Payments professionals from across Europe are gathering in Amsterdam this week for EBAday 2015, hosted by the Euro Banking Association and Finextra. We're liveblogging events here.
16.30 As the moderators gather to bring the event to a close, we say goodbye to EBAday 2015 and look ahead to EBAday 2016 in Milan.
15.50 From the floor, Bank of Ireland's Vincent Brennan asks what is holding banks back from realising the potential of this technology? Fundtech's Neyer says it is the usual barriers faced by industry vendors peddling tech products - producing references, finding the right budget holder with a shared vision, getting user buy-in. Richardson says it is all about education, separating the technology side from the business side so that people can have an intelligent conversation using a common language. Yago says most conversations he is having with banks these days are in wealth management, capital markets and trade finance. 'I personally believe that consumer payments will be the last part of banking and finance that will be substantially affected by this technology.'
15.45 Epiphyte's Yago says: "Finance and banking is the industry of trust and here we have a technology which provides a whole new way of defining trust. The implications of that are giant and probably something the financial industry will be working through over the next 20 years."
Epiphyte's system creates a smart contract that allows banks to guarantee payments across the distributed ledger in fiat from bitcoin. This allows the bank to retain its role as a central player in performing transactions. He says Epiphyte's foccus has shifted from pitching the product as a means of achieving cost savings to one that emphasises the potential for new revenue generation.
15.35 Richardson says RBS has been exploring the use of blockchain technology with a view to seeing what it can offer to the bank, in terms of both reducing costs for international payments, and different ways of handling international payments. One potential use case identified is the use of virtual currency technology to help customers in foreign countries who need emergency payments.
15.30 Lycklama has been helping the EBA to develop its thinking around the use of the blockchain and cryptocurrencies. The group took its cue from the idea that this a major IT innovation which can act as a catalyst for change. It's real-time, immutable and low cost, he says. The group feels that the use of the blockchain for recording and registering assets - in FX and remittances, documentary trade, real-time payments and asset servicing - is quite achievable in the immediate term.
15.15 A couple of workshops to end the day before the moderators return to round off the show. The cryptocurrencies and blockchain workshop will analyse the opportunities and threats from the introduction of virtual currencies and blockchain technology in financial transactions. In the chair is Douwe Lycklama of Innopay, supported by Fundtech’s Gene Neyer, Damian Richardson from RBS, Jean Wallemacq of the Belgian Bitcoin Association, and Epiphyte CEO Edan Yago.
15.05 Asif continues the interrogations in the TV booth. If you look closely you'll catch a glimpse of your, increasingly dishevelled, correspondent in the reflections on the screen doors.
15.00 Beach life for one exhausted delegate
14.50 The discussion inevitably turns to distributed ledgers and the opportunities these represent to start afresh and forge a true transnational standard. Ipagoo's Sanchez says it is up to the regulators to force the pace. 'You have to form a dictatorship to push things through.'
14.45 Lehr says more progress would be made if the relevant bodies looked at the process from an end-to-end perspective, rather than dealing with problem areas piecemeal. CBEE's Wagener says this is just the approach taken from by the EBA in developing a framework for instant payments across Europe.
14.35 Sanchez from ipagoo says there are many people in the payments industry who are coming up to retirement and have never had to evolve the existing standards. Refining these long-standing embedded processes for emerging digital commerce opportunities is a long, slow undertaking, he says. Brennan nods in agreement, saying the tried and trusted route of forming a committee and getting agreement on new rules may no longer be fit for purpose in the fast-moving e-economy.
14.25 Where does PayPal engage in the conversation around standards and interoperability, asks Brennan. Interestingly Lehr used to work in the standards dept of Swift. She says PayPal may not participate in developing the standards, but is perfectly happy to use them to achieve a wider geographical reach. This is why the company is now a keen advocate of ISO 20022.
14.15 Wagner from BCEE talks about the development of Digicash, a bank-backed mobile payment app which has captured 80% of the Luxembourg retail market. The bank actually worked with a small startup to develop the initiative. 'One bank can not realise anything,' he says. 'You need all banks to support the solution.' Merchant buy-in is also crucial.
14.10 Large turn-out for the session. Brennan runs through the big themes of the past few days. Rerences HSBC's Paul Nixon's observations yesterday that banks have built a solid house for payments, while new entrants are simply squatting in a penthouse on top of the building and having a private party. PayPal's Lehr says that since the foundations already exist why prevent new players with new propositions from enjoying the party.
14.00 Lunch over and the debate, inevitably, turns to Sepa. It’s a face-off between Stream 1’s discussion of Sepa 2.0 and ISO 20022 XML, and stream 2’s delve into electronic alternative payments. It’s the latter which grabs my fancy, with Bank of Ireland’s Vincent Brennan in the chair, supported by Paul Alfing of Ecommerce Europe, KatJa Lehr of PayPal, ipagoo CEO Carlos Sanchez, and Serge Wagener from Banque et Caisse d’Epargne de l’Etat.
13.40 Fifteen minutes of fame on Finextra TV
13.05 Plenty of post-lunch demo action on the exhibition floor
12.45 Selfie-spotting in the speakers lounge
12.20 Unless the industry can develop a new business model, the banks will continue to carry the burden, says Stet's Beltran. At the moment regulatory requirements are pushing the industry to a position where it has to keep on spending just to keep the lights on.
12.15 Let's not forget the investment required around cybercrime and security, says DB's Brady. As we let more people ride the rails we have to continue racking up that investment, taking more money from banks' discretionary budgets.
12.10 Innovating at an industry level is not straightforward, says Stoddart. The pressure around access is an interesting topic. We now have a lot more banks in the market and a lot more people agitating for access to payments infrastructures. Should the banks have to pay the bill to accommodate all of these new players? Third-party gateway hubs, such as those offered by VocaLink can insulate banks from some of these costs, he says. At the same time, the industry needs to ensure that it does not destabilise critical industry infrastructure in response to political and regulatory pressure for change.
11.50 We've seen more technology failures in settlement system and in banks in the recent past than we have for years, notes VocaLink's Stoddart, and that's a function of patching back end infrastructure. This can't continue, says Stoddart. 'There is a lot to be done', he says, 'but we should not deflect or avoid the issue. I feel very strongly that we must get on with building those new roads and getting some traffic on them.'
11.40 There is much to be learned from the Sepa project, says Stet's Beltran, in that much of it was built on legacy infrastructures. In preparing for instant payments, for instance, we need to step back, look five years down the line, and take a view of the key components for future services. What can be built collaboratively and what can we build competitively?
At Deutsche Bank the move to real-time payments will require an operating model and support model that runs 24 hours a day. 'Can we do that?' asks Brady. 'Yes, but it will require a new way of working and a lot of process changes.'
11.30 What is the best way forward for modernising banks’ internal architectures? That’s the question being asked in this session, with input from Jose Beltran of Stet, Deutsche Bank’s Neil Brady, Davide Girompini from IBM and Paul Stoddart of VocaLink. Moderation comes courtesy of Maurice Cleaves from the UK Payments Council.
11.15 More news from the conference floor: Worldline to process ING Belgium’s SDDs on MyBank eMandate solution
11.10 Rumours that ING was going to bring its sponsored lion in from Amsterdam zoo were sadly wide of the mark.
11.05 Take time out during the break to see if you can spot yourselves in the first batch of photos from day one of EBAday 2015. Lots of happy shining people on view here.
11.00 Why should banks work with disruptors, asks Jones. Because banks have a lot of legacy in their ICT systems and mindset, says Borgese. Also 40-45% of internal budget has to be spent on compliance. 'Banks need for sure to partner with disrupters to bring in new ways of thinking and smarter ways of working around innovation.'
'Disrupters shake the tree, open our eyes again and we start learning,' adds van Os.
10.50 Returning to the retail sector, ABN Amro's van Os says the real disruptions come when you start combining new trends, such as virtual currencies, mobile and wearables. Fintech is defined as a combination of the big tech companies, startups and banks that re-invent themselves. He doesn't think that startups will take over the financial sector, nor that banks will retain absolute control. More that a combination 'will be gold', through a process of co-creation and collaboration. The imperative is to move from a closed system to an open system through the use of open API platforms to accelerate innovation.
10.45 Addressing the wholesale side, HSBC's Mark Evans says recent big investments in compliance, resilience and infrastructure have constrained spending on innovation, leaving the door open to new players to ride on the payment rails. 'We have a whole range of assets as banks. It's critical that we embrace the whole idea of open APIs, so that we can serve up our services to some of these new entrants and insert ourselves in the centre of the innovation ecosystem.' The upsides are tremendous he says, from financially supporting startups through seed funding and benefiting from new ideas and new ways of thinking.
10.40 Borgese says it is not so easy for banks to think out of the box, constrained as they are by legacy infrastructures and a conservative culture. But banks have to realise that new players already are in place with new platforms and initiatives These include companies like Google, Amazon and PayPal, as well as the credit card schemes.
10.30 The PSD2 is viewed as opening the door to new disruptors, as is the blockchain. In the future, gateway-based non-banks, such as the Apple's and Google's of this world, are also seen as playing a huge role in the coming upheavals.
10.25 Quick straw poll shows about five people in the audience classify themselves as payments disruptors. More than half are bankers and the rest are suppliers to the industry.
10.20 On the subject of PSD2, if you haven’t already downloaded Finextra’s survey of European banks on the subject, you really should do. Great insights, even if we do say so ourselves
10.15 The sessions are coming thick and fast this morning. Tough choice between stream 1’s PSD2 and the opportunity for identity services by banks and the stream 2 session on the role of payment disruptors. I’ve opted for the latter, moderated by PSE Consulting’s Peter Jones and featuring Salvatore Borgese of ICBPI, Mark Evans from HSBC and ABN Amro’s Arjan van Os..
09.50 Payments innovations emerging from Silicon Valley are coming from the simple consumer end, says Treacher, rather than from deep in the bowels of the big moneycentre banks in New York and London. 'We feel there is a serious movement to look hard at the engine room of finance and banking, rather than just dabble in the consumer side,' he says. Over the next ten years, he predicts, major innovations are going to emerge from these monolithic sleeping giants which will create much better infrastructures and payment experiences for the corporate world.
09.40 How far should banks allow newcomers to build on top of the rails the banks have already built, asks Lodge. King says it's important to understand that banks are for-profit companies. It has to be a balance between not being closed and opening up, but it needs to be done in a commercial as well as a regulated and controlled way. It can't be a free-for-all.
09.30 RBS's King agrees, saying that it's the experience that counts, rather than the payment. HSBC's Treacher says banks need to spend more time creating and shaping ideas. With the technology we now have we can prototype and create compelling apps really quickly and test them in the market. It's really important to be out there with the customer, on the leading edge and bringing ideas to market, he says. Banks tend to spend their time polishing the regulatory sheen while newcomers like Google and Apple get into the market and take the interface away. King says banks can 'absolutely' do better, The parent-child approach between banks and regulators has to change so that the rulemakers are working to drive the creative spirit and innovation within banks.
09.20 ABN Amro's Kirsten says that in the coming ten years we will see more change than in the past 100 years. All banks need to take a broader view beyond their own expertise and internal silos, and tap into the innovative spirit of creative startups. Thee revisions to PSD will provide increased impetus for this. New startups are really good at client-centricity, she says. Big organisations need to look beyond legal and regulatory issues to get the client-centric perspective.
09.05 Introducing the session, Lodge notes that how we make payments could be radically different in the future to how it is now. With IT spending in banks returning to pre-crisis levels, the stage is set for renewed investment and rapid innovation in the payments industry - from mobile money to instant payments. But with over a 1000 startups working in the payment space alone, the main players and competitors could be very different in the future.
09.00 Day two begins with a strategic roundtable: ‘Empowering payments – from bank regulation to customer centric innovation’. Up on the stage are Karin Kersten of ABN Amro, Marion King from RBS, HSBC’s global innovation lead Marcus Treacher and Gareth Lodge of Celent.
08.30 Thirty minutes and counting before day two starts in earnest
08.15 Welcome back to day two of EBAday 2015. We've rolled out the blue carpet...
...filled the bags...
...and prepared the pastries.