Alastair Johnson, Founder & CEO, Nuggets, explains why, far from being a threat, the latest technology and in-app payments could enable High Streets to thrive
With the proliferation of e-commerce websites offering next day delivery on a staggering range of items, one would be forgiven for thinking that the days of brick-and-mortar high street retailers were numbered. However, such a supposition assumes that the high street is incapable of adapting in turn.
Indeed, whilst online retailers grow increasingly, so, too, do the tools available to physical stores. Take, for instance, Marks and Spencer’s unveiling of its new payments platform, which enables customers to shop as normal, scanning items they wish to purchase. Instead of going through a till, they can simply make the payment directly in-app, removing some of the tedium associated with shopping at a brick-and-mortar establishment.
Developments such as these are solid advances in the progression towards the realm of cashless digital payments, and just one example of the innovative technologies that can be employed by merchants to incentivise visits to traditional shops. When it comes to this area, the Chinese markets are undoubtedly far ahead of the curve.
At a period where the rest of the world were focused on credit/debit cards as the successor to cash, innovators in Asia realised the potential for making such payments “digital”, carried out through individuals’ smartphones – both online and in the meatspace. WeChat and AliPay are prime examples of this, used by everyone from conglomerates to street vendors. As a result, the commerce infrastructure and marketing techniques in China have evolved with a particular focus on accommodating and integrating widely-used technology into day-to-day commerce.
Consider, for instance, the O2O (online-to-offline) model that is now a go-to strategy for many merchants, allowing online and offline stores to thrive in tandem. It makes extensive use of a wide (online) user base, encouraging shoppers to visit brick-and-mortar locations in order to enjoy deals, rewards and events.
Progress in digital payments can be chiefly attributed to consumer desire for convenience and simplicity (as of late, however, privacy concerns are also becoming a factor). With the penetration of smartphones around the globe, it’s becoming easier to create secure and intuitive apps that make payments simple (indeed, this notion predates even smartphones – one need only look to the staggering network effects of mobile payment system M-Pesa in Kenya, introduced in 2007).
One development poised to catalyse these types of solutions is the adoption of open banking initiatives, which allow fintech innovators to build on APIs provided by banks, breaking their monopoly on what have traditionally been very conservative forays into technology.
With the open-source ethos spurred by open banking, bleeding-edge advances in blockchain technology and cryptography can be harnessed to build apps that not only make payments or identity verification actionable at the touch of a button, but also take aim at the hugely damaging phenomenon of data breaches that permeates the digital space, by ensuring that individuals maintain complete control over their personal data.
This tech stack offering is incredibly valuable in an unfortunate reality characterised by gaping security vulnerabilities that put individuals at risk of fraud, identity theft or data harvesting. Decentralised networks with heavy encryption are key to breaking away from this model – a blockchain layer allows for an alignment of incentives amongst participants (issuing native tokens as fuel for the network), whilst zero-knowledge storage enables individuals to store personal information (card details/identity documents) in an encrypted container, accessible only to them.
In order to make a payment or verify their identity, all they need to do is sign off (with a simple tap on their device, rendered even more secure with biometrics) to validate the action – instead of revealing sensitive data to a merchant, attestations across the network mean that said action is confirmed without opening oneself up to counterparty risk.
Such a platform, in addition to resolving major systemic issues with the existing asymmetrical data landscape, is a boon to businesses and customers alike – a one-stop shop for digital identities and payments, accessible from an individual’s phone, goes a long way in streamlining a customer’s experience whether in-store or online.
Emerging technology is not exclusive to cyberspace, as examples such as these or that of Marks and Spencer demonstrate. Digital innovation does not necessarily phase out existing brick-and-mortar establishments, but rather can be leveraged to enhance consumer experience. High street retailers need to explore technologies like blockchain, digital payments and artificial intelligence (as well as strategies like the O2O model) so as to incentivise consumers to continue visiting their stores.
About the author
Alastair, a design-led entrepreneur and innovator, believes the blockchain is about to transform relationships between individuals and institutions they interact with. He envisions a world in which individuals regain absolute power over their own data and profit from its value every day — both financially and through day-to-day conveniences. Alastair has led global integrated product development and product marketing for brands like Microsoft, Skype, Office, Xbox, Hololens, Disney, TED and the BBC. His focus over the past three years has solely been on using blockchain technology to help consumers take back control of their data.