EBAday 2016: A Brave New World for Payments
Hosted by the European Banking Association and Finextra, EBAday attracts payments professionals from leading financial institutions and technology providers. This year’s event was held in Milan Italy with the theme, “A Brave New World for Payments.” Sessions focused on the dilemma facing the payments industry – enhancing existing payment models while preparing for alternative payments and technology.
I had the honor of moderating day two’s strategic roundtable discussing future challenges and opportunities for banks. The panelists were Paolo Cederle, CEO, UniCredit business integrated solutions; Christophe Chazot, group head of innovation, HSBC; and Damian Pettit, RBS head of payment operations.
The panelists felt that there is a disconnect between the limitations of legacy bank infrastructure and the promise of new technologies. With the majority of bank IT budgets spent on maintenance, the challenge is for banks to keep existing systems running while investing in the future. For customers, there is too much complexity, especially in cross-border payments, and customers want an easy experience at minimal cost.
Discussing Faster Payments in the UK, the panelists said the introduction eight years ago has revolutionized payments, completely changing customer behavior and paving the way for new mobile-based services such as Paym, the UK’s mobile payments service offered by seventeen banks and building societies. For countries having implemented immediate payments, real-time is the new norm and with that comes expectation and demand from customers.
With the EU PSD2 payment services provisions looming on the horizon, the discussion turned to the prospect of disintermediation of banks by third-party providers. The panelists were optimistic about the future, and feel that the regulation is helping to steer the banks toward new initiatives and innovation in services, and is a great opportunity to better service customers and push banks up the value chain.
Regarding the question of whether emerging payment models and technology represent an escalating threat, the response was that instant payments brings security challenges. But the panelists overwhelmingly agreed that convenience and speed cannot come at the cost of security--safety and security is absolutely paramount.
The discussion then moved onto the theme of disruption — are payments in a revolutionary or evolutionary phase? The panelists felt it was a bit of both. Revolutionary technologies such mobile and artificial intelligence are pushing payments along an evolutionary path. And banks have an advantage. The Fintech startups entering the market don't have the direct customer interaction and track record that banks have in safety and security. The banks are running hackathons and open to working with startups while improving legacy systems and simplifying the customer proposition.
All of the panelists’ banks are members of the R3 blockchain consortium. Blockchain is bringing a new way of working together for banks and technology providers. Each of the panelists is watching the technology closely and one area of opportunity cited was the last mile of the payments chain and in the trade finance arena.
My take-away from the roundtable was that the global payments industry is transforming. The “brave new world” is one with an imperative to be nimble, keeping your eye on all of the opportunities both for existing payment models as well as alternative technologies. Collaboration is key whether through acquisitions, consortiums, partnerships or open source projects.
What do you think? Are payments in a revolutionary or evolutionary phase? How should a bank decide where to place its bets on alternative payment types and technology?