Technologies such as machine learning, cloud computing, APIs and robotics are rapidly changing the way payments services providers operate. But what is the hidden cost and risk? Hines posed this question and asked: “it is never technology for technology’s sake, but how do we get there?” Lloyd stated that cloud and APIs combined can offer a real opportunity for firms to simplify the payments stack, which is currently extremely complex. He believes that very few organisations are able to handle this complexity.

“What cloud and APIs allows us to establish is an architecture that enables the consumption and creation of a service capability. We need to stop trying to do platform as a service, or software as a service, or infrastructure as a service without truly believing that it is the future. We must assume the best in breed solutions and platforms, which in turn, help us differentiate,” Lloyd said.

He added that with “accelerated obsolescence”, the payments stack that is built today will not be relevant in 20 years. All infrastructure will need to be renewed, refreshed, and replaced on an ongoing basis.
Later, Wright picked up on this sentiment and recalled David O’Mahony, chief operations officer, Erste Group’s keynote earlier in the day during which he had stated that: “Banking operations will continue to be the heart and lungs of any good and functioning banking organisation. When we believe that, payments is lifeblood.” In Wright’s view, this is “excessive because we’re spending every cent we’ve got keeping us alive.”

He added that technology is “providing glue in a negative way” and change is avoided because the decision makers are “five years away from a pension” and it is too much of a risk for them. In response to this, Höfer said that for effective technology utilisation for a successful long-term strategy, starting small and scaling up is your best bet. “New technologies such as the cloud is absolutely one of our core pillars,” Höfer he explained.

Amann also explored how this way of working is beneficial and was earmarked by fintech firms. “I don’t know any fintech that is running on a mainframe. Everything comes from the cloud in terms of services.”

Returning to the topic of obsolescence, Lloyd said that we must “trust the technology. I think that’s so appealing, but also so naïve because the technology we’re talking about today is best in class today.” The technology created and put in place five or ten years ago is now redundant. It's not a long term bet, we should be making short term investments.”

According to Wright, it is a combination of short-term investment and a long term bet, or strategy: “what you see as core to your organisation. And then you've got to look at how you deploy the technology.” Those that do not adapt will lose out, as all panellists agreed, but Amman pointed out that it is also only about implementation of the cloud.

“The cloud is not magic. The question is which one and what kind of implementation you’d like to choose. The journey needs to be understood.” One theme that emerged out of the panel was also the impact of PSD2, open banking and embedded finance.

Vincent Brennan, payments and operational continuity advisor chaired a panel on this subject and Mark Lohweber, CEO, CoCoNet; Michael Niczyporuk, global head of open banking, Visa; Craig Ramsay, managing director, global innovation and partnership lead, HSBC; and Paul Thomalla, global head of payments, Finastra took to the stage to discuss.

Ramsay referenced a Finastra report that found that the embedded finance opportunity is slated to be worth $7 trillion by 2030. He said that “ultimately, it's the customer who's going to be in control in the future. The customer can be a consumer, the customer can be a corporate, but they're in control, and they're in control because they're going to do something of value in the context that they like. And finance has to actually embed itself into that.”

In regard to control, Niczyporuk explained that “what's lost is this fundamental tenet of open finance, which is the customer, whether it's a consumer or small business owner or corporate, is at the centre of their financial data, and ultimately at the centre of their financial lives. That starts with that customer having an undeniable right to their own data, to the channel of their choice. That extends to give you the right for that customer to give explicit informed consent to an authorised, trusted third party to access their data. And ultimately, it's about empowering a range of ecosystem players to deliver experiences that serve that customer with the promise of open finance, which we're already starting to see in pockets and that I expect to see more and more of.”

Niczyporuk added that one issue is that open banking still requires a consumer to have a bank account. “I'd love to envision a world of open finance where we enable billions of consumers or small business owners that don't have access to financial services today, to actually be included within the financial system.” Lohweber provides a good explanation for why this has not been put in place, or that has not been an in-depth exploration around resolving this long term issue.

“If I look at open banking and embedded finance, I see two different things. Open banking, for me, is you enabled something, but you are more on the passive side. As a bank, you open up your bank for others, and they maybe play the game with your customers for your data. If you look at embedded finance, it's different. It's the other way around. You want to be embedded in something new, something out there.”

Thomalla’s view is that “it's not a single playing field. And I think that's just the wrong thing that needs to be sorted out. 10 years ago, we were doing banking, we just did banking. And now we're talking about open banking, but underneath open banking, you have effectively, open payments. If you haven't got open payments, you're not going to do open banking. I don't think open banking is particularly well structured. But then when you get to open finance, everything's connected.”