RBA warns Australian banks not to backtrack on payments modernisation

RBA warns Australian banks not to backtrack on payments modernisation

The Reserve Bank of Australia has warned that it will be "duty bound" to use its regulatory powers should the nation's banks fail to deliver on promises to modernise the country's payments infrastructure.

Urged on by the central bank, Australia's banking industry, in concert with the Australian Payments Clearing Association (Apca), is in the final stretch of a vendor selection process to deliver a 'New Payments Platform' which promises to usher in immediate retail payments and the ability to conduct transactions in the absence of a bank account or BSB number.

In a speech to Apca's AGM, RBA governor Glenn Stevens acknowledged the challenges facing the industry: "It requires that industry leadership and collaborative spirit to be maintained over a sustained period. At various key moments the project faces the risk of that spirit breaking down."

Implicit in his remarks is a concern that bank backing for the project is beginning to waver. "The Reserve Bank is fully aware of how complex and far-reaching this project is, and how costly," he said. "Having said that, let me also say, very clearly, how important the Bank sees it that the industry deliver on its collective commitment to deliver real-time, accessible payments to the community."

He warned banks that they should not seek to constrain the system so as to conform to existing boundaries and business models and play to their own vested interests.

Calling on the industry to stay the course, Stevens said that the delivery of an open and competitive system was in the collective interest of all Australian financial institutions.

"It can be expected to lead to further growth in electronic payments and a reduction in costs," he concluded. "It will maintain the ongoing relevance of the current players. If those players do not provide Australian end-users with the services they want, surely others will seek to do so. Alternatively, the Reserve Bank would be duty bound to consider a regulatory approach."

Comments: (2)

Sreeram Yegappan
Sreeram Yegappan - Cognizant - London 24 October, 2014, 09:33Be the first to give this comment the thumbs up 0 likes

Australia was one of the elite to join the 6 Countries worldwide to implement Real time payments and was a good initiative in the right direction. Not sure why they need a regulatory bulldozing to keep moving. Was the Business case not strong enough or their learnings from other Countries is worrying them ?

A Finextra member
A Finextra member 27 October, 2014, 03:29Be the first to give this comment the thumbs up 0 likes

Thank God for Glenn Stevens and the Reserve Bank of Australia. Sometime during 2016 is the planned end point of the Australian Payments Clearing Association's and the RBA's goal of instantaneous electronic transactions. This essentially means that all banks in Australia will be 'open' 24 hours a day, 7 days a week. I have noted this year in my mind as to when it is supposed to happen. I expect that all banks will implement hardware and software upgrades to reaslise this important initiative. Failing so, I would expect the RBA to enforce this policy on the grounds that it is in the national interest.