Payments, Banking & FinTech Roundup: June 2021

As the first half of the year draws to a close, we’ve seen growth in BNPL platforms, updates on CBDC, and a wealth of new research.

It’s also been an extremely busy month for Banking Circle. Our CEO, Anders la Cour joined the panel at the Paris FinTech Forum, discussing the digitalisation of financial services, while Jon Levine, our Co-Head of Institutional Banking sat on the EBAday panel talking about trends in global payments.

Our latest Knowledge Circle webinar – ‘How Request to Pay will transform the payments landscape’ – explored topics such as the regulatory hurdles that need to be overcome, and how much tech transformation is needed. Watch it on demand here.

Banking Circle experts also took part in two podcasts in June. Our Global Head of Business AML, Livia Benisty gave her thoughts on ‘Rethinking AML’ in the Fintech Insider Podcast by 11:FS and our Head of Products & Solutions, Sarah Barslund Lauridsen appeared on Mambu’s Architects of Change podcast.

Anders la Cour shared his thoughts on post-pandemic payment trends in an article for Sifted, predicting that while Buy Now Pay Later (BNPL) schemes are here to stay, growth could slow as providers become increasingly regulated. He was also part of a panel of experts for the Luxembourg for Finance webinar on how Amazonisation is driving competitiveness in financial services.

And finally, Banking Circle’s senior experts, as well as professionals from the Banking and Payments sector, shared their Pearls of Wisdom in 60 seconds, on everything from regulation, to product and marketing. Watch the videos here.

Here are some other important stories from the industry you may have missed this month:

European Commission publishes proposal for regulation establishing European Digital Identity framework

On June 3, the European Commission published a proposal for a regulation that would see an EU-wide framework for electronic identities that can be used anywhere in the EU to identify and authenticate the holder, which would allow them to access public and private sector services.

The Commission is aiming to improve the current eIDAS framework, with ‘digital wallets’ linking to national digital identities. These will contain proof of personal attributes like driving licenses and bank accounts.

Read more about that here.

BNPL to reach $995 billion in 2026

New research has revealed that spend from BNPL services is expected to reach $995 billion in 2026, up from $266 billion in 2021 – a 274% growth.

The study from Juniper Research predicts this growth will come from a greater appetite from users for credit to spread costs, particularly with the pandemic putting increased pressure on user finances. And while regulation is likely to place restrictions on services, these changes aren’t expected to diminish the growth or appeal of these services.

The research suggests that in the next five years BNPL services will account for almost a quarter (24%) of global ecommerce transactions, with the number of BNPL users is set to exceed 1.5 billion in 2026.

PSR publishes five-year strategy for UK payments

A new strategy aimed at ensuring that payments and payment systems work well for everybody, has been published by the Payment Systems Regulator (PSR), the specialist economic regulator of UK payment systems.

The document is designed to ensure there is fair competition and access to payments for all, protecting and embracing elements currently working well, and changing those which aren’t. It is laying the foundations for new products, ways to pay and new payment systems to allow them to develop with the needs of real people and businesses in mind.

The PSR is collecting written feedback as well as arranging a series of engagement events to gather the views of its stakeholders.

Find out more here.

UK Finance publishes UK Payments 2021 report

The UK trade association has published ‘UK Payments 2021 report’, a detailed analysis of all types of payments in the last year, featuring commentary on payments used by consumers, businesses and the government.

While overall payments volume fell as a result of the pandemic, Faster Payments saw strong growth as both businesses and consumers shifted to online and mobile banking.

Download the report summary here.

European Payments Council SRTP rulebook comes into force

On June 15, the European Payments Council’s first version of the Single Euro Payments Area (SEPA) Request-to-Pay (SRTP) scheme rulebook came into force.

The rulebook outlines rules, practices and standards that will make it possible for eligible SEPA Request to Pay service providers to join, participate and operate in the scheme.

Read the full announcement here, and keep track of how the scheme is developing here.

Andrew Bailey speaks on innovation

At a talk given at the City UK Annual Conference, Governor of the Bank of England, Andrew Bailey, discussed his thoughts on how public policy makers think about innovation in financial services. With a focus on new forms of payment, he believes public interest must be at the heart of innovation.

In particular, he spoke about work on payments and digital currency, of which he claimed “it is no exaggeration to say that this is the beating heart of central banking.”

Bailey also talked about how new forms of digital money represent an important source of innovation, and the need to evaluate whether and how this can meet public interest objectives.

Read the full speech here.

Bank of England update on CBDC

The Bank of England’s Tom Mutton shared an update on work on Central Bank Digital Currency (CBDC), at the Future of FinTech Conference.

Talking through the latest thinking on CBDCs, Mutton explored what has been learnt so far and what is being set up for the future.

As well as explaining the interest in CBDC, the FinTech Director at the Bank of England spoke about use cases, and the platform model for CBDC, as well as how the BoE is approaching some of the big debates on central bank digital currencies.

Read the speech here.

UK most attractive location for investment in Europe

New research from EY has revealed that investors see the UK as the most attractive European location for international investment into financial services.

Almost half of respondents (48%) to the EY survey believed that the UK has the most investment friendly COVID-19 recovery plans in Europe, followed by Germany at 38%, and France and Switzerland tying for third place, at 21%.

According to the global investors surveyed, the top three driving factors of UK growth in the coming years are the digital economy (54%), real estate (42%), and financial services (33%). The largest source of financial services investment into Europe in 2020, was from the US.