The question of whether banks are failing to provide the services customers expect was the subject of a heated panel debate during a lunchtime roundtable on Day Two of EBAday.
“Probably, yes,” answered David Chance, VP, product strategy and innovation, Fiserv, the company hosting the discussion. Having put the cat among the pigeons, Chance explained that large payment service providers are keeping closer tabs on what aspect of the payment the customer is interested in, as part of an end-to-end interaction. Banks, he said, are focused on just one part of that interaction model, the payment.
Chance further pushed the point, explaining while most banks have implemented instant payment infrastructure, they are yet to tackle carving value out of it, both for the customer and, crucially, themselves.
“[It’s] hard to say an industry running 40 billion transactions a year was failing,” countered Francis De Roeck, head of Sepa offering, BNP Paribas Fortis.
De Roeck reinforced the much-discussed Request to Pay development as signifying great relevance in terms of customer value proposition.
“Enabling users to trigger payments, Request to Pay, in particular, is a marvellous initiative. This is one of the instruments that in the future will help us create this full customer experience for customers.”
De Roeck also offered Sepa as a success story as well as the execution of the “primary role of banks [in providing] loans and credits to the economy, to fuel the economy”. Deposits need to be safe, available and moved often. The movement of money is the business of banks, he added.
Niklas Lemberg, head of payment industry, Cash Management Customer Solutions, Nordea, upheld the banks’ stance on more than one occasion: “Banks are not failing. Without the customer focus there is no sustainable business and no revenue. Banks provide services [customers] feel are relevant to themselves and are willing to pay for.”
Lemberg conceded there is work to be done leveraging the trust and the market share of customer accounts and, in combination with data analytics, crime prevention services could constitute potential monetisable products. At the same time, the rising cost of KYC and AML processes needed to be mitigated by “[looking] for the cheapest and most efficient rails, then [building] on top”, he said.
In terms of the biggest opportunities for bank-provided corporate services, Lemberg concluded: “Predictability, traceability and ease of access. Corporate customers are willing to pay for the predictability of sending a payment.”
“Finality and RTP to trigger this finality is really important,” added De Roeck.
Chance said revenue opportunities for banks lie in providing credit lines for merchants offering Buy Now Pay Later and that instant payments could be utilised to push payroll out on a personal preference basis in large corporates, for example, as is done in the gig economy at the end of shifts.
“Where you have a value proposition you have a willingness to pay for it,” Chance said.
The panel discussed technology priorities for banks, among which cloud and managed services were cited to bring the “best-of-breed” services to customers and handle the resilience requirement of ‘real time’ so that financial institutions can focus on carving out their value in the changing ecosystem.
Banks are also investing heavily in consolidating their payment systems and ‘instant’ is a catalyst for this, the speakers agreed.
According to the panel, the future outlook encompassing satisfied customers and healthy revenues will include more partnerships in the vein of Google Pay and Citibank, and Apple and Goldman Sachs.
Or, as moderator Vincent Brennan, head of group payments, Bank of Ireland, put it, “an element of self-cannibalisation where you're giving up a part of an origin to play a bigger game”.
“I fully believe we'll end up with one payment rail, which is an instant credit transfer push. I think there'll be two settlement models around that- either collateralised central bank money or pre-funded cash money. On top of those rails will have lots of different overlay services that make it look like a debit environment or a card environment, if people want to use a little bit of plastic to just sort of initiate the payment itself,” concluded Chance.