NASHVILLE—Innovation is being able to “see around the corner,” according to the co-founder of Square, who cautioned that financial institutions will soon see a significant advancement in the payments space that will likely make them “nervous.”
“The future is scary,” said Jim McKelvey, whose company years ago was able to forecast a market for payments technology for small merchants.
Indoor location—the ability for retailers to not only track consumers via their smartphone and view what they browse and buy, but also the ability for the consumer to navigate through a store and locate items via guidance on the phone—will become widespread soon enough, said McKelvey during PSCU’s 2016 Member Forum.
Citing research being conducted in labs today, as well as to technology that resides outside and inside smartphones—Bluetooth low energy, Wi-Fi, NFC–McKelvey said the compass on most phones today and other sensors that will soon be mass produced to be small enough to fit into phones.
“When will we see indoor location happen? Probably within a year we will see a meaningful application of the technology,” said McKelvey.
He pointed to a test being run by Walgreen’s that allows consumers to type in a product they are shopping for and then follow an arrow on their phone to guide them aisle by aisle to an item’s location.
“It’s pretty amazing,” said McKelvey. “This is not fantasy. This is the technology that is coming.”
What that means for those in the payments chain is that there is an “avalanche of super-valuable data” on the way for those who own it—such as very detailed and in-depth buying and shopping habits of consumers. He said that financial institutions today have a great deal of consumer payment data they can leverage, but most are simply sitting on it.
He cautioned that credit unions may lose this big advantage as indoor location becomes widespread, as others within the payment chain will lay claim to the data and gain a clear financial picture of their members.
“Purchase data is the largest treasure trove of unused data,” he said. “But the question is, when indoor location takes hold, who owns the data?”
Is it the retailer? The financial institutions? The data systems providers? Google? That has yet to be determined, McKelvey cautioned.
Looking around the corner is never done with 20-20 vision, added McKelvey, who said the future typically turns out to be different than what forecasters predict.
He urged CUs to be ready for the change and to act on the data they have, adding that they likely won’t feel comfortable with what’s coming.
“What is truly innovative never feels comfortable,” McKelvey said. “it will feel unsettling and make your nervous.”