With banks pushing to transform the user experience, customers are offered more choices than ever. Andrew Hewitt, director of payment and data solutions at FIS, discusses the new era for the banking sector with Briony Richter
Across the world, a growing number of payment systems are moving to real-time. This is according to the fifth annual Flavors of Fast report from FIS. In this report FIS found 40 active real-time payment programmes around the world, up from 25 in 2017 and nearly three times as many as the company’s inaugural 2014 study.
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In addition, it highlighted five payments programmes under development, plus another 16 that it expects to go live over the next 12-18 months. Discussing the report’s highlights, FIS director Andrew Hewitt states:
“This year’s report really showcases the rapid growth we are seeing in real-time payments. Since the report started five years ago, the number of real-time payments systems as gone from 14 to 40. In fact, since the report launched the market has seen another system go live in Hong Kong, so it’s actually 41 right now. This year-on-year increase shows the global growth in real-time payments.
“Another interesting aspect from the report was the rise in overlay services and open APIs. Overlay services sit above the payment rails and enable new and innovative user experiences above that utility layer which consumers and other service users are looking for.
“In Eastern markets, there has been a boom in the use of QR codes to initiate payments. Looking ahead, it’ll be interesting to see if any European countries will adopt QR codes in the same way, where investment in consumer education to use contactless payments has seen a marked rise in their usage.”
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By GlobalDataThe report looked into faster payments systems around the world. India came out in top place, followed by Australia and Singapore. Even though the systems in the US are not operational at scale, the report noted significant growth in the country. The global growth of systems moving to real-time is largely driven by the explosion of new technologies, and much higher customer demand.
A new era
It is a new era for banking. New regulations are surfacing all over the world, and with that comes a demand for responsive platforms and a more proactive approach to the value of data.
In the UK, banks are still adjusting to Open Banking and what to deliver as their unique offering. “Since Open Banking’s introduction, we’ve only seen two big moves from the traditional banks: HSBC and Barclays. HSBC was the first to market with its mobile app that allows users to see all accounts in one place, including accounts that are other from different providers. Whilst this is all we have seen at this stage, it is a clear trend and things will continue to move in that direction,” Hewitt notes.
“At FIS we understand that we have a responsibility to help the industry grow, and grow with it. With the ever-changing regulatory landscape, FIS’s strategy is to help people connect, thrive and keep our finger on the pulse of real-time payments around the world, so that when there is a change, we have a solution for it.
“More often than not it’s about bridging the gap between old and new. For example, our payments hub software is able to join up new technologies with legacy systems to help businesses execute the latest real-time payments solutions.”
While Open Banking opens up new opportunities, a concern for incumbent banks is that new fintechs that have entered the market will be able to surpass them in customer experience and innovative products.
Due to their agility, speed and low costs of maintenance, fintechs can typically react quicker to industry changes and meet customer expectations. Hewitt highlights that getting to real-time payments functionality is a challenge, and one that has to be met to maintain seamless operations.
“There are two main hurdles when it comes to real-time payments: technical and operational. Real-time payments are a 24/7 operation, available, 24 hours a day, seven days a week, 365 days a year. This means that the payment systems within a financial institution must be able to be technically available and operationally staffed at all times. This can be quite a large change for an institution which is used to running a ‘business hours’ type of operation.
“For many businesses, it will not be technically or financially feasible to begin operating 24/7/365 at the flick of a switch, which means an attractive option is to outsource the infrastructure to a third party such as FIS,” Hewitt adds.
The Open Banking environment is pushing banks to expand their boundaries by improving the customer experience and delving into new ways to deliver their services. The industry is starting to see the emergence of real-time cross-border payments around the world. Hewitt concludes that in this new environment, FIS will continue to support clients with connectivity to new and existing real-time payments schemes.
