COPENHAGEN, Denmark -- There are plenty of real-time payments initiatives under development around the world, but all of them seem to forget one thing: corporate end-users.
During a session Wednesday morning at the Money2020 Europe conference, a panel of fintech CEOs agreed that corporates are one group that has particularly been neglected. David Yates, CEO of VocaLink, began by saying that as much progress as Faster Payments has made in the UK, there is still room for improvement, particularly when it comes to corporate usage. “It needs to develop into a proper commercial service that’s good for business, good for merchants, etc.,” he said. “It needs to develop into a proper business service—and ideally, internationally, as well—not just market by market, but connecting these payment systems together.”
However, getting these systems to work together on a global basis will be a difficult undertaking, as individual nations’ preferences and complexities will need to be taken into consideration. “In Europe, we have the additional complexity of having one currency in multiple countries, and when laws get transposed to national legislatures, there can be little differences,” said Hays Littlejohn, CEO of EBA Clearing. “So even within a single currency zone, you have local flavors.”
Littlejohn noted that this also happened with SEPA; the one advantage SEPA had, however, was that there was an actual mandate to move to it by 2014. “This helped push banks and consumers in the same direction,” he said.” What we lack in the international space of course is a single regulatory push that could do that.”
Moderator Liz Oakes, director, management consulting for KPMG UK, noted that in the case of SEPA, the corporate end-users community was actually the last group consulted on it. She asked the panel whether there is currently enough discussion going on with the end-users as these various real-time initiatives are being discussed and implemented. “Do you think that with retail payments in particular, is there actually an effort going out to the retail community to have that conversation?” she asked.
Gottfried Leibbrandt, CEO, SWIFT, responded that he doesn’t believe there has been enough outreach to the end-users. But the bigger problem, in his estimation, is that there has not been enough discussion about what segment these real-time initiatives are actually seeking to improve. “You’ll find people who believe that this will be the rails on which all payments will run—high value to low value, etc. I think it would be good to have a clear discussion about what segment this is really aimed at and what’s the vision behind it. If the vision behind it is to have universal rails that every application can plug into, that makes for a very different design than just focusing on the faster, person-to-person or person-to-business space,” he said.
Oakes asked the panel then if there truly a case to be made for joining real-time systems together, across borders. Yates answered that there absolutely is a business case, and he expects it to happen. “It will happen for consumers, but I also think it needs to happen for business too,” he said. “What really gets in the way of it are the larger transactions where you need to go through all of the various sanctions, etc. But SWIFT and others have great programs that help with the identification of counterparties that should in many ways help to resolve this problem.”