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It is not very often in our industry that we get the opportunity to say there is fantastic news for banks, however that is exactly what the new ‘World Class Payments’ project, instigated by the UK Payments Council and Payment Services Regulator (PSR) is.
The project has been launched to review the UK’s payment schemes, looking forward 10 years to 2025 and what the industry may require, and set out a vision on how to achieve a first-class, world class payments environment. The project has already identified there are too many access points, schemes and processes, and that customer’s needs are not at the heart of the environment currently in place.
The ultimate goal of the project is to simplify and improve the end-to-end experience, drive innovation and competition, standardise interfaces, all whilst having the ability to change the core processing schemes without affecting services. As a result, we can expect to see the following changes:
So why is all this such good news for banks I hear you ask? Firstly we will end up with an environment with just one high value (RTGS) and one low value (UKFPS) scheme, with BACS transactions being routed through UKFPS. This will save bank’s resources, as they will have fewer schemes to maintain services through and integrate with, allowing chunks of existing maintenance budgets to be spent on other revenue generating projects.
Moving away from batch processes like BACS, will also mean that banks will have an opportunity to retire old batch based processes and systems, again saving precious resources which can be used for innovation. Offering innovative solutions is a huge challenge facing banks today, the new environment will have this at its heart, laying out a path for banks to follow with overlay services, mobile offerings, market places and much more.
With the new environment migrating to ISO 20222, banks will have to migrate or translate their existing systems to this standard, laying the foundations for real-time payments, and ultimately being part of the global immediate payments market which will change the provision of financial services forever.
Finally, there is nothing like regulation to force change, it makes the business case for renovating so much easier and might just encourage the culture within many banks to come into the 21st century.
Amidst all the excitement let me not forget to acknowledge that yes, there will be a significant amount of time and resource that will need to be dedicated to fully capitalise and implement the fallout from this new project.
However all in all this is a very exciting time for the UK, the Payments Council and the PSR’s plans will place the UK at the leading edge once again and could give banks a real competitive advantage over their European counterparts. The banks, if they seize the opportunity, have a chance to place themselves back at the centre, becoming the Amazon or iTunes of their customer’s financial services world. I would encourage banks to embrace this new world, and lay the foundations for a digital bank, operating in a true digital economy.
For more information on the project, please see here - http://www.paymentscouncil.org.uk/current_projects/the_world_class_payments_project/-/page/3213/
This content is provided by an external author without editing by Finextra. It expresses the views and opinions of the author.
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Alex Kreger Founder & CEO at UXDA
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