What the demise of Barclays' P2P app means for other banks

Barclays plc was well ahead of the curve when it launched the Pingit P2P app in 2012, but despite years of innovation it was not able to sustain the service in an age of open banking and embedded financial services.

But the U.K. bank doesn't have to be a mere spectator. Barclays' expertise will allow it to pivot from being a player to being a coach, enabling more fintechs to take over where it left off.

Barclays' Pingit, which will end service on June 30, was an early example of cutting-edge experimentation with payment technology. What's changed in the years since is the pace of innovation has gotten even faster — due in part to open banking, a European initiative requiring banks to share data with fintechs.

"There aren’t many things from a decade ago that have remained the same," said Gareth Lodge, a senior analyst at Celent. "The industry has, and continues to, evolve — and perhaps with a pace that continues to increase."

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Banks first viewed PSD2, the European regulation that mandated open banking, as a competitive threat. But the practice has sparked a global trend that enables banks to spot which digital innovations have legs by forging connections with the fast-growing market of fintechs.

"No longer is it just the banks' domain to create these things," Lodge said, adding banks have benefited from open banking. "The net result will be better customer propositions and experiences, and a different way of working for banks. Banks will need to be more agile, and experiment more, but then again, what business today doesn’t?"

Barclays, which has long been an early adopter of fintech, has already taken advantage of open banking connections. Its 2020 collaboration with e-commerce engine BigCommerce, while not directly related to PingIt, has enhanced support for new authentication techniques and added scale for digital merchant onboarding. Barclays has also partnered with Starling Bank, which provides payments-as-a-service technology, to lighten the development load required to upgrade bank payment systems.

Pingit and bPay (a contactless payments brand that was folded into Pingit) pushed the boundaries of what was imaginable at the time. A wristband to make payments at a music festival was added to bPay in 2014, a year after the bank joked about putting a payment chip in a dog collar. It really did put a payment card reader on a donkey saddle and in a wide range of wearables such as jackets and gloves, years before contactless and mobile payment technology made a serious dent elsewhere.

Barclays did not answer questions about what products it may add or build to replace Pingit. In an email, a bank spokesperson said there are similar features available in the Barclays app for Pingit customers who also hold a Barclays account, including making payments via a mobile phone, bank transfers, paying a business or transferring money within the U.K. or abroad.

"It makes me think of the 'walled garden' approaches taken by financial institutions and telcos in the early days of internet commerce," said Ron van Wezel, a senior analyst at Aite Group (Barclays was also a member of the telco-led ISIS mobile wallet, which rebranded as Softcard before shutting down in the 2010s).

Open ecosystems such as marketplaces became more appealing to consumers and proprietary approaches have faded in recent years, according to van Wezel. "Open banking will enable banks to work together with fintechs and other financial institutions to develop new services that work for every bank account, without having to offer a wallet-type approach such as Pingit."

Banks have collaborated among themselves through transfer apps such as Zelle, a U.S. P2P network that counters PayPal's Venmo. Such options make it less necessary for banks to manage their own transfer apps.

Instead, financial institutions have turned to technology companies as distribution partners.

Goldman Sachs partnered with Apple to produce Apple Card, supporting digital onboarding to bring Goldman-affiliated banking products to Apple's enrolled base of consumers, who can also access streaming content and other non-banking products. Citigroup and Stanford Federal Credit Union later entered a similar partnership with Google.

The embedded finance trend is giving rise to similar collaborations, with Walmart, Amazon and Facebook all adding financial services to their core functions.

For banks, the opportunity in this trend is to see external innovation from non-banks as a potential collaboration to reach new populations where the banks don't have a brand presence, according to Rick Oglesby, president of AZ Payments Group.

"When the banks don't have consumer mindshare, they can still win the enablement business for those customers," Oglesby said, adding technology companies will always have an advantage when it comes to speed-to-market on tech products.

But banks may still have the upper hand when it comes to branding and trust.

"Consumer mindshare varies depending on context. Banks can definitely win when the context is financial," Oglesby said.