BLIK follows all the trends highlighted by the European Payments Initiative: mobility, immediacy, and e-commerce first approach. It plays an essential role in the context of all these components. Therefore, we picture BLIK as a European payment system in a span of just two or three years, stresses DARIUSZ MAZURKIEWICZ, President of the Management Board of the Polish Payment Standard – BLIK System operator, in an interview with Jan Bolanowski and Paweł Minkina for Miesięcznik Finansowy BANK.
BLIK has become the most popular payment method in Poland. Online transactions have practically been dominated by it: BLIK is more popular than pay-by-link or card payments. And yet this concept’s tenth anniversary will be celebrated in 2023. In the period of such dynamic technological changes, does BLIK already feel the pressure of time?
The idea, or rather its germ, was created in 2013. This original concept is largely based on the one-time token, being the BLIK code. Today, however, BLIK is so much more. It stands for an entire payment ecosystem that, despite being largely based on the original product, has been significantly expanded. This results from the dynamically changing environment, customer expectations, certain competitive pressures, and even the increasingly strategic role that payment systems will play in individual markets. Competitive pressures, external expectations, market changes, new consumption models, the shift towards e-commerce, and expectations regarding the immediacy of transactions are the trends that affect and will continue to affect the development of BLIK in the coming years.
What are the post-pandemic perspectives for the payments market? Will the changes be as dynamic in this area as those we have witnessed over the last two years?
Experts are mostly convinced that the pandemic has not created any new trends, but greatly accelerated the existing ones. We have long recognised the inevitable move of the independent payment system, or the very way money circulates in the economy, towards digitalisation. The pandemic has disrupted our comfort zone as regards thinking in a long-term perspective: it has become an almost immediate reality. Someone who had not previously planned for the long-term horizon was not prepared to respond or adapt to pandemic changes. In contrast, those who had had long-term strategies simply began to urgently implement them. The pandemic has proven to be a testing ground for technology. Long-term strategies were turned into operational plans or, in extreme situations, even into business continuity plans.
Are there any key areas to this testing ground?
Three issues should be noted. First of all, we have seen remote trade becoming more popular, with e-commerce being the first channel to purchase goods. Physical points-of-sale have become a luxury and a rather expensive product experience, necessary only in exceptional cases where specific goods are offered. Currently, this is not the primary trading model, but rather a sales channel preferred only by selected brands. Today, the basis of trade is an e-commerce model equipped with excellent logistics. This is the new paradigm; however, it seems that not all retailers are aware of it yet.
The second trend I would like to call attention to involves the immediacy of settlements. Today, the absolute immediacy is becoming the standard in the exchange of money between various parties. Service performance or goods dispatch takes place when the full circulation of money is ultimately ensured. This trend involving the immediacy of transactions used to be associated with a certain “premium” quality, while today it has become a kind of legacy. Nowadays, the settlement for a product must be immediate in order for the product to be delivered. This is the direction that will radically affect all market players.
The third trend is related to mobility, understood as the mainstream. Years ago, studies showed that mobility would refer to a select group of top computer solutions. Today, the new model must provide customers with a payment solution that is versatile, convenient, and fast. Currently, there is no market in the world that does not respond to customer needs in this respect. This is different in Asia, America, and Western Europe, but fundamentally, the trend of mobility is undisputed: payment is mobility. The pandemic acceleration has helped us forget how unique this process is or that some used to position it as a solution aiming exclusively at a certain group of prestigious customers; today, this has become a completely misplaced stereotype. The three trends I have listed determine the development of BLIK, but they also affect the expansion of our product and our functional ecosystem. They enable us to create solutions that could become market hits in two or three years. We realise that competitive pressures are enormous in this area.
With the pace of the changes, is long-term planning in a five- or ten-year perspective at all viable at the moment?
It depends on what we mean by “planning”. If we are talking about the conventional model of the economy, a perspective that exceeds the period of five years is a good contribution to Yuval Harari’s books. We should be thinking about how the world might look like in the future, but it has little to do with building your business. Currently, a three-year planning horizon seems to be optimal; however, we must also realise that this too is subject to a large margin of error. This is why the agile attitude that permanently modifies the direction of development is essential. We have to think three years ahead, knowing that in six month the strategy might change substantially. Without this perspective, it is not possible to prepare the product well. We are talking about quick implementations that we verify at a very initial stage, so if we face failures, we are brave enough to bury them and look for new solutions, without making huge investments. Today, the market expects the specific agility of small product implementations. Nevertheless, I would absolutely disagree that there is no point in making any plans anymore, as without this model of operation, it is impossible to build a business or a team, or invest in the brand and educate the market.
This is different, however, from the viewpoint of the customer who does not have to follow the quick look at the product. At this point, we must emphasise one key issue of the designed solutions: it is part of the responsibility touching on cybersecurity, and of the processes of creating products that will provide all market participants with the highest standard in this respect. Therefore, we cannot change the customer communication too often.
In our internationalisation strategy, in a three-year perspective, we primarily focus on having a significant presence in CEE. There are several markets that are crucial for us. The most important one for us is Poland, not only because it is our home country, but also due to the size of the market.
Where – if not in ten, but in three years from now – might BLIK be?
Above all, there are several market trends, particularly in Europe, that we would like and need to pay attention to, and where we see that BLIK has a role to play. The potential of the e-commerce market across Europe, with a particular focus on the CEE region, is especially important. The second element is the nature of and the attempt to develop national payment systems. The independent payment system has grown in many markets, reaching the level of ambitions of the local banking and e-commerce sectors. We are witnessing a national fragmentation of payment systems. We glance at Europe, and we know we have our BLIK: the national champion in terms of market penetration that many countries appreciate. There are markets that have been successful in building their solutions for some time, including the Nordic markets. The Spanish national sector is also trying to scale up their solution. There are attempts to define such a model in the German and French markets. Virtually all the markets appreciate Poland, and this is not an exaggerated statement. We should also focus attention on the European Payments Initiative (EPI), which attempts to and makes a diagnosis related to the need for a single central solution. While we understand this initiative, we must emphasise that BLIK follows all the trends highlighted by EPI: mobility, immediacy, and e-commerce first approach. It plays an essential role in the context of all these components. Therefore, we picture BLIK as a European payment system in a span of just two or three years. Of course, we do not expect that every market will already be using our solution at that point, but rather that we will actively become a regional payment system that complies with all regional requirements, including the particularly important multi-currency aspect. We would like any bank in Europe to be able to use the increasingly interesting acceptance network that we are already building. We started establishing partnerships with local and global payment services providers two years ago. Today, it is crucial for us to have an important and long discussion about the business case and the implementation of BLIK in applications of banks outside Poland. This is how we want to scale our business.
In the three-year strategy, do your targets focus on the number of banks, the percentage share in each market, or something else?
In our internationalisation strategy, in a three-year perspective, we primarily focus on having a significant presence in CEE. There are several markets that are crucial for us. The most important one for us is Poland, not only because it is our home country, but also due to the size of the market. CEE is a region where you have to work really hard in other countries to achieve volumes similar to those offered by Poland alone. In the start-up sector, people even talk about the curse of the Polish market that, due to its potential, makes domestic companies lazy and prevents them from expanding abroad. I see it from the other side as a certain problem of our region, namely that markets being the natural direction for the development for Polish companies are so fragmented. There is much more to be potentially gained in the large markets of Western Europe, but we must face more competition there.
We believe that our role is to carry the torch of enlightenment, and promote the benefits BLIK offers in CEE’s banking sector: in the mobile application model. It has proven to be effective in the Polish market, so we will now aim at making BLIK a regional payment system based on the Central European region. This is our target, but for the time being, I would prefer not to talk about our ambitions as regards the level of penetration in individual markets.
The Polish market is quite bold in adapting new payment solutions. We have been a leader in the implementation of contactless payments. Many European countries, however, were more sceptical, fearing for their safety, for example. Do you see similar risks that BLIK will face in its European expansion?
I think the process of developing such mobile payment systems as BLIK from scratch must face not European but global challenges. In Poland, we are used to mobile payments provided by BLIK being based on the bank-client relationship, but this is not so obvious in neighbouring markets, as mobile payment solutions are provided by bigtech players. However, these companies are increasingly bold in entering other product areas. I don’t think there is a banking sector in the region that is not aware of this challenge or would not like to have its own payment solution that is widely accepted and used by customers. BLIK may prove to be a panacea of sorts in this respect. We present a business case proving that with the use of the existing banking applications, an independent payment ecosystem can be created, one that also benefits the local e-commerce sector. In the post-pandemic era, there are no longer any banks that see e-commerce as a minor segment.
The example of Poland shows that the scale and awareness of the added value of contactless or P2P payments can be based on e-commerce.
This is our message when entering individual markets. We offer an off-the-shelf solution that can be replicated in any banking sector, and ensures the synergistic effect. We see how this works in Poland. On the one hand, BLIK uses the well-developed mobile banking, while on the other, it strongly supports its growth. Today, every second financial transaction in the Polish mobile payments sector is a BLIK payment.
We are approaching this difficult task with optimism, but also with the awareness that we still have a lot of work ahead of us. We must face up to the challenge of multi-currency and cross-border settlements, for example. Because of these realities, we are developing our competencies in this area and around the European infrastructure, so that we can soon invite any interested bank in Europe to join BLIK.
Today, we are becoming a cloud hub, which is an excellent idea. I think, however, that in the coming years, we must focus on hard ‘cyber’ competences, as the market is starting to become really difficult in terms of availability of specialists. This is also an area that our universities should take more into consideration when training the future employees of the financial sector.
Going back to the payment trends you have mentioned, does this digital transformation mean, in a short-term perspective, the closure of bank branches where over 60,000 people are employed in Poland?
In my opinion, in the mid-term perspective, banks will implement IT projects even more effectively, quickly and comprehensively. As is the case in retail, physical branches will too become a luxury in banking, whereas the face-to-face contact with an employee – a premium service. This is the direction followed by the market. The mass product will no longer be based on a relationship with another human being, as this service is becoming more and more expensive compared to automation. At the same time, a growing group of customers will not feel the need for it in everyday banking. This is different when it comes to more complex, bespoke financial products. To put it bluntly, we will come to branches for advice or consultation on strategic life decisions, but not to order a transfer or deposit money.
And yet the National Bank of Poland’s research shows that over 17% of Poles still only use cash. The trends we are talking about leave this group even further behind. Is it possible to offer some convenient and simple payment solutions to people with lower digital skills?
We know that a certain level of cash turnover will continue to happen. Today, nobody wants to completely remove cash from circulation. The pandemic has already made a huge difference in terms of radical digital exclusion for many groups. There have been many campaigns and activities encouraging the use of digital solutions, as they been forced by the new reality. We have also eliminated regional exclusions, so today there is little difference between different parts of Poland. These achievements are appreciated by international e-commerce players who see the very well-developed e-commerce infrastructure in Poland, understood as efficient logistics and well-developed online payments. Therefore, I believe that we should aim at becoming the leader of e-commerce development in the coming years. Polish businesses, the payment system and the society are ready for this.
In terms of cybersecurity, is there a threat of the magnitude of COVID-19 in banking, finance and the global economy that is a global digital virus?
Vigilance must be maintained at all times. I believe that those who care about the security of the Polish banking sector and are actively involved in it should not say that we are safe, prepared, and have nothing to be afraid of. We are constantly seeing new techniques that criminals use, as well as innovative ways to intercept the bank-customer relationship. Therefore, I believe that the next few years will be the time of major investments in the infrastructure and cloud dissemination, which will increase the level of security. Our analyses must also take into account the increasing number of threats, including for instance energy security issues.
The challenge is that we might have to catch up here in terms of competences. Our IT industry is one of the strongest in the world, but it has focused on the development of services. Today, we are becoming a cloud hub, which is an excellent idea. I think, however, that in the coming years, we must focus on hard “cyber” competences, as the market is starting to become really difficult in terms of availability of specialists. This is also an area that our universities should take more into consideration when training the future employees of the financial sector.
You can find Polish version of this Interview here: