Payments professionals from across Europe are gathering in Milan this week for EBAday 2016, hosted by the Euro Banking Association and Finextra. We're liveblogging events here.
17.30: And that’s a wrap for day one of EBAday 2016. We’ll be back with more live reporting tomorrow.
17.15: Back on the floor, what's the vendor take on day one of EBAday?
17.05: Paul Anning of Osbourne Clarke provides a legal and regulatory perspective. Mobile payments govern both the payments transaction and the handling on private consumer data. This entails seperate regulatory regimes, which are both evolving and demands careful analysis of individual business and operating models. PSD2 provides no direct reference to mobile payments, he notes, muddying the waters over the application of, for instance, requirements for strong custotmer authentication. Understanding where the liability lies for missing funds is not always straightforward.
17.00: ICBPI's Borgese reminds the audience that in Italy still 80% of payments transactions are conducted with physical notes and coins. A lot of cash is still used because of merchant rebellion against high interchange fees. This is particularly true at militant petrol stations. Co-operation between banks will be crucial for the industry to gain ground in this market.
16.50: Intesa Sanpaolo's Tessitore says customers are willing to change behaviour if they are moving to one single payment experience. If banks fail to deliver on this expectation, mobile payments will struggle. The mobile has a clear advantage over cards in providing consumers wiith a single authentication protocol across multiple cards, eliminating the need to remember many different PIN codes. Ultimately, however, loyalty and promotional discounts may well be the "key success factor" for mobile payments, providing an improved experience for both the customer and the marchant.
16.40: A quick straw poll shows that while some in the audience recognise mobile payments as a mature market, the clear majority still see it as a novel concept. This may be reflected in the response to a follow-up question which found few delegateswilling to raise their hands over the introduction of a ground-breaking product.
16.30 Back to stream two for a dialogue on trends in mobile payments, moderated by Peter Jones, managing director of PSE Consulting. He’s joined on the podium by Paul Anning, a partner at legal firm Osborne Clark, Salvatore Borgese payments services director at ICBPI and fellow countryman Massimo Tessitore, head of direct channels, mobile payment and e-commerce department Intesa Sanpaolo.
15.55: Recognising the strategic imperative is the easy part, says Waterhouse from The Clearing House, demonstrating the value is more difficult, particularly in a competitive market with multiple vested interests and infrastructure operators. As the European experience has shown with the Sepa SCT model, ensuring interoperabilty is a key objective to realising the value.
15.50: In approaching the project, McBean says the Association is looking at 'creative' options to expand its funding and minimise the burden on members. That may come from growing its membership or leaning on the government for additional funding.
15.40: Intesa Sanpaolo's Favale points out that cash is still king. In Italy 85% of transactions are made by cash. He points out that some of the use cases for instant payments are already satisfied by existing payments schemes, such as cards and Sepa SCT. Nonethless he says, "banks have to be brave", and seek out the new business cases and opportunities that will arise from the introduction of instant payments before somebody else steps in to meet that unfulfilled demand.
15.30: CPA's McBean says changes driving the market include new customer demands, new governance issues, ageing payments system and new competitors. Canada's batch-based payments infrastructure is over 20 years old. The Association has spent 18 months in consultation with members and users on plans to move to a real-time payments system. The number one request from users is for better information around remittances, she says.. The CPA has yet to decide on how to approach the project, adds McBean, "whether to acquire new, redevelop internally, or adopt a combination of the two".
15.25: ACI's Wedge points to a slide showing at least 18 live schemes, six in development and multiple discussions around the globe, comprising some 40 potential appliations. The global shift to instant payments is "changing the game", he says, with important implications for bank back-end infrastructure and front-end customer innovation. Reflecting the speed of developement, he references moves in the UK to revamp the Faster Payments scheme some eight years down the line to meet changing needs and new technology developments.
15.15: The session follows a lunchtime briefing by EBA Clearing, which provided a sneak preview of the system design, functionality and interface specification of its pan-European instant payment platform. The full specs will be rolled out later this summer. Elsewhere in the world of real-time payments, Finextra yesterday broke the news that Istituto Centrale delle Banche Popolari Italiane (ICBPI) has enlisted Denmark's Nets to help it build an instant payments platform for the Italian market.
15.10 Back for another busy session, this time deliberating over the global move towards real-time payments. Reflecting the worldwide interest in the issue, the debate is moderated by Russ Waterhouse, EVP of products and strategies at The Clearing House and features a panel comprising Stefano Favale, head of global transaction banking at Intesa Sanpaolo, Michaela McBean, director of payments at the Canadian Payments Association, Equens’ CEO Michael Steinbach and Daren Wedge, SVP North America and Europe processors and networks, ACI Worldwide.
14.45:For DB's Budd the biggest barrriers to adoption may come from moving projects out of the lab and into the real world, as business and compliance heads begin asking questions about resiliency, data resolution etc. It could also be seen as using a big hammer to bash some very small nails. "However, what's important about it is that it makes us think outside of our existing infrastructure to look for solutions to very real problems." This is going to become imperative as the introduction of machine-to-machine based technologies begins to lower the value of assets transferred and increase volumes in the B2B space.
14.40: Wallis says IBM is worrking on a project to use geo-location to track container shipments, which will then trigger a payment when the shipment reaches the half-way mark using a smart contract. This won't come into production in the next year, he says, but it shows the real opportunity for innovative thinking to transform transaction banking.
14.35 Ametrano says: "As banks we should understand what is our real asset. Our real asset is trust. I don't think in ten years time there will be business cases based around payments, but there will be opportunities for leveraging trust."
14.30: D+H's Gene Neyer says if you want to make money you have to lead the pack and take 'moonshots', otherwise you will be relegated to the role of a fast follower.
14.25: At UBS, the business case for blockchains is defined in two levels: In the near and medium term on raising efficiency in financial markets, but longer-term in its application to individual companies and individual products.
14.20: Intesa Sanpaolo's Ametrano describes the movement to distributed ledgers as a "paradigm shift". He sees the biggest disruptive potential in virtual currrencies, in the creation of a form of "digital gold", to empower a new monetary system.
14.15: Wallis says the company has engaged with about 300 customers globally on blockchain. Points to an internal use case at ABN Amro using a permissioned ledger in compliance to open up their books both internally and ultimately externally.
14.10: IBM's Wallis is convinced blockchain will become prevasive across the industry. He sees trade finance as a key area, pointing up a project currently underway at Big Blue to cut costs in supply chain financing.
At DB, the bank is looking across the full spectrum of its business to understand what assets can be handled across a blockchain. DB is taking a three-pronged approach: working internally, on a consortium basis and with a small number of partners to leverage the technology. Budd says the bank is looking at the technology across a five-to-ten year horizon for practical implementation.
14.05:From a quick show of hands, approximately seventy percent of the audience have an experimental project devoted to blockchain technology. Far fewer have identified a business case.
14.01: The Finextra TV crew caught up with Ferdinando before the event for a chat about how banks can stay ahead of the game in developing blockchain-based services. You can watch the video here. He's also active on Twitter. This one's intriguing.
14.00 Torn between a stream one session on future payment strategies and stream two’s take on the mainstreaming of blockchain. Your correspondent opts for the latter, where a decent crowd gathers to hear Lee Fulmer, managing director COO office at UBS chat with Intesa Sanpaolo’s head of blockchain and virtual currencies Ferdinando Ametrano, Edward Budd, chief digital officer at Deutsche Bank, D+H head of payments Gene Neyer and IBM’s James Wallis.
13.35: Alongside the live blog, join in the debate on Twitter using the hashtag #ebaday2016
13.15: Looks like EBAday is taking over the Finextra news stream. Token launch and MyBank digital ID pilot both profiled.
13.00: No let up for Finextra's EBAday TV crew
12.30: Back on the exhibition floor, where there's plenty of food for thought.
11.50: With the heat in the room rising, Kirsch whips off his jacket to reveal a T-shirt bearing the legend 'PSD2 Threat + Profit'. #showmanship. For PSD2, standards should be set by banks, with a single API providing the killer app. "It's basically the world wide web for banking," he suggests.
PSD2 is designed for B2C retail, but it's a gift to transaction bankers says Kirsch. "B2B payments will be transformed by the single API - it's a once-in-a-hundred-year opportunity. Any bank, large or small, can benefit from PSD2. It's just a question of the decisions you take."
11.45: It may be a sales pitch, but Kirsch's delivery has an engaging revolutionary zeal. Audience lapping it up. Knocking the blockchain off its perch, Kirsch notes that the technology can't move fiat currencies. Central banks control how money moves, he says, not a number of companies engaging in side-agreements on a private blockchain. "Blockchain is great for bitcoin, but not for fiat."
11.40: Here comes the sales pitch. Kirsch's Token has taken a stand on the Fintech Pavillion. The Token platform leverages each bank’s policies and procedures and integrates with their core system APIs to provide an instant springboard into the execution of cryptographically secure, PSD2-compliant digital transactions. Kirsch says the key is the delivery of a single standard open API. He says Token is engaged with many of the largest banks in the UK and Northern Europe and is working particularly closely with Denmark's Nets to explore options in instant payments and PSD2. "The largest consumer banks in a number of EU countries are committed to move forward with Proof of Concept trials," he says.
11.30: Kirsch says PSD2 is "the best thing to happen to banking EVER". But banks have to take a leaf out of Apple's book and 'think differently'.
"PSD2 is a once-in-a-lifetime opportunity to re-invent payements," he continues. Most bank payment rails pre-date the Internet. Kirsch says the new payment ecosystem should seek to redefine the value of exchange.
11.20: A fast-talking Kirsch adopts a Ted Talks stance on the stage. So what's the big challenge? "PSD2 is the bank's uber moment," says Kirsch paraphrasing a famous quote from Barclays former chief Anthony Jenkins. What's the best way to profit from PSD2 he asks the audience: Inhouse, commercial off-the-shelf, banks as PISPs, or creation of a new payment ecosystem? A show of hands sees delegates favouring the latter two options.
11.05 The challenge speaker spot is usually reserved for someone with provocative views, prepared to challenge the status quo and set the tone for the debate that follows. Last year, Ripple’s Chris Larsen appeared unwilling to upset the apple cart when facing an audience of potential prospective customers. Steve Kirsch too is looking to sell his tech, which is promising instant PSD2 compliance to banks. Will there be fireworks?
10.55: Stangoni lays down a whole slew of advantages open to fintech competitors, including a lighter regulatory framework, entrepreneurial culture and, more nimble technology offerings. For banks, PSD2 and instant payments will be 'game changers', he says, providing a digital bankbone for the delivery of new business services. Nor should banks underestimate the value of the data they hold - it is their key advantage over fintech startups.
10.35: Keynote speaker Intesa Sanpaolo's Stangoni says the banking industry is wide open to disruption from new tecchnologies and new challengers. Banks that survive will have to adapt to the new trends - they have to become leaner, meaner and more responsive to customer demands. Institutions should use all of the data and advanced analytics at their disposal not just to meet regulatory requirements but to gain insights into customer behaviour and demands. Aligning this with the buy in of non-core tech from outside providers will provide banks with the opportunity to circumvent legacy technology and infrastructure and become more relevant to their clients.
10.25: Ehrmann says traditional bank preferences for five-year project timelines will no longer work in a fast-changilng landscape defined by digital and Web-based technologies. The EBA is stepping up to the challenge with the publication this week of two major papers on blockchain and open APIs. Ehrmann also namechecks, the Fintech Pavilion, urging delegates to pop in and see what the future for payments holds.
10.20: Right, that’s my buzzword bingo card ticked – blockchain, check, open APIs, check, fintech, check, disruption – BINGO!
10.15: The light's dim and we're off and running with a bombastic video intro carrying a portentous voiceover.
10.00: The main event kicks off at 10.15 with the traditional welcome from EBA chairman Wolfgang Ehrmann. He'll be followed onstage at 10.30am by our keynote speaker Stafano Stangoni, global head, financial institutions, Intesa Sanpaolo.
At 11.00 we’ll be hearing from this year’s challenge speaker, Steve Kirsch a serial entrepreneur who’s current company Token focuses on faster, more secure worldwide payments.
Closing out the morning will be Susan Skerritt, Deutsche Bank’s global head of institutional cash management and head of global transaction banking for the Americas, and Alain Raes, Swift Emea and Asia Pacific chief, who will provide a strategic viewpoint on the changing global payments industry.
09.55: The plenary room awaits
09.50: EBAday speaker prep.
09.45 The EBAday conference programme comprises two streams, one of which will address methods to enhance existing payment models, while the other will explore alternative payments and technology trends.
The former will navigate the global move to real-time payments, the future of correspondent banking, and management of intra-day liquidity management in instant payments, among other issues. The latter will take a deep dive into blockchain technology, mobile payments and fintech threats, PSD2 and the move to open APIs.
09.35 Breakfast is served, and the main room is a buzz of excitement as the first delegates begin to stream in.
09.30 More fresh tech comes in the form of the handy EBAday app available to download from iTunes and Google Play. The app comes packed full of interesting information about the conference, exhibition floor and speakers and is topped up with live blog ramblings from yours truly (don’t say I didn’t warn you).
09.25 The motto of EBAday 2016 is a ‘brave new world of payments’, alluding to the title of Aldous Huxley’s dystopic future fantasy where conditioned citizens fulfil their roles as workers and consumers in line with principles dictated by technology. Offering a glimpse into an alternative future is the Fintech Pavilion – an exhibition floor first for EBAday - where eight top startups from across Europe will be demonstrating applications at the cutting edge of financial technology, from AI to blockchain, and KYC to mobile banking.
09.20 Ah Milan – the spiritual home of fashionistas, Italian finance and connoisseurs of fine dining. The city is a major world fashion centre, where the sector can count on 12,000 companies, 800 show rooms, and 6,000 sales outlets. It is also home to Italy's main banking groups and over forty foreign banks. Foodies too are well catered for, with 157 Michelin-selected restaurants and three two-star establishments.
09.15 Such was the demand for breakout and meeting rooms this year that the Finextra organiser’s office was consigned to an elegantly appointed broom closet. #finextranervecentre
While the musings from your own correspondent come from this pleasingly blank shoebox #whitenoise
09.00: EBAday is taking place this year at the Mico, Milan Congress, the largest convention centre in Europe. We’re playing host to more than 1000 delegates and 57 exhibitors on a sprawling exhibition floor.
08.45: So, without further ado, welcome to
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08.30 Building on the success of last year’s congress in Amsterdam, EBAday 2016 will set out a vision for the future of the European payments industry as new technologies and trends reshape the business. We'll bring you news from a packed agenda of keynotes, panel discussions and debates covering real-time payments, virtual currencies, cybersecurity and the challenges presented by the digital revolution in banking.