PayPal Holdings Inc.’s digital payments platform is available in more than 200 markets worldwide and used by 227 million active account holders. Sri Shivananda, senior vice president and chief technology officer of the company, is a geek at heart who earlier worked at eBay Inc. as a software engineer and rose up the ranks to become vice president of global platform and infrastructure. He will be speaking at EmTech India 2018—an emerging technology conference organized by Mint and MIT Technology Review—on 8 March in Gurgaon. In an email interview, Shivananda talks about the dynamic digital payments market and the impact of emerging technologies such as artificial intelligence (AI) and blockchain. Edited excerpts:
In the payments space, do you see the big getting bigger or will there be ample room for multiple smaller companies that have only recently emerged?
We have seen the sector evolve over time. We know there will be more innovation in the next five years than we have seen in the last 50 years. As long as the needs of the customer are kept at the heart of innovation with a focus on creating a secure payments ecosystem, there is room for companies of all sizes to grow.
One must remember (that) how a customer defines a good experience has changed dramatically with the advent of emerging technologies. Instead of it being a battle between the big and the new, it is more important than ever today to understand the potential of collaborations.
How do you see the role of traditional banks evolving? How are newer technologies like AI (machine learning, deep learning, etc.), blockchain and the Internet of Things disrupting this sector?
It is difficult to stay relevant in this world without infusing emerging technologies intelligently, and financial services are no exception to this. The future of financial services is algorithmic and experience-centric. Bringing together Big Data and predictive analytics will enable financial service providers to make better real-time decisions. Looking at many digital companies, the primary income source is the gathering, analysis and linkage of customer data—data that financial services firms already possess as a by-product of their traditional business.
While 2017 was definitely a breakthrough year in terms of emerging technologies, 2018 is going to be all about how these technologies will disrupt this space for a more sophisticated, secure and trusted payments process.
Emerging technologies such as blockchain and AI, among others, are transforming the industry—with mobile phones, digital assistants and connected devices deriving patterns from our usage and making intelligent suggestions, and automating processes for compliance. We are moving to an era where “ambient intelligence” no longer provokes amazement from the users and has become an expectation.
It is said that the use of blockchain tech in financial services is marred by scalability, among other issues. Your comments?
Blockchain’s core advantage is that it enables distributed trust without a central trusted intermediary as well as enables the creation of a distributed, shared, immutable and trustable record of facts. It certainly is a revolutionary technology that could enable financial services firms in terms of integrations, fraud (prevention), compliance, efficiency, security and smart contracts. We have engaged with a broad range of ecosystem firms and have launched a number of internal experiments to better understand how blockchain technology can contribute to our aspiration to be the world’s largest open digital payments platform. However, it is important to note that it’s still early days for blockchain, and we believe the transformational opportunities posed by blockchains may yet take time to be realized.
The online payments market is in a state of flux, especially in the dynamic Indian market. How do you see the space shaping up globally and in India?
India is at the cusp of the digital payments revolution. The initiatives by the government and the regulator coupled with increasing adoption of digital payments make India an exciting market for us. Some of the initiatives undertaken by the Indian government are remarkable, and probably the first for digital payments worldwide. A recent report by US-based banking technology provider, FIS, said India has the most evolved digital payments system among 25 countries including the UK, China and Japan. These countries were surveyed on parameters such as round-the-clock availability, adoption and immediacy of payments.
The challenge I see is that the Indian consumer has been treated lavishly with discounts and cashbacks. Unfortunately, these are not sustainable loyalty practices. While incentives will bring the customers to the platforms, retaining and building trust will depend on being brilliant at the basics on reliability, fraud, risk, security and compliance.