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Having a strategy about payments is critical for success in the payments business today. But which of the things that might be a threat, or potentially an opportunity, is most worth focusing on?
When confronted with new challengers in payments, a good first step is to screen the threats against a simple strategic-analysis rubric to sort out those that need attention from those that probably don’t.
Questions For any potential payments method, competitor, or opportunity; what do we need to know to understand if it merits further attention? See the chart below for eight strategic questions that isolate what needs our attention.
Now, let’s see how this performs in two test cases, which we’ll call X and Y for the time being.
Test Case X First, is X a potential threat to my payments business? You may have guessed that the candidate threat is online consumer-lending sites, which have regularly been cited as potential payments competitors. But analyzed strategically, they don’t look like they would be a threat if they tried to get into payments.
Test Case Y Now, is Y a potential threat? This second example is the China UnionPay card. This payment card, which processes in the United States on the Discover and Pulse networks, could be a real threat and is quite aggressively pursuing the U.S. market. For some financial institutions serving certain U.S. ethnic communities, it could be a potential partner. The screening questions are telling us we’d better get to know more about this one and watch it carefully.
Not all payments challenges will come through the rubric in as crystal-clear a fashion. That is part of the effectiveness of using this approach. The process isolates those factors on which it is hard to rate the challenger so we know where we should be focusing our strategy effort.
This method is not a substitute for having a strategy. It is a way of isolating for which new challengers you need to have a strategy.
Click here to view the accompanying chart.
—George Warfel • gwarfel@wespay.org
