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Keen on knowing what are the top three differences you expect to see in the payment ecosystem of the future compared to today's: (1) Will existing issuers, acquirers and scheme / networks die? (2) Will nonbanks become issuers and acquirers? (3) Will more nonbanks enter the ecosystem in the capacity of agents / resellers of the existing bank actors? (4)...

Bet Blockbuster would've found Netflix immature if it had the power to decide whether Netflix should enter the market or not! But Blockbuster didn't and Netflix did. 

But ECB does and DLT doesn't.

And it's not as though the rent seeker's oligopoly hasn't been challenged. Nonbanks have tried to disrupt incumbents in payments infra e.g. MNO (ISIS), Retail (MCX), Dwolla (Fintech). But, for whatever reason, they haven't taken off. So, we're where we are.

Forerunners of 2FA for online payments like India's banking regulator have slowly realized the pitfalls of the security technology and have permitted the launch of frictionless alternatives like UPI and mobile wallets to drive greater offtake of digital payments in India. USA has outright rejected 2FA as a conversion killer. You'd think ECB wouldn't touch 2FA with a 40-feet bargepole. But, no, going by its recent mandate for EUROzone, ECB has just found 2FA to be mature!

Congrats and best wishes to Mark. 

Let alone consolidation of low care and high care payments, are there any Top 100 Banks that have migrated even Card and ACH/FPS/NEFT low care payments to a single payment platform?

Reminds me of 20 years ago when I used to be working for an ERP company. We positioned our software as lego blocks versus competition's jigsaw architecture! 

It has become fashionable for banks to say that they're tech companies in the business of banking. They might reject assembly-based software development just because it'd make them "... focus again on what they are good at, i.e. providing financial services rather than solving technical issues.":)

Having worked in the software industry for over two decades, I totally agree with you that the biggest hurdle to reuse of software components is the programmers' emotional attachment to their solutions. But, alongside that, we must be mindful of the fact that many software buyers continue to believe that software provides competitive advantage to their companies, so the software owning company also tends to have a lot of "emotional attachment" to the solution.

@GerardHergenroeder:

What regulators / scheme operators and vendors do is not germane to this context. In any case:

• I reckon that "checks processed via ACH" is a new payment type that's different from check or ACH alone. I suspect FED's new application is to support this new payment type. I doubt if FED would sunset its existing check processing system and ACH processing system after the check+ACH system is commissioned.
• I don't know about IBM but I know enough tech vendors who have been trying to sell open-system CBS to replace mainframe CBS for 20+ years. From my experience of having worked with one of them, I know how hard it is to make banks give up their mainframe CBS and migrate to open-system CBS. Just today, I happened to read this article on how there's a major demand for COBOL in finserv because there are so many financial systems that are still running on COBOL. 

Your post is about your wish for what banks should be doing, my comment is about the reality of what banks have been doing. So, with due respect, what regulators / scheme operators and vendors are doing is irrelevant in this context.  

I'll believe that payment type convergence is real if you can name at least 10 Top 100 banks that have moved to a single payment hub for all their payment types and sunsetted the plethora of their individual payment systems they ran before the migration.

No, it's relevant for many more reasons. You can find them by following the hyperlink given in my post. 

After the checkered past at Lending Club, a leading VC trusts his integrity. Once upon a time, we used to call this OBN (Old Boys' Network). I'm guessing this is what they now call "bro culture" in Silicon Valley.

"Just think if banks had one payments application with one servicing platform". Indeed, it'd be great. But I wonder if this will happen in my lifetime.

A Top 10 Global Bank kicked-off a project to do exactly this 10 years ago. When last heard, it hadn't completed the project. Some of the hurdles were:

1. Difficulties in routing high touch and low touch payments in the same platform. A defective $100 retail payment can hold up a $250M FI-FI payment. No way to avoid this in a single platform.
2. Incorporating changes to one payment type inevitably causes platform downtime, thus affecting normal operations of other payment types running on the same platform.
3. Regulatory timelines are almost always very tight. Only way to meet them is to develop the impacted payment types on a separate track, which ends being a separate platform.

I haven't even raised the people and political challenges.

In a way, monolithic systems made way to distributed systems because of some of these issues. This happened in payments as well. Hard to imagine that payments would be able to buck the trend and get centralized. 

There's also a business issue that works against consolidation. I agree that consolidation will slash operating costs. But in a regulated space like payments, regulators / government always target banks to reduce payment processing fees and their arguments are inevitably based on "your costs are low, why are your prices so high?". We saw this in USA w.r.t Dodd-Frank-Durbin regulations for debit card interchange a few years ago. We're seeing this in India, where the government is keen on accelerating digital payments and is currently in a tussle with banks to reduce MDR for card payments. What is the incentive for a bank to spend the money and take the risk to consolidate all payment types into a single platform only to face regulatory / political pressure to drop their prices and see they revenues erode because their operating costs have come down?

Ten years ago, in a report on consolidated payment hub, TowerGroup had made a very strong case likening the technology to the opening scenes of the Samuel Beckett play "Waiting for Godot". Notwithstanding all the intervening technologies and other things that have happened since then, I'm not sure if the central theme underlying TowerGroup’s conclusion has changed even today.

It's precisely because customers have a natural proclivity to buy financial products from different banks that banks need to put in efforts for upsell / cross-sell! There's really only one bank that showed better financial results with a conscious strategy of basket pricing, etc. But we all know now what the bank really did to get there - it had nothing to with customer-centric behavior.   

While Bill Gates' quote has come true in many other realms, I've been hearing it for over 10 years in the context of banking / fintechs. After a bout of Kool-Aid about fintechs disrupting banks for the past 5-7 years, we're back to Square One, namely, the realization that banks are not easy to disrupt.  

Barring a few exceptions, most fintechs have themselves to blame for their current plight. They reached where they have by demonstrating poor understanding of consumer behavior and customer pain points, as I've been highlighting in my blog posts for several years: 

Will Millennials Bankrupt Neobanks?

Banks Have Nothing To Fear From Neobanks

Regulators haven't hurt fintechs or rescued banks. In fact, they've created a whole category of fintechs:

Innovative Fintechs Don’t Need No PSD2 Regulation