The implementation of instant payment schemes like EBA Clearing’s RT1 and new Request to Pay (R2P) initiatives will help banks compete with global technology firms and fintechs, according to a panel on day two of Sibos 2019 in London.
Narinda You, head of strategy and market practice at Credit Agricole, says that its time banks thought beyond provisioning core services and providing payment rails. “Global technology players have the power and capacity to convince clients to go through them instead of banks,” she said. “The question is how can we provide the most efficient way to pay in all use cases?”
Erwin Kulk, head of services development and management at EBA Clearing, says that with the Single Euro Payments Area (SEPA) the banks built a network like 3G, and that instant payment schemes like SCT Inst upgraded that network to 4G. With the implementation of Request to Pay (R2P), he believes that the network will be pushed to the next level.
R2P is a secure messaging service overlaid on top of existing payments infrastructure. When a payment request is initialised, the payee will be able to pay in full, in part, as for more time or decline to pay and begin a dialogue with the requester.
“What every bank needs to realise is that there are two choices – disrupt or be disrupted,” says Christof Hofmann, global head of payments and collection products at Deutsche Bank. “You can’t assume your existing revenue streams will stay as they are in the market, you need to decide if you’re going to be an active participant or an inactive participant.
“R2P has the potential to replace every other collection feature out there if we make sure we have everything in place and all the functionality,” he adds.
“If you think about the minimum viable product of sending and receiving payments you can use Open Banking but R2P includes further functionality and can include new features which are key at the point of sale (POS).” This, he says, includes pre-authorised payments which make the strong customer authentication (SCA) challenge at POS a thing of the past.
Despite the advance in payments systems, the panel agreed that there remains a strong argument for a pan-European network.
“Complete solutions are still very much at a local level,” says Cedric Derras, global head of cash management at UniCredit. “We need to take advantage of what SEPA is offering. In the countries where nothing is available, starting from scratch is a good opportunity. The is the potential to use the SEPA building blocks to do things right, right away.” Trying to create interoperability between various initiatives has not gone particularly well, he adds