The payments industry came together at Pay360 this month in London – the flagship conference and exhibition of The Payments Association.
Banking Circle’s Head of Local Clearing, Michael Boel, spoke on an ‘all-star discussion’ panel focused on ‘The Future of Instant, Frictionless and Cross-Border Payments – Pushing the Frontiers of Payments’.
We’ve wrapped up the key points from the discussion below.
- Oonagh McGrane, Director, FI Commercialisation, Client Products, Lloyds Bank
- Lewis Ide, Interim Head of UKI & Head of Key Customer Relationships, SWIFT
- Michael Boel, Head of Local Clearing, Banking Circle
- Connie Blacklock, EMEA Head of Real Time Payments, J.P. Morgan Payments
- Ross Jones, Director, Barclays Corporate Banking
- Moderator: Vincent Brennan, Leading Expert in the Future of Payments & Banking, Experienced Payments and Banking Executive
Innovation: Front or back-end?
Moderator Vincent Brennan kicked off the discussion by asking about the dynamics between innovation in the front and the back-end.
“In a world where the user front-end is increasingly becoming invisible, instant, frictionless, and unfortunately, free, would you agree that back-end platforms act as enablers for front-end innovation?” Vincent asked.
According to Ross Jones, Director at Barclays Corporate, “innovation in itself shouldn’t be driven by what your back-end can be capable of – that’s not how the best ideas come about. But in banking and certainly innovation in payments, having a strong foundation is absolutely critical to success.”
Ross highlighted resiliency, speed, and the ability to scale up as being essential building blocks. He went on to say: “Having that infrastructure which allows you to be nimble and agile, and to be able to bring new services to market much quicker – I think that’s absolutely critical. If you can get that right, building payment innovation on top of that is going to be far easier.”
Oonagh McGrane, Director, FI Commercialisation, Client Products at Lloyds Bank, said that while there is a “lovely duality between technology and the capability you’re able to deliver… technology doesn’t deliver the use case, and it doesn’t deliver the customer experience.”
Michael Boel, Head of Local Clearing at Banking Circle, explained that though the back-end won’t be a source of innovation, it does act as an enabler of ideas in the front-end, which has an “exponential effect” on use cases. He added: “The stronger the stability or the foundation of our back-end, the more ideas will grow upon it.”
From ‘big data’ to ‘smart data’
According to Vincent, in recent years the conversation in the industry around data has moved from being focused on ‘big data’ to ‘smart data’.
Lewis Ide, Interim Head of UKI & Head of Key Customer Relationships at SWIFT, pointed to ISO20022 as a key data source for building the platforms of the future in the payments industry.
“If we’re all speaking the same language, it makes it much easier for us to communicate, to collaborate, and to innovate. So for me, I think the foundation is ISO20022, and then we can look at that as a building block for other services – you can start to look at things like AI and Machine Learning.”
Banking Circle’s Michael Boel added that ISO20022 should be embraced, and that clients should think of its requirements not as a liability, but rather as an enrichment, “because the more data we have, the more we can send downstream.”
Michael went on to say that the more data that can be provided to schemes and correspondent banks, the less work that needs to be done on additional due diligence or transaction monitoring, as the information is already visible.
To build or buy?
Asked how organisations can and should decide between building, reusing or buying, Connie Blacklock, EMEA Head of Real Time Payments at J.P. Morgan Payments, highlighted the benefits of reusing in order to keep up with innovation.
“Last year, we were able to go live with over seven real-time payments markets across the globe, and that came down to having a platform where we were able to identify synergies and opportunities to reuse code. 85% of the code is reused in our clearing system rollouts… Reuse is what allowed us to have such success in the last year, and to have that speed to market.”
According to Michael, there are significant benefits from taking a hybrid approach: “My take would generally be, do the core service that you are best at, build that yourself and then nurture, fill in and adapt… There are so many good solutions for other things out there, where you could piece them together.” He added: “Find what you want to be good at, and buy the rest, because it’s impossible to be a champion of all trades.”