Payments professionals from across Europe are gathering in Amsterdam this week for EBAday 2015, hosted by the Euro Banking Association and Finextra. We're liveblogging events here.
17.30 And that's a wrap for day one of EBAday 2015. We'll back with more live reporting tomorrow.
17.15 A lot of bank systems are ageing, observes Vink. 'Large organisations are like large ocean-going tankers,' he says 'they turn very slowly. These fraudsters who are going after you are in speedboats.'
17.00 Again, faster payments are in the limelight. 'Anything linked to the Internet is not secure,' says Vink. 'It's a real challenge. This threat is not going away, these criminals are not going away. For a prospective fraudster this is a very, very attractive business to be in.'
16.50 Hartsink says the industry has to operate in a co-operative manner to counter the threat. 'For the payments industry an end-to-end approach is absolutely essential,' he says, but there are always weak spots in the chain. 'I personally believe the best way forward is for central bank oversight of the different scheme groups to ensure that private sector groups do what is necessary to protect themselves from fraud.'
16.40 DB's Vink reports a 40%+ increase in fraudulent attacks on banks in the UK last year. 'The return on investment is good and the chances of being caught are low,' he says. At the same time, clients want faster, easier banking with multiple connections.
'The cost of managing the risk of cybercrime will increase as more customers go digital,' he says. ' Our customers are the weak point in terms of fraud.'
To counter the threat banks have to start sharing data. But within the UK, that's still not possible due to client confidentially and data protection issues.
'These are organised crime groups at work and at the moment I don't see too many successful cybercrime prosecutions.'
16.30 Time for my first visit to Stream 2 for a boardroom focus on financial crime and security in payments. On the podium are Andre Vink of EBA Clearing, Deutsche Bank’s John Flynn, and Gerard Hartsink from Gleif.
15.55 The issue of fraud rears its head. Dignen says that the financial services industry tends to catch fraudulent attacks after the fact. The challenge is to anticipate it and react quickly enough to stop the cyber criminals in their tracks. This will be a big issue for the industry, says Steinbach, as we move to an era where all payments are instant and immediate. Fraud, resiliency, and security are key areas where the industry needs to demonstrate 'absolute' collaboration on standards, says Dzina.' We operate in a world where if we experience a breach we can find ourselves in very dangerous situations,' he says.
15.45 Denise Tischhauser-Straehl of the Swiss National Bank asks what is a faster payment? Is it two seconds, or four seconds or two hours. The best outcome is to build with the end-customer in mind. She estimates that up to 99% of transactions processed by faster payments will be domestic traffic. Spending millions of dollars on internationally interoperable platforms does not have a business case.
15.40 Eileen Dignen of The Clearing House says the US has agreed to the use of ISO20022 for the build out of the nation's immediate payments platforms. Having a standard opens the doors to third party service providers and provides a platform for international interoperability, she says. Dzina says the greater challenge is for the country's legacy proprietary infrastructure for real-time gross settlement which will have to be re-engineered to handle emerging standards.
15.30 The Fed's Richard Dzina views standards as the most important area for industry co-operation, although there is a growing concern that individual nations are implementing standards idiosyncratically. Paul Thomalla of ACI believes speed is of the essence, and standards may be fixed further down the line. Dovetail's Coen agrees that too many stakeholders trying to put standards together will take too much time to evolve. (cif. Sepa). Equens chief Steinbach points out that there were roughly 200 ISO standards applying to Sepa from the outset.
15.15 Back for another packed panel session on real-time payments and the need to promote global collaboration on standards and national schemes. We have some international representation on the panel, with Eileen Dignen from the Clearing House and Richard Dzina from the NY Fed joining Equens CEO Michael Steinbach, Paul Thomalla from ACI Worldwide and Denise Tischhauser-Straehl from the Swiss National Bank. The moderator is Global Payments non-exec director Kevin Brown.
15.05 Recharging batteries - literally and metaphorically - in Finextra's onsite HQ
14.30 Perez-Tasso of Swift says that instant payments is going to be a key focus of the interbank co-operative's 2020 strategy. This follows Swift's success in winning the mandate to build an instant payments platform for the Australian markets. This will be a distributed solution with a peer-to-peer topology, offering immediate clearing and settlement. Swift expects to re-use some of the components built for the Australian market for other projects worldwide.
14.20 Talking about the UK's experience of Faster Payments, Simon Newstead of RBS says the scheme has experienced exponential growth and provided the backbone for mobile-to-mobile payments, such as the national Paym project. So, while demand has vastly outstripped expectations, the number of use cases for the service has also multiplied. 'Expect the unexpected for the number and type of use cases,' he says. For the European market, he cautions that there is an awful lot of back-end work that needs to be done in order to emulate this success, but concludes that he couldn't imagine the UK payments market without Faster Payments.
14.10 The ECB's Wiebe Ruttenburg sets the scene referencing the recent decision by Danish authorities to allow shops to refuse cash payments at the check-out. It's unlikely to spell the end of cash, he says. However, instant payments equates to'cashless' cash, with 24/7 availability, immediate interbank settlement and confirmation to the payer. In order to avoid fragmentation, instant payments need to be co-operatively or competitively developed by the markets, based on Iban, SCT and ISO20022 standards. The ECB is ready to step in and adjust its operations, such as market opening times, to help move the effort along, he says.
14.00 Time to settle in for the afternoon sessions. I'm in Stream one for a presentation that will describe the ongoing industry efforts to create a Pan-European scheme and service proposition for instant payments. Taking the stage are Erkki Poutiainen, chairman EBA Clearing, SIA SVP Gian Mazzi, Simon Newstead of RBS, HSBC’s Paul Nixon, Javier Perez-Tasso of Swift, Wiebe Ruttenberg from the European Central Bank and ING’s director of instant payments, Inge van Dijk.
13.55 According to iGTB's MindCloud survey, pan-European faster payments are set to become a reality sometime between 2018 and 2020, winning 68% of the delegate vote.
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13.30 The post-lunch conversation continues on the exhibition floor
12.15 Dinner is served
12.00 With digital currencies proving a hot topic in the opening sessions, the EBA has published two reports from its Working Group on Electronic Alternative Payments (e-AP WG) dealing with the impact of Digital Customer Service Interfaces (DCSI) and crypto-technologies. Finextra has the full story.
11.30 Once you get to a world with zero cost of settlement and zero time to settle, it's impossible to say what that will enable us to achieve, says Larsen. Asks the audience to think of cars, phones and other devices from the Internet of things as new payment customers.
'Fear of the big four tech companies is real, but we don't think it's going to be a death sentence for the banking industry,' he says. Payments are incredibly complex he notes, with a brief allusion to Ripple's recent run-in with US regulators,
11.20 Ripple use case is around cross-border payments and is pitched by Larsen as a viable replacement for correspondent banking using public distributive ledger technologies. 'Ripple is a giant pathfinding algorithm for value exchange, enabling instant point-to-point settlement,' he says. 'Ultimately we will end up with an Internet for value exchange. importantly this wiil be built on the existing infrastructure'. He describes the idea that outsiders can replace the international payments infrastructure built by the banking industry as 'Silicon Valley nonsense'.
11.15 Larsen notes the absence of international settlement rails, which forces banks to rely on a patchwork of intermediaries via correspondent banks. 'These are antiquated rails,' he says. 'It's completely out of step with consumer needs for making payments.' We are on the cusp a new era in payments, states Larsen. We're not sure how that's going to play out, but certainly payments are going to have to have wider geographic reach, they'll have to be faster, safer, and cheaper. 'Banks will not be competitive if they use the same tools as they're using today.'
11.05 Larsen takes to the stage. Will we hear about Ripple Labs recent difficulties with US regulators? Let’s see...
11.00 'We believe instant payments will completely change the market,' says Buitenhek. 'It has the potential to disrupt the way we do everything' Customers are asking for a 'snapchat experience with Amazon tracking'. Digital disruption has the potential to shrink the role of today's banks, he notes. We have the potential to stay relevant so long as we act, and fast.
Banks need to open up their APIs, introduce open interfaces, and explore the use of the blockchain for reshaping the business. Collaboration with smart startups will be important as will fostering innovation internally. 'Fail fast' is one off the most important cultural change slogans that ING has introduced.' We give a new product six months, spend a couple of hundred thousand, and if it doesn't work, we pull it'. It's called agile. We have to get rid of our legacy technology and attract new talent.
10.45 ING's Buitenhek gets a laugh with a slide that asks Google 'why are banks so...' and the autofill feature helpfully adds a menu of options from 'greedy' to arrogant'. Banks will need to work hard to win back customer trust as the industry faces new challenges, he says. 'I'd rather have a small slice of a bigger pie than a large slice of a smaller pie'.
10.30 Ehrmann ticks off all the main challenges facing the payments industry, from immediate payments to digital currencies and role of disruptive startups and business models. All of these issues will be addressed on the conference floor and in special interest meetings at this year's EBAday
10.25 The first EBAday took place in Frankfurt with 296 delegates, The tenth edition of the show has well over 850 delegates and 40+ exhibitors, notes Ehrmann.
10.15 The lights dim for an introductory video as Wolfgang Ehrmann welcomes us to the 10th annual EBAday.
10.00 The main event kicks off at 10.15 with the traditional welcome from EBA chairman Wolfgang Ehrmann. He'll be followed onstage at 10.30am by our keynote speaker Mark Buitenhek, Global Head Transaction Services, ING.
Your correspondent is particularly looking forward to the challenge speaker slot at 11.00am, which this year has been allocated to Chris Larsen, CEO of Ripple.
Larsen’s Ripple protocol is looking to upend traditional banking payments channels by creating a fiction-free standard for instantaneous funds transfers.
Clearly, the EBA is not shy of airing uncomfortable truths. Last year’s challenge speaker Andrew Tarver of Bold Rocket lambasted the assembled delegates for failing their customers and themselves with outmoded technology and execrable service standards.
We can expect a more conciliatory speech from Larsen, who is interested in working with the industry to use Ripple as an overlay to established networks such as Swift and ACHs. According to his vision, financial institutions will be able to connect and make payments directly with each other, eliminating the costs, risks and delays that come with relying on intermediaries, such as correspondent banks.
Closing out the morning will be Marcus Sehr, global head of institutional Cash at Deutsche Bank and Christopher Schmitz, a partner at Ernst & Young, who will take a strategic look at the global transaction business, and how to move it forward in a changing world.
09.58 All smiles on the exhibition floor.
09.55 Lights, camera, action!
09.40 Spotted in the speaker lounge, EBAday Challenge speaker Chris Larsen of Ripple Labs.
09.36 Breakfast is served, and the main hall is a buzz of excitement as the first delegates begin to stream in. There are lots of mouths to feed, with 850 payments professionals from across Europe pre-registered, and more expected on the door.
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09.25 Another Amsterdam factoid: In 1602, the Amsterdam office of the Dutch East India Company became the world's first stock exchange by trading in its own shares. The first recorded speculative bubble also took place here, when contract prices on tulip bulbs climbed to unsustainable highs and then suddenly collapsed.
09.20 The RAI may have moved on, but the Dutch love affair with cycling continues unabated. In 2013, there were about 1,200,000 bicycles in Amsterdam outnumbering the amount of citizens in the city.
O9.15 EBAday is taking place this year at the RAI Exhibition and Convention Centre in Amsterdam.
The origins of the RAI complex can be traced back to 1893, when the trade association RI (Rijwiel-Industrie, Dutch for "Bicycle Industry") was founded by a number of bicycle manufacturers.
09.00 Building on the success of last year’s congress in Helsinki, EBAday 2015 will look beyond the practical compliance requirements of operating in a Single Euro Payments Area and deal with the critical strategic questions facing the international banking industry. We'll bring you news from a packed agenda of keynotes, panel discussions and debates covering real-time payments, virtual currencies, cybersecurity and the challenges presented by the digital revolution in banking.