A UK expert group set up by the Payment Systems Regulator to chart a new vision for the nation's financial plumbing has called for consolidation of Bacs, the Cheque & Credit Clearing Company, and Faster Payments as the springboard for a new architecture to level the playing field for non-bank competitors and simplify the processing of financial transactions.
The Payments Strategy Forum was created by the PSR in March 2015 with a brief to chart a new course for unlocking competition and innovation in UK payments.
In its draft strategy report, the PSF highlights the complexity of payment systems in the UK, which it says make it difficult for the industry to meet the changing needs of a diverse group of end users.
"The complexity of the current structure means that the industry is not agile, and the pace of collaborative change is only as fast as the slowest participant," notes the report. "The costs and complexity of establishing and maintaining access to each of the schemes are deemed to be excessive as PSPs must conform to all of the differing standards, protocols, and constraints."
Consolidation of the different schemes will go some way to easing the pain, says the PSF, alongside "the universal adoption of internationally recognised messaging standards ISO20022 and the development of common governance for the APIs that act as the glue holding together the payments architecture and would provide the ability to send more data with payments".
The longer-term goal set out by the report is the creation of a 'Simplified Payment Platform', that would embody a layered model for payment processing.
"The layered architecture approach is established best practice in IT and in particular in the telecoms sector where end-to-end systems are built in layered stacks," the report explains. "Importantly each layer has functions to isolate capabilities from the layer above and below it. This means that it is possible to make changes to and create new components of the layer - for instance, an overlay service like Paym - while still preserving the service characteristics, without it affecting all the other layers."
Describing the idea as a 'conceptual' ideal which would be delivered over a '3++' year timeframe, the PSF acknowledges that further work is needed to shape the model, before developing a detailed cost benefit analysis and implementation plan.
Other ideas floated in the report are the adoption of a financial crime intelligence sharing capability and the creation of a shared KYC utility.
The group is calling for industry input on its findings and intends to publish a definitive report in the Autumn