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REAL-TIME PLATFORMS Real-time: platforms for innovation?


Real-time payment infrastructures are proliferating with the US, EU and Australia set to join in. They can potentially act as platforms for innovation and provide a means to fight disintermediation, says Neil Ainger, if banks can connect inexpensively and internationally and use them fully.


many other countries now have real-time payment infrastructures. The drivers for adoption come from increased customer expectation and a fear that if banks don’t offer better, quicker payments on a shared back-end that provides ubiquity to consumers, and more data-rich services to corporates, they could face disintermediation.


D


Established banks could lose valuable customer immediacy to FinTech newcomers, challenger banks with no legacy, or alternative payment service providers (PSPs) online or in the mobile field – such as Venmo, PayPal and so on – and become ‘dumb plumbers’ if they cannot offer the fast payments and informative data that 21st century customers want.


“The world is moving towards real-time in all aspects of life,” says Tom Hay, Head of Payments at Icon Solutions. “Just-in-time manufacturing has been around for 40 years – if a supplier can deliver parts within hours, why should the payment take days? Any bank that fails to offer instant payments is likely to lose market share, particularly among millennials.”


According to Jean-Francois Denis, Deputy Head of Cash Management at BNP Paribas: “Instant payments can help banks fight disintermediation, but remember it’s only a platform. What the bank makes of it is what matters. Building a community and getting the customer


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enmark, Poland, India, Singapore and


experience right should be the focus.”


Trevor LaFleche, a Vice President at Dovetail, agrees that, “the rise of real-time payments is giving the opportunity for banks to compete effectively with card schemes and others”, but the landscape is new and still evolving.


Authentication services can be rolled out with these platforms, as in India, or new mobile payment systems, as in the UK with pay-m or in Denmark. This can happen if banks are savvy enough to know how to use the new capabilities and functionality as a platform for innovation. For corporate banks speed alone isn’t the thing, data-rich payments in the business-to-business (B2B) or merchant space are crucial.


If banks don’t offer the speed, convenience, and tracking, timestamps and other data services that customers’ increasingly demand then they could be in-line for “pain” according to Christopher Wasdean, director of the Sorenson Centre for Discovery & Innovation at the University of Utah. Speaking at SWIFT’s Sibos trade show in Singapore late last year he warned that the companies of tomorrow like WeChat in China might leverage technology to bypass banks, pointedly asking the banking audience “why do you guys take so long and charge a fortune for a payment” and adding “I don’t care you have expensive legacy infrastructure”.


Real-time platforms could ensure banks aren’t bypassed


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