faster payments reality in europe & the future of cross ......distributed ledgers key drivers...

© equensWorldline

Observations on ongoing developments

Faster Payments Reality in Europe & the Future of Cross Border Payments

Michael SteinbachCEO equensWorldline andManaging Director Worldline Financial Services

Payments Innovation Alliance7 June 2018

About our group

2

Financial Services and equensWorldline

07/06/2018 | © equensWorldline | Payments Innovation Alliance | Geneva

GBL Financial Services – ID card

3

Connecting payers and payees via any type of electronic transaction

* pro forma figures 2017


© equensWorldline

Account-to-Account payments

Faster cross-border

Industry trends

5

Putting pressure on traditional banking revenue pools

New regulation

New technologiesCustomer behavior

Competition

New business models

Disintermediation

Competition increase

also w. peer banks

Mobile

Cross channel

Better User Experience

Speed

PSD2

Instant Payments

GDPR

eIDAS

APIs

Biometrics

Artificial Intelligence

Distributed Ledgers

Keydrivers andenablers

Digitization, Globalization, ConnectivityMacro trends

Banks are makingstrategic partner decisions to unlock new revenue pools and reduce TCO on back-office

Payments revenue pools of traditional products under pressure

New products (e.g. Instant Payments) a “new normal”

Increase in investment budgets: IT (including compliance and security) as main spending domain


SWIFT used to be the defaultFor cross border payments

Payer PayerBank

PayeePayeeBank

BankBank SWIFT Messaging infrastructure

Todays cross-border payments are perceived as high cost, slow and inefficient

07/06/2018 | © equensWorldline | Payments Innovation Alliance | Geneva6

Multiple cross-border payment initiatives

7

Forcing banks to maintain access to various instant payments networks

InstantPayment

ACH servicese.g. EU and beyond

DLT*

disruptivealternatives

e.g. Ripple

Fintechservice

offeringse.g. TransferWise

Incrementalservicerenewal

e.g. SWIFT gpi

* DLT = Distributed Ledger Technology

The new kid on the block


Instant ACH payments started domestic

8

EU payments speeding up from days, to D+1, to D+5… seconds

European initiatives towards instant payments

Source: Company research and Lipis Advisors

Poland - Express Elixir

Sweden - Swish

Poland - Blue Cash

SwitzerlandSIC

United Kingdom Faster Payments

Spain - Bizum

Italy - ZAC Netherlands

Hungary

2008 2012 2014 2015 2016 2017 2018 2019

Finland - Unbranded

Spain - SCT Inst

Greece - IRIS (Extension)

Latvia - EKS Instant Payments

Denmark - MobilePay

Italy - Jiffy

Greece - IRIS

Belgium

Ireland

France - Paylib

Portugal

Romania

Slovenia - BIPS

EU cross-border instant initiatives: TIPS, RT1 and EACHA Interoperability Framework


The challenge of becoming cross-border

9

Requires a full interoperability framework, not just messaging standards

ACH Cross-border Instant Payments cannot only be achieved via an interoperability framework but also via system and scheme consolidation. E.g. the P27 initiative of 7 major Nordic banks aiming to consolidate both scheme and systems

Legal; interoperability contract needs to be in place

Settlement; Payment finality needs to be defined

Compliance; Regulatory approval to be obtained

Reach; Insight in participation and reachability to be set up

Risk management; needs to be agreed and performed

Data communication: Network, protocols and security to be aligned


Resulting in disappearing differentiation

10

Payments processing experience identical for x-border and domestic

Cross-border EU payment processing is changing

Cross-border payments processing experience will see major changes, rendering them equal to domestic payments

Standardization

Commoditization

Low cost

Quick

And now also Instant Efficient


� Many different channels / networks creating high complexity

� High running costs

� Massive investments required without additional revenues

� Single bank consolidation will lead to sub-scale at best not to competitive scale

� Provided services are non-differentiating

11

Short to mid term will not see a global winner-takes-all

Network selection depends on use case

SWIFT

DLT 1

DLT …

SWIFT gpi

ACH 1

…

ACH …


Banks need customer facing differentiation

12

And lower TCO on non-differentiating back-office and C&S

Race for scale and low price

Key characteristics� Commoditization� Standardization� Industrialization

E.g. Expected required account payments volume to be competitive >20bn trx/yr

War on customer relation

Key characteristics� Threat of disintermediation� Need to work with 3rd parties:

new revenue models / streams

� Provide A-class user experiences

Need to be extremely agile and excel in innovation

Payment platformstransformation

OpenBanking

Back-officeProcessing

Clearing &Settlement

Customer UserExperience


For more information please contact:

Thanks

Michael Steinbach

equensWorldline is an expert leader in e-payment services and a registered trademark of Worldline. Confidential information owned by equensWorldline, to be used by the recipient only. This document, or any part of it, may not be reproduced, copied, circulated and/or distributed nor quoted without prior written approval from equensWorldline.

© equensWorldline

CEO equensWorldline & Managing Director Financial Services Worldline

T +49 171 381 7695

E [email protected]

For more information contact:

faster payments reality in europe & the future of cross ......distributed ledgers key drivers...

Documents