The conversation around real time payments is without question dominated by speed and rails, and while this may make a logical introduction to appreciating the concept, it should be recognised as just that – an introduction, a taster, a snippet of what is to come as the industry evolves over the next five, 10 or 15 years.
The real value within real time payments is a buried treasure that exists in the form of data, which is increasingly embedded in the evolving processes. This can lead to greater security, scalability, efficiency, and a common global language such as ISO 20022 – this in addition to 24/7/365 accessibility. With such robust capabilities, we can expect to see a new era of innovations emerge.
As the nature of the working business week evolves and banks start to no longer value-date payments only on business days, business banking is also an area with untapped potential for real-time payments.
Enhanced by straight-through-processing capabilities, the onset of real-time payments is spurring improved customer experience and new efficiencies for business. While the loss of revenue associated with paper-based payments processes is a cause for concern for banks, a greater concern should be not having a better electronic alternative in place and not leveraging the unrealised opportunity that smart digital solutions present.
More importantly, the migration toward ISO 20022 is indicative of a greater movement across financial services toward building systems that are instant, reliable, interoperable and driven by the needs of the client. Data is central to this.
Effective collection, analysis and deployment of data is what will allow firms to develop products that are by nature tailored to the consumer (be they retail or corporate) because the products will be personalised around the data such consumers are able to provide.
This data-rich format presents financial institutions with the opportunity to extract information from across their client base, pre-empting their needs and gleaning an incisive understanding of the relevant sector.
Certain firms may not be ready or willing to face a ‘big bang’ overhaul to their legacy systems. It is vital that these firms are provided with products and mechanisms that will give them the ability to bridge the processing gaps into the XML world of ISO 20022 without stumbling before they’ve even begun.
The potential to innovate and create value beyond the speed of transactions can be seen in the ability to overlay services and applications on the RTP rails. Financial crime is one example. ISO 20022 has many structured fields which can be made mandatory for including important details, meaning payments using ISO 20022 can include all information necessary to comply with FATF 16 requirements and EU Wire Transfer Regulations. This, in turn, increases efficiency, lowers cost, and will result in higher straight through processing rates.
By leveraging payments data and applying cutting-edge data analytics and machine learning, banks and financial institutions can quickly detect and prevent fraud. Using rich data in a structured way will also make it easier for parties receiving payments to achieve higher levels of automated reconciliation.
This applies to money laundering as well as fraud tactics such as business email compromise (BEC), a multidirectional attack targeting corporate communications systems in order to trick employees into making payments to fraudulent accounts. Technology can now recognise false invoices or out-of-pattern urgent requests for payment to new bank accounts before fraudsters receive an instant, irrevocable payment.
The key for financial institutions is to find suitable overlay services built on ISO technologies that are both immediately practicable, boast the agility of scale and recoup loss of revenue, providing a better contingency arrangement than before.
It is essential for institutions to gain awareness of such opportunities rapidly emerging in order to keep pace and arrive at the doorstep of a truly digital environment ahead of the curve.
Join in this webinar from Finextra, in association with Bottomline Technologies to join the discussion on the following areas with industry experts:
- How will ISO 20022 enrich the data we get from a real-time payments transaction?
- What are the use cases emerging?
- How does Real-Time and Real-Time Data fit with Payments Modernisation as a whole? Which regions are achieving this best?
- How important is leveraging the real-time data in building out new digital overlay services
- What role does co-existence play in leveraging data across payments modernisation?
- How does shifting to a platform model that offers a single payments ecosystem help with easy integration, speed of adoption and operational efficiency?
- Gary Wright - Head of Research, Finextra [Moderator]
- Ed Adshead-Grant - Director of Strategic Business Development, Bottomline Technologies
- Deborah Hoskins - Programme Director and Product Scheme Owner, Wholesale Payments, RBS
> Register your place now