This month in Digital Banking #8 – Turning Instant Payments new European Regulation into a growth opportunity?

Edition 8 – February 2024

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This month in Digital Banking #8 – Turning Instant Payments new European Regulation into a growth opportunity?

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2024 is sure to be a transformative year in the digital payment market. On February 7, the EU Parliament approved the adoption of instant payment final proposal. This is a significant commitment towards digital payment, which reflects the accelerated dynamics in this evolving market. In Europe, requirements and timeline are now clear. Especially, it is forcing banks and payment service providers to be ready in 9 months to receive credit transfer in euros, in 18 months to send them.

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Why does it matter?

Most clients have adopted a cautious and fragmented approach so far, often driven by Tech legacy and a market-by-market focus. At this moment, there are key questions to solve for incumbent banks as well as payment service providers:

1.???? How to integrate rapidly and at low-cost innovative payment services into new propositions and customer experiences?

2.???? How to enrich customer insights from payment data and drive incremental revenue?

3.???? How to craft a trajectory supporting a bold and profitable growth on Digital Payments – either directly or through partnerships? - within and beyond the Instant Payment space?

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The implications

Multiple models can be developed for further value generation on instant payments, including the building of platform(s). While the target and the path will depend on each player ‘s payment vertical strategy and current maturity level, there is a need to assess and align stakeholders across 3 dimensions:

·?????? Customer and Products: What are the targeted customers and key features of the client value proposition – on short term (2024), on mid/ long term

·?????? Technology Strategy: What will be the most appropriate customer facing solution? what will be the most appropriate back-end Tech platform?

·?????? Partners: What will be the most relevant partner(s) to leverage to move faster on digital product / service design, secure time to market and ensure compliance? ?– rather than building in-house capabilities

Success in this area entails looking at the adoption of a high performing, scalable Payment as a Service technology to make it work seamlessly in terms of financials, operating and partnership model.

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#Digital #Future #Digitalbanking #Innovation #Instantpayments

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