A recent example that illustrates this point can be seen in Google’s unveiling of Google Glass in 2013. This was an ambitious experiment/folly that was touted as providing wearers with a ‘portal to the future’ – the product making use of augmented reality to seamlessly meld our digital and physical realities into one.

Journalists had been buzzing since 2012, and by its soft launch, industry pundits were confidently declaring the "year of wearable tech." Yet, instead of a mass-market debut, Glass was exclusively released to a select group of ‘Explorers,’ predominantly in the San Francisco Bay Area. In retrospect, this proved to be the project's undoing. It starkly divided the tech landscape into literal "haves" and "have-nots," with influential early adopters granted a glimpse into tomorrow while us mere mortals left on the fringes were left to merely observe – and, disconcertingly, be observed. These Explorers quickly earned the moniker "Glassholes," and concerns over privacy fuelled a slew of critical articles.

Then, by 2015 the product vanished without trace. Google Glass didn't falter due to a lack of technical prowess. Its demise stemmed from Google's fundamental misjudgement of the public's appetite for a solution to a problem they simply didn't have. This is a crucial lesson we too often overlook, particularly within the financial services sector: not every innovation equates to progress. Sometimes, genuine progress lies in enhancing what already works.

What does true innovation actually look like?

At its core, innovation is the act of creating something new. However, new doesn't automatically translate to better. Financial services, especially payments, have witnessed their fair share of novelty over the last decade. Buy Now, Pay Later (BNPL) stands out as a particularly prominent example – disruptive, widely adopted, and undeniably innovative. Yet, this model is now facing intense scrutiny and increasing regulatory pressure. Critics argue that BNPL encourages overextension, fosters poor financial habits, and lacks the consumer protections inherent in traditional credit.

BNPL embodies a central tension in financial innovation: the quest for convenience clashing with the imperative to prevent exploitation. When the pace of innovation outstrips regulatory frameworks or ethical considerations, we risk developing systems that, while appearing sleek, ultimately prove unsustainable.

The past few years have also seen an explosion of blockchain-based financial products: decentralised finance (DeFi), NFTs, and a proliferation of altcoins and memecoins. Much of this activity promised to "democratise" finance and dismantle traditional systems. Yet, beyond a relatively niche audience, the vast majority of these projects have failed to achieve practical impact or long-term credibility. Their collapse or stagnation underscores the peril of mistaking mere novelty for genuine necessity.

Can progress exist without innovation? Absolutely. Some of the most significant advancements don't spring from entirely new concepts, but from systemic changes – for instance, mandating that bank accounts must be accessible to individuals with disabilities. Placing NFTs alongside accessibility initiatives highlights the often-tenuous link between innovation and true progress.

These examples also bring us back to the question posed at the beginning of this article – just because we can innovate, doesn’t mean we should.

Pruning those legacy systems carefully

Believe it or not, the financial services industry frequently relies on infrastructure that is decades old. Many of the systems processing our daily transactions are built on technologies that have been in place since the 1980s or even earlier. While these legacy systems may be trusted, that doesn't necessarily make them resilient enough for modern demands. On the flip side though, nestled amongst a legacy tech stack there will still be components that are undoubtedly old, but are still actually functioning effectively. While the default position maybe to oversee a complete overhaul of the ‘old’ we should always be mindful of throwing the baby out with the bathwater (to borrow a legacy adage).

It's worth remembering that, when it comes to modernising infrastructure, we don’t always have to start with a blank slate. In many instances, the more meaningful form of progress is found in strengthening, streamlining, and securing the systems that already underpin the global economy. In essence, this can involve utilising existing solutions more effectively or, as was the case with expanding access to bank accounts, making them more widely available.

It's not that innovation is inherently perilous; rather, it's innovation for its own sake – detached from purpose, regulation, or practical application – that often leads nowhere. Frequently, what's truly needed is to genuinely understand what people require and then respond accordingly.

There's a prevailing myth within fintech circles that regulation stifles innovation. In reality, it often serves as a crucial foundation. Regulation provides the clarity and stability essential for innovations to scale, particularly when they touch sensitive areas such as data privacy, fraud prevention, or consumer protection.

Simultaneously, innovation can easily outpace existing regulatory frameworks. This isn't an argument for disregarding regulation, but for approaching innovation with a keen sense of caution and responsibility. The recent collapse of several unregulated or poorly regulated digital finance platforms serves as a stark reminder of the consequences when innovation races ahead without adequate guardrails.

Solving real problems effectively

The true engine of progress in payments isn't the next flashy app or groundbreaking protocol; it's the intersection of clear regulatory thinking, astute problem-solving and the pragmatic application of technology. A prime example of this is the revised Payment Services Directive (PSD2). Introduced in response to growing concerns around fraud and digital security, it not only addressed immediate problems but also laid the groundwork for future innovation.

PSD2 enabled the rise of Open Banking across Europe, granting consumers greater control over their data and creating new opportunities for fintech companies to offer improved, more personalised services. This is innovation grounded in genuine need, informed by robust regulation and aligned with consumer interest. In other words, it represents meaningful progress.

Rebuilding on solid ground

The days of tech exceptionalism have grounded to a halt – along with its oft-quoted slogan “move fast and break things”. The collapse of several high-profile startups and the tightening of venture capital in a post-cheap-credit era have fostered a new sentiment – one that prioritises resilience over reckless risk, and clarity over chaos.

In this evolving environment, payments companies and fintechs are beginning to ask more intelligent questions. Not "What can we build?" but "What do people need?" Not "How can we replace what exists?" but "How can we improve it?"

Google Glass wasn't a complete failure – it was an experiment, and experiments hold value. However, the future doesn’t belong to those who shout the loudest. It actually belongs to those who ask the right questions, and fundamentally solve the right problems in a way that is ethical and meaningful.

In short, innovation alone is hollow if it's not purpose-driven. 

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