Future of payments: open banking, innovation and competition
With a multitude of changes currently ongoing in the payments landscape, what are the most relevant changes for treasurers and what can they expect in the years to come? A workshop at the EACT summit discussed the ongoing and expected changes in this area including the entry into force of the revised Payment Services Directive (PSD2), fintech, blockchain and SWIFT GPI. The workshop panel consisted of Philippe Pellé from the European Commission, Bruno Mellado from BNP Paribas, Marc Delbaere from SWIFT, Christian Mnich from SAP and the session was facilitated by Massimo Battistella who chairs the EACT payments working group.
The regulatory framework, with its recent changes, is clearly one key driver of changes in the payments area in Europe. The philosophy behind the revised legal framework for payment services is to open payment services to new service providers and to bring them within the scope of the legislation - they can be classified under those offering payment initiation services and account information services. The overall objective is to accelerate innovation and enhance competition. The change in the legal framework and the open banking model is and will continue to change banks’ business models. Open banking brings also with it the need for an increased focus on security as more actors also means more potential cyber security threats.
On technological developments, it was noted that there are still a lot of uncertainties in the use and factual development of blockchain but the technology will certainly be used and is being tested for different projects by banks. On the topic of fintechs, it was seen by the panelists rather as a collaborative area, where a sustainable business model where risk and reward are shared still need to be found. Fintechs are interesting for corporates as they are agile, can enhance customer experience and can provide fast solutions, for instance in the area of reconciliation.
SWIFT GPI is one development that is potentially interesting for many corporates in terms of changing cross-border payments with accelerated timeframes, end-to-end payment status and enhanced transparency; however a broad network of banks adopting GPI is needed in order to widely benefit corporates.
Last, but not least, the panel touched upon still existing problems around harmonisation of payment processes, even inside the EU. Further harmonisation is indeed still needed for instance in terms of cut-off times and bank-to-corporate and corporate-to-bank communication – it might be that help from the regulators is needed in the future in order to tackle these issues.