IBS Journal February 2015


APCA confirms Swift and Fiserv as winning bidders for New Payments Platform deal


The Australian Payments Clearing Associa- tion’s (APCA) plan to introduce a new real- time payments infrastructure – New Pay- ments Platform (NPP) – has finally reached the definitive stage. Fiserv and Swift have now officially bagged the twelve-year contract, which is estimated to be worth around AU$1 billion. As IBS revealed in November 2014,


Swift and Fiserv fended off the rival con- sortium of Vocalink, Accenture and First Data, with the announcement regard- ing this decision finally unveiled on 2nd December. ‘Nobody ever got fired for buy- ing Swift,’ as an independent source par- aphrased from the famous quote when describing the selection to IBS. APCA stated that twelve financial institutions have signed up and commit- ted funding to the project. The project will now be managed by a steering company, NPP Ltd, a joint venture between the par- ticipating members. In addition, KPMG will provide project management oversight. Among those that have pledged sup-


port to the NPP project are major players ANZ, Commonwealth Bank of Austral- ia (CBA), National Australia Bank (NAB), Westpac and Macquarie Bank. The list also includes the central bank, Reserve Bank of Australia (RBA). However, five entities are yet to join, with Bank of Queensland, Sun- corp and Paypal among them.


System selection


Juliette Kennel, head of market infrastruc- tures at Swift, explains that when the Soci- ety first became aware of APCA’s plans last year, it carried out an assessment as to whether there was a suitable business case for entering the retail real-time pay- ments market. ‘The real-time payments trend around the world was having a pro- found effect on the payments ecosystem, so any changes to that are likely to have an impact on our core business,’ she says. When APCA issued its RFP, Swift decided to present some of its ideas. ‘At the time, we weren’t sure if we would get to the end and we were clearly an outsider.’ Vocalink, for instance, had experience of similar pro- jects in the region with its development


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for the Singapore Banker Association and its FAST network. In the first stage of the selection,


vendors were invited to respond to the RFP within a six-week timeframe, outlin- ing their prospective solutions. Short- listed vendors were then invited onsite to discuss their proposals. ‘We had to go through absolutely everything and answer very detailed questions,’ says Kennel. The final two, Swift/Fiserv and the Vocalink-led consortium, then advanced to the com- mercial phase, which drilled down into the solution specifics, which personnel each vendor would be sending, costs and time- lines. Swift was provisionally selected in summer 2014, but the official announce- ment was delayed whilst final contracts between Swift and the steering commit- tee were drawn up and ratified. APCA was reassuring the market


throughout that the project remained ‘broadly on track’, although IBS under- stands that there were doubts from some of the participating banks as to whether the choice of supplier was the most appro- priate. According sources on the ground, one of the major domestic banks, West- pac, was refusing to sign off on the deci- sion until its concerns were appeased. Given the political capital invested in


this project, however, it was never likely to fall by the wayside, despite Australia’s history of failed industry initiatives, name- ly the Me and My Bank Online (Mambo) project, designed to create a single iden- tity for online payments users which was shelved in 2011 after ANZ and NAB with- drew their support. Although this is Swift’s first ven-


ture in retail real-time payments, Kennel emphasises that this was not a stumbling point during the selection process given the Society’s involvement in high-value/ low-volume interbank payments. ‘Admit- tedly these are for lower volumes of mes- sages and not 24x7 because a central bank doesn’t need that, but we already have a number of systems around the world with central banks which know Swift extremely well,’ suggests Kennel. One of the main draws of the Swift proposition, feels Kennel, was that it did


© IBS Intelligence 2015 www.ibsintelligence.com


not have an entrenched approach as to what the ideal solution would be. ‘We designed the system intuitively, rather than go in with a pre-conceived idea of what the right solution was. We listened to what APCA wanted.’


Project roadmap and system design


The provisional project timelines have slipped by a year, with the deadline now planned towards the end of 2017. The first phase, which includes the detailed specification and design of the system, is now underway and will run until Q3 2015. The first work group on message flows and content, as well as direct and indi- rect participation details, have now start- ed. This will be followed by the system build phase, lasting ‘around eight or nine months’, and then by an industry testing cycle which will last from the beginning of 2016 through to the project’s conclu- sion.


Carlo Palmers, market infrastruc-


tures market manager at Swift, explains that the NPP will use a different techni- cal approach compared to other real- time payment infrastructures. ‘With our solution, we are trying to reuse as much as possible of what our members use already, so everyone who is participat- ing will not have to restart their integra- tion from scratch,’ says Palmers. ‘Whilst the RFP was looking for a hub that centrally operates the real-time payments, what we have actually offered is to take the intel- ligence of the central hub, and integrate that into the interface at the different par- ticipating banks.’ The key features of the NPP are as


follows: o Domestic messaging channel –


This uses local network access points to switch payments between the participat- ing banks and the RBA. It is a distributed point-to-point messaging solution, with no single point of failure. o Payment gateway – This is the


SWIFT interface deployed to each NPP participant, which will facilitate clear- ing and settlement flows between the


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