Payments, Banking & FinTech roundup: March 2023

The month opened with the news of a new industry body and closed with the shutting down of Tech Nation, an important fixture in the UK FinTech sector for a number of years. In between, we saw plenty of new research, and progress with updates to payments infrastructure.

At Banking Circle, we collaborated with leading Asia FinTech-focused strategic consulting firm, Kapronasia, on a new report: The De-Risking Threat to Asia Pacific Fintechs.

Our CIO, Michel Andre shared his thoughts on cloud infrastructure, for an article with Microsoft Azure.

Meanwhile, Livia Benisty, Banking Circle’s Chief Business Officer, gave her views on how AI can transform transaction monitoring and prevent financial fraud in this article for UK Tech News, and wrote about how AML can be an enabler, rather than a burden, for The Stack.

We were delighted to win the Payments Innovation of the Year category at the FStech Awards, and to be shortlisted for Best Cross-Border Merchant Solution in the Merchant Payments Ecosystem Awards.

Here are some other important stories from the industry you may have missed in March.

Final Tech Nation report published

The UK’s growth hub for tech startups, Tech Nation, has outlined what it believes the UK tech sector needs in order to quadruple in value by 2032.

The annual report is the last one before Tech Nation is shut down, with the government recently announcing it was terminating its funding.

It calls for tangible support to secure capital, growth and exits to cement the UK’s status as a global FinTech leader.

Read the report here.

New UK FinTech body launched

The Centre for Finance, Innovation and Technology (CFIT) has been launched to drive growth in the sector, following recommendations from the 2021 Khalifa review.

The new body aims to bring together “coalitions of experts” across finance, technology, academia and policy to support the growth of the industry, and create “high-income” tech jobs.

The CITF, chaired by Charlotte Crosswell, will establish innovation hubs across the UK, as well as work with leading universities to provide students with opportunities to secure placements at UK businesses in the financial innovation sector.

Read more on that here.

ISO 20022 migration finally begins

After a number of delays, Swift began the migration of its system onto the new ISO 20022 standard on 20 March.

ISO 20022 is the global standard that aims to standardise how payment messages are sent worldwide.

ISO 20022 sees financial institutions switch from the legacy MT (message type) format to the new MX (message type XML) format. The new MX format is more transparent, holds more data and is designed to boost interoperability between banks.

Read more on that news and how it impacts payments here.

T2 wholesale payment system goes live

The European Central Bank (ECB) has launched the new real-time gross settlement (RTGS) system and central liquidity management.

Migration to the new T2 system took place between 17-20 March, replacing TARGET2 as the new RTGS system for settling payments related to the Eurosystem’s monetary policy operations, as well as bank to bank and commercial operations.

Find out more about that here.

New research highlights limitations of legacy banking infrastructure

The Payments Modernisation and Technology report, from the Aite-Novarica Group found that banks must invest in new technologies in order to keep up with business customers’ demands for more robust payments.

Surveying 108 banks in North America, Europe and Asia-Pacific, the research revealed that almost half of banks have admitted to losing at least 10% of their payment volume to FinTechs.

Over the next two to three years, 65% of those surveyed said they were planning a significant or moderate level of investment in payments technology.

See the report here.

Swift reveals CBDC interoperability testing progress

As governments worldwide begin to explore alternatives to fiat currencies, there have been questions raised over the interoperability of central bank digital currencies (CBDCs).

As a result, Swift has been testing the potential for international transfers across over 200 countries, using its own solution, an API-based CBDC connector. Swift deployed the solution into a sandbox and gave 18 central and commercial banks 12 weeks to test it.

The testing facilitated a wide range of experiments and involved 4,736 CBDC-to-CBDC and CBDC-to-fiat simulations over the testing period.

See more of the results here.

Central banks successfully test global instant payments via mobile phones

Central banks in Italy, Singapore, and Malaysia have seen successful results from their tests of cross-border instant payments via mobile phones.

The Bank for International Settlements (BIS) Innovation Hub in Singapore oversaw the year-long tests under the banner Project Nexus.

Test payments were initiated using only the mobile phone numbers or the recipients’ company registration numbers via the Eurosystem’s Target Instant Payment Settlement (TIPS), Malaysia’s Real-time Retail Payments Platform (RPP) and Singapore’s Fast and Secure Transfers (FAST) payment system.

In the future, the BIS and the five central banks believe Nexus could eventually be implemented globally.

Find out more about that here.

EBA Clearing adding fraud prevention and detection capabilities to its SEPA payment systems

Provider of pan-European payment infrastructure, EBA Clearing, has announced it will be adding fraud prevention and detection capabilities to RT1 and Step2 by November 2023.

The new Fraud Pattern and Anomaly Detection (FPAD) service will allow users to supplement existing fraud-fighting tools and evaluations with information from a centralised network.

FPAD will cover a wide spectrum of tools for real-time fraud prevention and detection and is being developed with the help of STEP2 and RT1 participants.

FPAD will be supplied in stages, beginning with transaction and account risk assessment modules.

Find more information here.

FIS Global publishes new report

FIS Global has published its 2023 Global Payments Report, detailing consumer payment behaviour and offering key insights into the broader payments industry.

A few key findings from the report include:

  • Real-time payment rails (RTPs) accelerate account-to-account (A2A) payments
  • Buy Now, Pay Later (BNPL) remains popular despite regulatory scrutiny, interest rate pressure and competition
  • Sources of consumer credit are diversifying but credit card use remains popular.

Download the report here.

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