Real-time payments can fight disruption …
The rise of real-time payment infrastructures in the UK, Singapore, Poland, Australia and elsewhere in the world can help banks fight the disruption they face from alternative payment service providers (PSPs) and financial technology newcomers, writes Neil Ainger.
Speaking at a CGI briefing on real-time payments, Stig Korsgaard, engagement director for Danish real-time platform Nets, said: “Real-time payment infrastructures allow banks to participate fully in the on-demand economy and compete on service.”
Launched ten months ago, Nets has created an 871 per cent rise in mobile payment usage (from a low base), as the €20 million infrastructure was rolled out.
“Mobile commerce can be a big usage driver,” said George Evers, immediate payments services director at VocaLink, referencing the Paym platform in the UK and how it allows banks to compete with each other, and newcomers, for digital business on a shared back-end infrastructure.
“When you have critical mass on the P2P [peer to peer] consumer side, merchants get interested and then the B2B [business to business] corporate space grows,” said Korsgaard. ISO 20022 harmonisation is also on the horizon to cope with further roll-outs in the US, European Union, the Swift-administered New Payments Platform in Australia and to assist cross-border interoperability.
“Real-time infrastructures potentially allow banks to compete with disruption,” said Harry Newman, head of market initiatives, Emea, Swift. “It’s all about bringing payments into the 21st century and digitalising them.”
Session moderator, Cathy Pin, director of global payment solutions, CGI, was surprised to hear panellists thank regulators for spurring innovation, as they’re not usually too popular. But as Korsgaard said: “Financial communities in some parts of the world have benefitted from regulators effectively forcing innovation on them.” Regulators can facilitate change, added Korsgaard, citing the planned new EBA-administered real-time platform in Europe next year as an example.
Equally, the UK case study is illustrative. The Faster Payment Service was launched in 2008 only after an Office of Fair Trading investigation decided that waiting for three days for clearing was no longer acceptable. ISO 20022 harmonisation is also an issue for the UK as it launched so early it was ahead of the curve on the standardisation drive.
“I agree regulators can be helpful as it forces commonality and cooperation on the back-end,” said VocaLink’s Evers. “It allows banks to concentrate on fighting each other on the front end and the common enemy of newcomer PSPs and fintech entrants.”