EBAday 2016, Europe's leading transaction banking and payments exhibition and conference organized by the Euro Banking Association and Finextra Research between June 7-8th, in Milan, put in the spot light hot topics of the payments industry agenda under the umbrella: “A brave new world for payments - the future of European payments industry”.
More than 85 of the industry's top executives from leading financial institutions debated in the two days sessions about: PSD2 and the potential for APIs, real-time payments, regulatory challenges, trade finance, Intraday liquidity management, E- and m-payments, blockchain and distributed ledger, cybersecurity, SEPA, disruption vs. revolution, trends in global payments or the impact of Fintech companies in the banking system.
PSD2 and APIs
Among the most debated subjects at EBAday 2016 was PSD2 - the impact on the industry, the transposition of the regulations and the opportunities for banks, and APIs. The speakers said that PSD1 was more of a compliance issue, while PSD2 appears to be an opportunity for banks to focus on the strategic business opportunities. The regulation is helping to steer the banks to new initiatives and innovation in services, if banks look up to this as a great opportunity to better service for their customer. Some of the participants consider the legislation will usher in new unconventional partnerships between banks and new entrants to address the issues at hand.
APIs could pave the way for open banking with Fintech and PSD2 pushing the envelope. Banks could also gain a competitive advantage by accessing other bank APIs to provide added value services. APIs have the potential to provide a pick and mix package of banking services for customers. From the customer perspective, the API will provide more relevant services. There were also voices who said that the utopian ideal of the single API has to be the way forward. The key is how to open it up while maintaining a degree of trust that underwrites the liability.
As in the previous years, instant payments covered a lot of the speeches. Banks need to find their value in the new ecosystem. Faster, cheaper, simpler, flexible, 7/24/365, more open and secure are the keys for the future payments.
The cash is still king, 60% of payments transactions in EU are conducted with physical notes and coins. A lot of cash is still used because of merchant rebellion against high interchange fees. As business models change there is now a discrepancy between where fees are charged and where value is provided.
Customers want an easy experience and fast payments at minimal cost. Customers are willing to change behavior if they are moving to one single payment experience and easing the experience for them is the key.There were also affirmations that said there is too much complexity in cross-border payments and not enough transparency around costs.
Also, instant payments brought into discussion security challenges. Changing the system to aid convenience and speed cannot come at the cost of lax security. In some years, instant payment will show a gradually development, and it expects that in the future all the payments will be instant as we already leave in an instant world.
Disruption vs. revolution
It is a little bit of disruption and revolution with all the digital and technology concluded the speakers. Revolutionary advances in mobile and AI are pushing payments along an evolutionary path. No talk on disruption would be complete without the mention of blockchain technologies. All the banks are watching this technology very closely and some of the banks already invest with opportunities at the last mile of the payments chain and in the trade finance arena.
For the first time at EBAday, the organizers set up a special corner dedicated to Fintech. New customer centric startups are beginning to insert themselves into the value chain, providing services which big banks cannot match.
Allevo at EBAday
As members of the European Banking Association, we had the chance to take a front row seat at the EBA Annual General Meeting and catch-up with everything that happens in the financial industry across the globe with impact on the European area – from technology to business and from regulation to innovation.
Allevo was once again among the exhibitors at EBAday, joining a select club made up of the biggest European Banks and international software vendors, market infrastructures and consultancy companies. This represented a great opportunity for us to meet old partners, update each other on the latest evolutions and the latest hot topics in the fintech industry. It was also a chance to generate new contacts and promote our FinTP open source solution for processing financial transactions and the FINkers United community around it.
This year’s experience represents a major milestone for the evolution of Allevo’s international presence and a great opportunity for exchange through networking with other participants at the conference.
Author: Adriana Costea, Marketing Manager at Allevo
On May 12-13th this year, senior executives, practitioners and key stakeholders from across the payments industry gathered in Amsterdam for the 10th edition of EBAday, the annual congress organised by the Euro Banking Association and Finextra Research. It also market the 30th anniversary of the Association’s founding. Like every year, the conference proposed a main discussion topic and all the streams, interactive workshops and panel discussions gravitated around it. This year, it was quite visionary: “Payments 2020 –From Vision to Action”.
To be more specific, the event’s agenda followed two discussion threads, through parallel streams:
A noteworthy fact is that there were more EBAday participants attending the sessions about the way banks can adapt to an ever growing customer demand for agility from their financial services providers, about electronic and mobile payments and crypto-currencies transactions and instant payments. It looks like the main theme chosen by EBAday’s organizers was aligned to today’s financial market concerns.
The time for SEPA discussions monopolizing EBAday is gone as the banking community in the Euro zone is fully compliant with the ISO20022 standards. But different interpretation for the same standard and flavoured XML messages implementations led to market fragmentation. In order to meet the SEPA compliance deadline, banks have implemented solutions that vary from one community to another, third party convertors and services that helped them demonstrate their conformity with SEPA. A trend aiming to refine this implementations is growing; it is set to use XML format benefits to the maximum and to replicate the standard to cover all payments, not only credit transfer and direct debit, thus maximizing the investments made. Tighter collaboration and coordination between banking institutions is needed to overcome existing market fragmentation. They don’t necessarily need to come from regulators, but rather due to the market’s demand and that of banking industry players.
The banks’ potential for innovation and for offering competitive services within the market’s dynamic frame has also been open for debate. Banks need to take into account that nowadays they are competing with non-banking providers who get every day more agile, precisely because they don’t need to prove compliance with industry regulations and therefore can bring in a business model different from the banks’.
Instant payments – Real time payments – Immediate payments
By far the hottest subject on the agenda was instant payments / real time payments / immediate payments. Customers are each day more demanding when choosing their service providers; the choice criterions include speed of response, speed of action (in real-time, if possible), accessibility and ease of use. When it comes to banks, their expectations are as high, at least. Financial services providers not being able to keep pace may lead to the intensely debated scenario of “banking without banks”. Banks have already started losing customers to non-banking competitors, as the latter have a different approach:
What’s fascinating is that the conclusions to these kinds of debates were drawn, in the majority of sessions, by people coming from the banking environment. They advised banks to invest in products that satisfy these new and growing customer needs, even without a business case, that is if they want to survive and keep their customers in a more and more competitive world. To this end, the banks’ value chain needs rebuilding, to be adapted to the future. It takes an Executive willing to take risks, to manage the change of the old working model into a new one, favourable to the banks; an open minded Executive that can take competition challenges and transform them into opportunities, rather than treat them as threats. A start may be the investments already made in the SEPA standards!
For the 7th year in a row, we were among the exhibitors. As in the previous years, it was a great opportunity to meet old partners and discuss joint campaigns, but also to arouse interest in new potential customers and partners which are not yet familiar with Allevo’s portfolio.
In the context of instant payments endless discussions and concern for banks being open towards flexible, easy to implement solutions, visitors felt inclined to come by our stand. They wanted to know more about our FinTP – the open source solution for financial transactions processing – and FINkers United, the community built around, gathering financial and IT experts willing to grow the project together. Collaboration and sharing within a community interested in developing a financial transactions processing solution (non-differentiating software) can easily help concentrating efforts and resources toward the front-office, more specifically towards designing and offering best quality innovative products to the end customers.
Benefiting from the change of distribution model (from commercial to open source) and the evolution of demands on the financial market, FinTP starts gaining the interest of European banks, becoming “the right solution, in the right place at the right time”!