International Payments Summit 2013 Recap
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I was at International Payments Summit in London last week. I spoke on a panel on real time payments, the insights of which will be the basis of a later blog. But here are the highlights for me: IPS may well be back I last attended IPS 5 or 6 years ago. I stopped going for a number of reasons. Firstly, cost. After Sibos it must be about the most expensive conferences on the circuit – the most expensive flavour is over £3,500 (although cheaper options are available). One doesn't mind paying for quality, but at the time it failed to deliver. IPS suffered from a probably deserved reputation of, er, “over influence” from sponsors. Frankly, I'd heard some of the vendor pitches so often I could have given them. I don’t begrudge the vendors as they’d paid for that opportunity, but equally it didn’t add value. This year the quality of speakers and sessions was dramatically up. A few "usual suspects" appeared but who can generally be relied upon to say something, let alone something interesting. Indeed, one positive over Sibos was the willingness of the panelists to actually discuss things rather than read prepared statements that sometimes happens at Sibos. Based on this event, whilst it hasn't gone back to “Must”, it's certainly moved to 3rd slot behind EBADay and Sibos. It’s Catch-22. If this event can significantly increase the audience size, then its value will significantly increase as well. I wish Katie and her team well for next year. SEPA With less than 12 months to go, you'd think that everything that could be said, has been said. Wrong. Even the experts seemed to be learning things, particularly from the panels with corporates. Key issues include the cost of compliance (one corporate suggested over 10m€); readiness of banks, particularly around direct debit; and the misunderstandings that pervade. On the latter point, it is worth pointing out that some of these are perhaps self-inflicted. For example, there is a belief that the regulation now means that the requirement for a BIC has been removed. Yet few - including myself - had realised that if customer arrangements put in place as a result of the PSD, the requirement for a BIC still holds. As a result, whilst the one party may not require a BIC, another may, and with no easy way of telling. SEPA#2 Based on the corporate forums, and polling sessions, some things were very clear. Neither banks nor corporates see any benefit from SEPA, that they view it as a compliance issue, and that they, the corporates, will be worse off. Hardly a ringing endorsement, but equally not new news. But I think the level of terror and the antipathy from the clients still shocked many. One corporate estimated that they will receive approximately 15,000€ benefit from SEPA, but it has cost them over 400,000€ to achieve SEPA compliance. Real time There is a real belief that real time is the future. But what is less clear is what that means. Some of the systems held up are real time, in the strictest sense, aren't. They authorise the payment in real-time, and the client may access the money straight away, but settlement takes place later. Furthermore, many are conflating real-time with “always on”. The trend I certainly to have greater availability, but understanding the difference is important in understanding the impacts on the back-end systems in a bank. Operating model Several conversations I had and a number of the presentations referred to the need for banks to address the cost of service/execution, with a number of banks undertaking significant projects to move to a different operating model. ING is one example, with Mark Buitenhek using an unusual but effective analogy of pasta! They're moving from spaghetti (lots of long processes, interwoven and difficult to untangle) to lasagne (multiple discrete layers of service, creating building blocks of components).