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The Only Way to Secure the Future is to Create It

Some pretty powerful words were shared at this year’s NACHA Payments 2016 conference. In a world where faster payments are coming, forget about thinking big. It’s all about creativity. While the U.S. benefits from learning from exsiting faster payment implementations, there are a number of integration and tools considerations for U.S. banks, combined with the need for better architecture. And with this in mind, block chain is more than a fad but definitely not the answer for all business cases. In fact it sounds like new technologies but similar challenges: data integration standards and common business practices. Lots of food for thought.

Here’s my summary:  

  • Innovate or Perish

Relevant to the theme of the conference “New World, New Ideas, New Conversations” the focus of the key note sessions was on innovation. Certainly the Uberization has made all payment market players think about reviewing their current products and services, and get ready to face the challenges related to this alternative business model. In his keynote, Josh Linkner outlined the five key elements to promote innovation:

  1. Get Curious
  2. Crave what is next
  3. Defy traditions
  4. Get Scrappy  and Solve complex problems in unorthodox ways
  5. Adapt Fast.


He delivered a clear message: it is no more the small vs. big, it is creative vs. complacent.  


Sheryl Connelly, Futurist at Ford Motors, agreed and during her keynote shared tips on how to be watchful to predict and manage the future by going beyond the past events. Predicting based on past events is dangerous and a SWOT analysis cannot really help much here. One has to go beyond the SWOT to identify the things that are beyond one’s control to plan the future. The punchline was “The only way to secure future is to create it”.


  • Faster Payments is coming

Tech savvy millennials have been driving the demand for real-time payments and the Faster Payments initiative is no fad. Yet, the U.S. has been very slow to initiate real-time payments, which is discerning given that the rest of the world has already moved on to phase two of these implementations: how to make real-time payments more efficient. On the upside, this delay has given U.S. institutions an opportunity to learn from others’ mistakes.


Between the Fed’s update on its Faster Payments Task Force initiatives, and The Clearing House and Vocalink 2017 U.S. launch of its real-time payments platform, things are looking up. The TCH platform will be available for all banks – not just for the TCH member banks. The adoption of ISO 20022 as the messaging standard for Faster Payments is going to put the U.S. on par with other global markets, and it will also enable real time cross-border payments.


In the short term banks will need to decide which platforms will serve them best, and integration with existing systems is going to be a critical factor in implementation. Banks need very agile AML systems to avoid compliance issues. A second critical factor results from potential disputes in irrevocable transactions. Better tools and architectural design are key in this instance and U.S. banks need to start their homework today to avoid last minute panics .


The NACHA initiative for same day ACH goes live in September of this year. The twice a day ACH file processing will definitely improve the speed of processing in a significant manner. But players like Paypal do not consider the same day ACH as anything close to the real time payments. From cost and convenience there seems to be a separate market segment for the same day ACH.


  • Block Chain – is it a fad, hype or real

With more than a billion U.S. dollar funneled in to block chain startups, blockchain technology is being seriously considered by the financial institutions worldwide. Yet, it was refreshing to hear that not all use cases make the business case for blockchain technology. At the rate of 2,000 transactions a second, the processing speed will require a trillion U.S. dollar infrastructure to run the technology. This seriously questions the suitability of block chain technology as panacea for all problems. With many block chain providers crowding up the market, data integration standards and common business practices have to be agreed upfront to make adaption easier for all participants.



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