Shaping the future of payments

Samantha Emery , Director, Payments Industry & Development, delivered the below keynote address at this year’s PAY360 conference on 19 March 2024.

With new technologies emerging frequently and customer expectations continuously evolving, staying ahead of the curve is essential. Technology plays a crucial role in influencing consumer behaviour and transforming the way people pay.

But the world of payments is more than just technology.

Geo-political events, the pandemic, and the rising cost-of-living, have shaped a dynamic economic landscape, prompting changes in consumer behaviour and customer needs.

In today’s society, we expect everything to be instant and at our fingertips. This trend extends to payments, as customers increasingly embrace options like instant card payments, money transfers and open banking solutions.

Over the years, the UK payments industry has faced significant challenges, including competing priorities, legacy infrastructure and a complex regulatory landscape. This has hampered the progress we have been able to make as a market and our responsiveness to fast-paced disruption from big tech.

Over the past year we’ve seen the industry come together, with regulators and Government, to start a discussion on how we collectively move beyond the individual challenges. We’ve taken the time together to think not just about the day-to-day blockers, frustration and, frankly, the detail we love so much in payments, but what needs to be done to support the industry as a whole to deliver a world-leading UK payments market. We believe a unified approach is crucial for the future of payments in the UK.

By working together towards common goals and outcomes, we can make sense of the moving parts and interconnected systems, to see the bigger strategic picture for the future of payments. This will enable us to make decisions with confidence for the betterment of the UK and its customers today and tomorrow.

This is a future that strikes the right balance between driving innovation for the benefit of UK consumers and businesses, while navigating complexities and maintaining the safety, security, and resilience of core payments infrastructure.

The National Payments Vision and Strategy

One of the most important developments last year was the launch of the Future of Payments Review, led by Joe Garner.

The review looked to answer a key underlying question, which touches on everything we see in the payments landscape: how can the UK continue to provide world leading payment journeys for our customers?

One of the recommendations to achieve this is setting a National Payments Vision, supported by a strategy to simplify the landscape we all work in, so payments can unlock GDP growth through empowering small businesses, frictionless trade, and Fintech innovation.

The National Payments Vision, led by His Majesty’s Treasury, presents a unique opportunity for Government, regulators, and the industry to develop a guiding north star for UK payments. It is our chance to lean into the power of unified direction and collective industry leadership to drive the right outcomes for consumers and businesses of all sizes.

We’ve identified four key outcomes that we will need within a successful National Payments Vision.

1.?????? Customer-centricity

In this diverse landscape, first and foremost, it is essential that customers stay at the heart of what we do and deliver.

We recognise the importance of ensuring that all customers, regardless of background or vulnerability, are able to access convenient and timely payments and feel protected throughout their payment journeys. We need an easily understandable landscape for customer protection, with recourse for when things go wrong, and measures to counter financial exclusion.

Therefore, we need to design innovative initiatives with clear and consistent standards to prioritise customer protection and satisfaction.

2.?????? Resilience and safety

The backbone of this is a resilient payments system. We know that customers and businesses just want their payments ‘to work’.

We need secure and streamlined infrastructure to ensure the safety and efficiency of transactions. We can do this by leveraging modular platforms and fast settlements to provide a seamless and effortless experience for customers.

At the heart of our architecture should lie a focus on security and fraud prevention. We must prioritise the implementation of robust security measures to ensure peace of mind for every transaction and build trust and confidence with our consumers.

3.?????? Innovation

Next is ensuring the ecosystem is one that fosters emergent innovation and data rich transactions to allow a seamless experience for consumers and businesses. For this, we will need a simplified payments landscape which will reduce the cost of ownership to existing participants and new entrants, creating space for the payments industry to innovate organically. We need to support the UK to innovate in the marketplaces of the future, promoting high quality competition.

4.?????? Sustainability

And lastly, sustainability. This is not just a buzzword, it has to mean something; it is essential for the long-term prosperity of our industry and our country.

From inception, to launch, to run, to sunsetting, we must maintain a laser focus on the economic viability of the UK payments estate – from ecosystem-based cost benefit analyses to more efficient and equitable funding models to decommissioning strategies. Commitment here will build a payments system that fosters economic growth, incentivises ongoing investment and, ultimately, helps drive prosperity.

Where do we want to get to?

We think we can harness technological developments and innovation to enable a financial services system where money, assets, data and international commerce are integrated and interoperable, adapting to ever-changing customer behaviour across retail and wholesale markets.

This would enable UK GDP growth and positions the UK financial services sector as a global leader. We think this is a really exciting prospect with countless benefits for consumers, businesses and the UK economy.

Together we can co-create a sustainable vision for UK payments that incorporates capacity for innovation and choice. Using this as our north star we can be confident as we invest in a brighter future for payments.

Samantha Emery , Director, Payments Industry & Development, Lloyds Bank Corporate & Institutional