In these tech-savvy times, speakers at the SWIFT Business Forum in London questioned why we’re still waiting for faster payments systems
Technology, real-time payments, and user experience were on the agenda at the SWIFT Business Forum London last month. In The Brewery in central London, Arun Aggarwal opened the conference with a speech focusing on the technology revolution in the payments industry, calling technology professionals “the new masters of the universe”, but questioning whether they will transform the industry, saying it “remains to be seen”.
Aggarwal cited agility, simplicity, efficiency and control as key factors in technology in the industry, and suggested that we may see more collaboration and partnerships. As well as firms deemed ‘too big to fail’, we are also seeing firms ‘too big to manage’, and companies should work together to form a ‘survival strategy’.
He continued to talk about the burden of heavy regulation in the financial industry, and warned that as well as being an inconvenience, it is also “a bit of a firewall” that could make it difficult for new players to enter the market.
A panel on the effects of ‘disruptive’ technologies echoed these sentiments, with speakers commenting on the challenges of creating new technologies in the financial space. Craig Donaldson, CEO of Metro Bank, compared innovation to a spark that could be easily smothered by the weight of tradition and regulation in the industry, while Daniel Marovitz, president of Earthport in Europe stressed that it is important for firms to work together to create new ways of operating, rather than just improving old processes.
He said: “A faster air craft carrier is still an air craft carrier. Hoping it is going to turn into a speed boat isn’t going to make it turn into a speed boat.”
He added: “It’s a partnership, not a war.”
Customer service also came in to the discussion, as the panel pointed out that, with the introduction of mobile banking and instant technology, customer expectations are changing, and so finance organisations must be willing to meet their clients’ needs.
Donaldson said: “It’s about giving choice to customers,” adding: “The most inventive customers stay close to their clients.”
Customer experience was also a priority for keynote speaker Sir David Clementi, chairman of Virgin Money and former deputy governor of the Bank of England. He made it clear that whatever business a company may be in, customer service is key, and financial services should be no different.
He said that mobile devices such as smartphones and tablets mean that technology is part of our everyday lives, and suggested that modern day customers expect instant results. This has had a significant impact on corporate banking models, as smaller firms have found it easier to innovate and implement change.
New models are about making processes easier for online users, and developments should always keep the end consumer in mind.
Clementi said: “I don’t want to downplay the importance of the technology platform, but a clever technologist never loses sight of who the technology is for.”
He added that a successful business will harness technology that improves customer service, saying: “Each payment has a story. The job of the payments company is to make sure each story has a happy ending.”
SWIFT took the opportunity of the conference to unveil its new white paper on real-time payments, analysing the key drives for adopting real-time retail payments systems (RT-RPS).
Market analysis showed that 73 percent of the drive to adopt RT-RPS was regulation, while 27 percent was attributed to commercial considerations. According to the paper, 18 countries are already live with RT-RPS, and 12 are exploring the possibilities of a system, or planning or building one.
SWIFT has adopted the ISO 20022 messaging standards to create the simplest communication system. This should improve the efficiency of payments and create a common, level playing field. It is also structured to carry more data fields and ‘richer’ information such as remittances, and supports non-Latin characters, a must for working with Asian markets.
Juliette Kennel, head of market infrastructures at SWIFT, said: “The emergence of real-time payment services is having a transformational impact on underlying payment systems.”
“Real-time is a growing trend led by consumer expectations, supported by regulatory reform. Different countries have implemented real-time retail payment systems in different ways, ranging from simply adapting current legacy infrastructures to deal with real time, up to building brand new innovative systems, as we are seeing in Australia.”
“Legacy and new models will need to co-exist both at a domestic and cross-border level, so, for banks, interoperability will be key. The industry is going to have to come up with ways to enable banks to offer real-time capabilities while keeping costs in check. Collaboration and innovation is going to be key.”
According to Clementi, the fastest ever international payment cleared in 6 minutes and 49 seconds, and in a world where customers are used to instantaneous technology, many attendees questioned why these payments still take so long.
On the final panel session of the day, Robert Kauffman, associate dean of the School of Information Systems at Singapore Management University, said: “For someone who comes to this area as a novice, who knows something about the adoption of new technologies, or different business processes, you would hardly think that it would take 40 years, but that’s the way that it is.”
He compared the real-time payments systems in countries such as India, where the interest was lead by the banks and their clients, who demanded mobile technology, with Singapore, where the adoption of real-time payments was ‘a harmony of forces’. In Denmark, the move came from a regulatory drive and a mandate from the central bank. According to Kauffman, this also came down to demand from Danish clients, who feel that they’re entitled to have their money immediately.
He added: “The world wants payments to be owned by the people.”
Alain Raes, CEO of SWIFT in Europe, the Middle East and Asia, and the Asia-Pacific region, pointed out that many of the new entrants in to the payments sector are not banks, for example, AliPay and Apple Pay both have technological roots, rather than financial ones.
He stressed that clients accepting new systems would depend on the ease of use, and that people want payments to be interactive.
He said: “Technology is pushing for this, especially mobile technology.”
The panel concluded that, in the long run, it will be the consumers that benefit from RT-RPS. Kauffman said: “Huge investments by the banks will wind up helping the consumers.”
Another panellist, Michael Mueller, global head of cash management at Barclays, predicted that a better payments infrastructure will lead to fintech companies building on top of it.
Craig Tillotson, CEO of real-time payment company Faster Payments, summed up: “Clearly consumers win and the economy wins, but … it’s banks that are at the heart of this, and they should be winning as well.”
