EBAday 2025: Building the banking ecosystems of the future

Ehrmann referenced how the director of the Louvre drew attention from the public when called on for major infrastructure upgrades on the museum, stating that even the greatest masterpieces require infrastructure behind them that needs to be monitored, maintained, and improved, just like in payments. Ehrmann emphasised how EBAday is about curating a space for innovative and future-looking collaborations and developments, stating: “Innovation doesn’t happen in a vacuum – each breakthrough builds on the ones before it.”

In both the opening panels, industry leaders discussed the potential in collaboration, embracing and challenging incoming regulation, and tapping into payments technologies to facilitate transactions. The experts emphasised the need for more proactive action from financial institutions to work with regulators.

Geopolitical risk is a significant challenge for banks

In the first session of the conference, Olivier Denecker, senior payments expert and executive adviser, moderated the CEO roundtable titled ‘The Future of Banking and Payments’, featuring Christian Rhino, CIO, Deutsche Bank; David Watson, president and CEO, The Clearing House; and Hays Littlejohn, CEO, EBA Clearing.

Denecker opened the panel by highlighting key developments made in the fintech sector, that is valued at $2.5 trillion, growing steadily and gaining momentum over the last decade, with instant payments growing 50% annually. He then outlined new challenges facing the payments space: regulatory complexities, inflation rate volatility, cybersecurity risks, and geopolitical conflict to name a few.

Littlejohn stated that the outlook is positive for the payments industry, especially with instant payments, commenting that “instant will become the new normal”, but the industry is also seeing rapid growth across all payments..

Littlejohn commented that there are pros and cons to regulation, using ISO20022 as an example: “ISO20022 is virtually everywhere in Europe. That set the ground for instant payments to grow and to be used for transaction settlements, and I think that's really good in preserving the remittance information that makes the transaction whole. So regulation can be also an incentive for positive change. The risk is when the regulations become too much taken to the lever, that sometimes they can be distorted, where there's a lot of focus on compliance rather than the value that you get out of it, and that's where we are right now.”

Rhino agrees that payments will grow in the next couple of years, moving away from cash to online and digital payments, but emphasised that the industry should be more proactive in working with regulators to steer the government on how to bring business forward as an industry, rather than waiting for action.

Denecker then posed a Slido question to the audience: What do you see as a specific challenge for the industry in the next 2-3 years? Over 350 respondees voted that geopolitics and de-globalisation is the greatest challenge, with cybersecurity and fraud coming in at a close second.

Noting the drastic changes to the global economy due to changes in leadership around the world, Watson stated that it is propelling the industry to move quickly: “The vast majority of the money we settle, over 95% of it is international. When you break down US dollar movements, usually the US dollar grows 2.5-3.5% each year. In Q1 this year, it grew more than 10%. So, when you think about what's happening in geopolitics, it has led to four times more payment growth in the US dollar in Q1 this year than we've seen in any other year in the last few years. There's a lot going on, but that's leading to more money flowing around the world faster. There is definitely an interesting dynamic of both localisation and globalisation, both increasing at the same time, which is an incredibly strange and unique situation, it's leading to a lot of payment growth and opportunity, and a lot of new payment instrument introduction will come from various legislations around the world.”

Responding to the poll, Rhino said that there needs to be a global stance against hackers, fraudsters to combat cybersecurity – serving clients globally requires cross-border cooperation and alignment, and politics should not influence the network to maintain a global payments architecture. “We are strongly believe in a global architecture,” he emphasised: “We must work together to build a full digital network and global standards.”

Watson furthered that there is a lot of fragmentation across the industry, citing how SWIFT covers less than 5% of global transactions because there are various mechanisms to move money around. He emphasised that the main question is how global interoperability can be maintained when moving money internationally.

Comparing European and American payments ecosystems, Watson highlights how US banks are advocating for legislation before it is even thought of in the government – thereby directly influencing the regulation that should be in place and creating a level playing field. He stated that Europe could do a better job on that front, however where Europe is excelling is by innovating on a broader scale through public mandates like in instant payments, which is not the case in the US as instant payments is optional.

When concluding the panel, Denecker asked the audience what their priorities are for the next 1-2 years, with most respondents picking ‘responding to compliance and regulation’, shortly followed by ‘developing new products and value propositions’.

Collaboration shaping the future of European payments

Industry leaders discussed interoperability and how cross-sector collaboration is innovating the payments landscape in the second session of the day, ‘Strategic Roundtable: Innovative Collaboration – Building Ecosystems of the Future’. Chris Skinner, global fintech leader and CEO, The Finanser, moderated the panel featuring speakers Gayathri Vasudev, global head of cross-border payments, JP Morgan, and Marc Recker, global head of client solutions and partnerships in institutional cash management, Deutsche Bank.

Vasudev opens the session by agreeing with the speakers in the prior panel, that fintech is in a good position. She commented on the role of regulation to push payments into the future:

“Sometimes the public sector is able to mandate things, whether it's instant payments in Europe, India, Brazil, etc. - you would not have had that adoption of instant payments if it was not the regulators stepping in. In some ways it's good. I know all the bad pieces are also there. I think with ecosystems in general, you cannot ignore the network effect, because unless you have adoption, you don't have reach.”

Comparing European payments ecosystems to what is taking place in Southeast Asia, Recker highlighted how payments systems are supported and facilitated by regulators in countries that are making strides such as India, Thailand, and Singapore.

When asked what SWIFT and the EBA should be focusing on, Recker stated that standardisation should be a priority. He offered an example of the EBA bringing together a “coalition of the willing” of experts to create a working group for SEPA adoption. “I think that needs to continue,” he said. “If you look into the future, you don’t need to have 10,000 banks around, but you need to have banks that want to drive innovation, they would need to invest in first steps, and then convince the remainder to join the respective journey.”

Vasudev stated that “technology is an engine of growth”, citing how JPMorgan has invested in blockchain infrastructure for the long term. When asked about JP Morgan CEO Jamie Dimon's statements on how Bitcoin is a “scam”, Vasudev responded that while JP Morgan does provide trading for digital assets and tokenised money movements, and utilises the technology behind cryptocyrrency, they do not use specific instruments.

Commenting on blockchain adoption, Recker stated that it is not needed to make instant payments, but to solve issues in asset chains, cost management, and risk reduction, among others. He noted that blockchain “has not yet the level potential of commercial utility that people would like to see, but is on the right trajectory”.