Paypal president Scott Thompson says the financial sector is and has been highly resistant to innovation.
In order to take advantage of an increasingly cashless society, Paypal (in a very K-Strategist fashion) is taking the apple route, and opening it's platform up for use and development. By crowd sourcing, Thompson hopes to tap the diverse resources brought about by convergence of websites and internet services thanks to Web 2.0.
While this approach is not particularly innovative, I believe it's an insightful move that will lead to innovations of a disruptive nature.
I think this is the case because Paypal can potentially compete in a number of markets. Just to name a few: it is a safe way to purchase online goods, can act as a no frills (and thus no fees) bank account, and can even be used to transfer money via social networking websites (Twitpay). These services can provide value in and of themselves, but imagine the linking of your own personal account across all these functions.
Paypal is such a multi-purpose/multi-form tool that Crowd-sourcing can provide the value of multiple uses (even if they are minority uses) without the cost of retaining a software development team.
Ultimately the power lies in the application of Paypal's concept, and the possibilities are as great as the crowd that gets sourced.