and regulatory authorities may be able to help facilitate this debate by encouraging the development of the technical backbone upon which we can all build. It is no good talking about a universal commerce platform if this cannot be accessed by all regardless of location.

We often get asked whether something so contrarian could be considered a realistic proposition.

My response is always to look at the evidence on the ground. We see the seeds of this vision in successful digital services provided by the likes of Shazam and Blippar with their revolutionary user interfaces and in the success of the digital content providers like Netflix and Spotify. We see it further still in the popularity of one click payment solutions from PayPal and Amazon and in new-age payment service providers like Stripe Inc.  

All of these services have grown out of developments founded on the needs of digital natives, the millennials who have vastly different attitudes to commerce than those of us born the wrong side of the nineties!

Those digital natives, who are fast becoming the primary economic units of our future, will have no patience if they cannot access the services they rely on through the internet and mobile devices.

This provides a powerful and compelling agent for change. I am reminded of the often quoted example of Thomas J. Watson, the former head of IBM, who confidently predicted there might be a market for five computers. In a world where six billion of the world’s population has access to a mobile phone, who can deny the fact that we have surpassed a ’tipping-point, with a digital technology that is here to stay, and which needs to be better  exploited?

David Baker is head of the payment innovations unit for The UK Cards Association. He will be writing a regular column for Essential Retail on the evolving payments landscape and its impact on the retail industry.

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