The US Federal Reserve Banks recently announced a public consultation exercise on improving the future U.S. payment system. In the U.K., the newly formed Financial Conduct Authority (FCA) has also just published an interim report exploring some early findings of a review into mobile banking services, setting out the possible risks to consumers and areas that firms should consider when developing their services.  Granted, the scope of the U.K. review is much narrower, but it is striking to see the increased level of interest from governments and regulators in improving the payments ecosystem.

So what are the US Federal Reserve Banks trying to achieve by launching this consultation? In short they understand the need for industry and government collaboration in improving existing legacy systems and embracing the digital (online and mobile) payments revolution.

This is something that is already happening in Europe. In the U.K., for example, large organizations are actively involving government in agreeing steps forward. As Lord Erroll, Chairman of the Digital Policy Alliance, suggests: "I see the UK as really progressive in this space, with the Digital Policy Alliance bringing together key players in the payments and security space to actively engage government and enterprise on how the payments ecosystem needs to develop. There is much to discuss, in particular how appropriate technological solutions need to be assessed against their capacity to effectively build in privacy and data protection during the earliest phases of their design." 

A prominent example of this in action is the UK’s faster payments service, which is now fully implemented in the EU and is part of our day-to-day lives. Getting to this stage was only possible with close cooperation between business and government, but even so, there is a long way to go.

The industry needs to move towards a much stronger security architecture in order to protect the existing and new payments ecosystem. Multi-layered authentication and transaction verification, using a mix of visible and invisible layers such as voice biometrics and SIM Swap checks, are now main-stream technologies, and when correctly incorporated as part of a fraud prevention strategy, can result in the strongest security models available in the world today, but without any sacrifice of ease-of-use for the customer. Fraud detection needs to work in real-time so that the victims’ banks are alerted to attacks immediately and thereby given the chance to prevent it from happening, saving customers the distress and inconvenience of being out of pocke,t and their banks from the costs of fraud investigation and reimbursement of lost monies.

Much work is still to be done in these areas in Europe, but industry partners working together and in close consultation with government makes the odds of arriving at genuine, lasting solutions much stronger, and fully integrated into the fabric of our payments infrastructure.

We therefore welcome the US Federal Reserve Banks’ announcement of a public consultation to ensure that the industry works together so the strongest and most convenient payment systems come to fruition.