1.
The payments landscape: the trends that
are reshaping domestic and cross-border
payments
SWIFT Benelux forum
22 April 2015
Elie Lasker, Senior Market Manager
Lior Cohen, Product Manager Banking Markets
2.
Where do we come from, where do we go to?
Source: Correspondent banking 3.0 white paper, available from swift.com
New entrants Benelux businss forum – 22 April 2015 – Confidentiality: PUBLIC 2
1970s
Automation
SWIFT
1990s
Efficiency
GTB
2010s
Simplicity
Consumer
1.0
Correspondent
banking
2.0
Transaction
banking
3.0
Experience
banking
4.0
?
2020s
3.
5 mega trends impacting correspondent banking
New entrants Benelux businss forum – 22 April 2015 – Confidentiality: PUBLIC 3
Real time
Open access
Compliance
Off the wire
Growth
4.
Correspondent banking disintermediated at origination
New entrants Benelux businss forum – 22 April 2015 – Confidentiality: PUBLIC 4
Local bank Local bank
PSP PSP
ACH ACH
GTB GTB
End customer
(retail, SME, corp)
End customer
(retail, SME, corp)
Correspondent Banking
CorrespondentBankingdisintermediation
Transfer
Agent
Transfer
Agent
*Icons are representative example
of each model
5.
Bank-grade payments system requirements
New entrants Benelux businss forum – 22 April 2015 – Confidentiality: PUBLIC 5
Addressing
real
challenges
compliant
Impact on
bank’s
economics
Scalable
6.
Real-Time Retail
Payment Systems
Benelux Business forum
La Hulpe , 22 April 2015
7.
Agenda
• Market trends and landscape
• Australia New Payments Platform
• Approach going forward
7
8.
Market trends and landscape
Key features of real-time (instant/immediate) payments
24x7x365:
payments can be
sent and received
all times of the day,
every day of the
year
24 x 7 x 365 Instant Finality Certainty
Instant*: good
funds must be
available on the
beneficiary’s
account in,
typically, less than
a minute
Finality: once
payments are
processed, they
can’t be recalled
Certainty: payments
sent to a beneficiary
bank are individually
explicitly confirmed
(to both payer and
payee) or rejected
*The term “Instant Payments” is increasingly used to refer to retail real-time payments
8
9.
Market trends and landscape
Retail payment system landscape – client side
9
Multi Currency Payment SchemeSingle Currency Payment Scheme
• Credit D / D+11
• Debit Later2
• Credit D / D+11
• Debit D / D+11
• Credit Instant
• Debit Instant
• Credit Instant
• Debit Before3
Credit
Accounts
Deposit
Accounts
Money Transfer
Operators
(no account)
Store-Value
Accounts
(wallets)
• Credit D / D+11
• Debit Before3
Note 1: “D / D+1” means same day / next day / next few days
Note 2: “Later” means ~30 days after transaction
Note 3: “Before” means account / service needs to be prefunded
10.
Market trends and landscape
Key drivers and challenges
10
Customers
Banks
MIs
Regulators
RT-RPS
Adoption
Customer expectations for faster payments
(consumers, business / merchants)
• Customer protection
• Financial inclusion &
cashless
• Next generation platform/
Foster innovation
• Macro-economic events
• Large
investments/costs
• Limited revenue
potential
• Disruption on
operating model
• Impact on
compliance and fraud
detection processes
• Threat from new
entrants
Threat from new entrants
11.
Market trends and landscape
Take-up rates vary depending on mandate and pricing
11
Rapid Adoption Path
Rapid adoption driven by Central
Bank / Regulatory mandate and low
pricing
Slow Adoption Path
• Low participation of banks is a blocking factor in
Poland, South Africa, India and Brazil
• In India, overly complex use experience was a barrier
Typical Adoption Path
Adoption(%ofCT/DDvolumevstotal)
Time in Existence (Years)
12.
RT-RPS market landscape
Live in 18 markets, with 13 more in planning / development
12
Europe
Denmark
Czech Republic
Iceland
Poland
Sweden
Switzerland
UK
Bahrain
Finland
Netherlands
Turkey
Eurozone
Asia Pacific
China
India
Japan
Singapore
South Korea
Taiwan
Australia
Hong Kong
Indonesia
New Zealand
Thailand
North America
Mexico
Canada
United States
Central & Latin
America
Brazil
Chile
Colombia
Africa
Nigeria
South Africa
18 countries ‘live’
12 countries ‘exploring’ /
‘planning’ / ‘building’
17 additional Eurozone
countries ‘exploring’
Planning
Eurozone
Live
13.
P2P
B2B
P2M
B2P
4%
51%
18%
7%
20%
Segment Type Share*
Payment
confirmation
Funds
availability***
RTP needs
e-payment
Point of Sale
(Physical)
Bill Payment**
Large value payment
e/m-commerce
Bulk Payment
Invoice Payment
Large value payment
Primary candidate
Secondary
candidate
RT Candidate
*share of total non-cash payments worldwide
**including direct debits
*** Immediate vs. (Near) Real-Time
Growth
trend
13
Secondary
candidate
Market trends and landscape
Real-Time Payments Use Cases
GSC 2015 - Real-Time Payments
14.
Market trends and landscape
There are different approaches to clearing and settlement
14
Hub Approach
Central
Bank
Hub
Clearing
A B
Bank A
Accounts
RTGS - Settlement
A’ B’
Shadow
Accounts
Bank B
RTGS Approach
Bank A
or
Central
Bank
A B
Accounts
RTGS Settlement
Bank B
Distributed Clearing Approach
Bank A
Clearing
or
Bank B
A B
Accounts
RT App - Settlement
A B
Accounts
RTGS – Liquidity Mgt
Central
Bank
Real-Time 24/7/365
EOD/Intra Day during Business Hours
15.
Agenda
• Market trends and landscape
• Australia New Payments Platform
• Approach going forward
15
16.
Australia New Payments Platform
Status
• Project was kicked-off in December 2014
• Currently mid-way through design phase, deep-deep
dive industry workshops are being conducted
• Scheduled go-live is August 2017
• Project is currently on track
16
17.
Domestic real-time payment system (clearing & settlement )
• Low-latency in-country messaging service
• High throughput and capacity
• Real time settlement payment-by-payment
• 24x7 ‘real-time’ operations (no down-time window)
• Financial industry standards (ISO 20022)
• Leverage SWIFT infrastructure components
Enable easy integration with overlay services, eg
• Mobile P2P Apps
• Government tax platforms
Distributed architecture model (RFP was based on a central hub)
17
Australia New Payments Platform
Key characteristics
18.
Australia New Payments Platform
How does it work?
Central Bank
Orderer’s Participant Bank
Branch
Mobile
Phone
Internet
Services
Applications
SWIFT
Payment
Gateway
Beneficiary’s Participant Bank
Branch
Mobile
Phone
Internet
Services
Applications
SWIFT
Payment
GatewayClearing / Confirmation
Settlement
Payment
Details
Payment Details
Confirmation
Domestic Messaging Channel
Settlement
Settlement
Confirmation
Settlement
Confirmation
1
2
3
4 4
SWIFT
Payment
Gateway
Overlay
services
Fast Settlement Service
RTGS
Bank
archive
Bank
archive
Payee /
Beneficiary
Customer
Payer /
Ordering
Customer
18
Addressing
Database
19.
19
Approach going forward
Identify markets
selectively on a
case by case
basis
Position SWIFT in
RTP
Thought
Leadership
Explore the
winning models,
build and adapt
the solution
Solution
Market
engagement
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