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More than 3.7 billion people now use the internet, 90 percent of them via mobile devices. In fact, we’ve never been more connected than at any time in our history. When connectivity becomes almost a hygiene factor, this cannot but alter expectations around speed and service.
We expect an e-mail to be received within seconds. We expect a meal or taxi ordered to the door to arrive within moments, and online shopping to arrive within days, if not within the hour in some locations. As to their finances, both consumers and corporates are expecting ‘faster money’.
Consumers want to buy rather than pay — and as quickly and conveniently as possible. They want to know that it’s secure and that the seller will be paid on time as agreed. When they want to review their spending, consumers expect the data to be there. Otherwise they just want fuss-free payment.
Corporates want all of this — and more. They want the faster logistics and fraud management that goes with faster payment. They want convenient visibility of funds to optimise working capital, make operational efficiencies and mitigate risk.
Meanwhile governments and regulators are also embracing the concepts of ‘faster money’ and ‘more than payments’. The European Central Bank is expecting at least one instant payment solution in euro to be available in Europe towards the end of 2017. Many other countries around the world are also looking to implement or upgrade an instant, immediate or real-time payment system.
At Tieto, we believe that instant payment and open access are intertwined. These twin trends reflect the drive towards more connected commerce, client centricity, open banking and the move from banking networks to platforms. Banks need to be able to take advantage of this instant opportunity whilst avoiding the possible threats.
When instant payments and open access becomes widespread, moving funds from A to B will become commoditised. Everyone will have a messaging app with payment integrated, so banks will need to consider how they plan for this future.
Will bank brands and scale be enough to stand up to Big Tech? After all, if the global consumer-facing technology brands have also implemented instant payments, it may not be that difficult for them to take over P2P/P2B services.
To keep pace with technological and regulatory changes plus client expectations, banks need the right technology partner. Tieto has established credentials in delivering end-to-end instant payments solutions — everything from front-end apps for P2P/P2B to central interbank infrastructures and back-end payment hubs.
We are currently working with the Kenya Bankers Association, an industry body comprising 45 banks, on building out the first real-time interbank transaction platform in East Africa. This national project supports Kenya’s payments strategy to enhance both interoperability through shared technology infrastructure and financial inclusion.
Meanwhile in our native Finland, we designed and implemented Siirto, the country’s first real-time multi-bank platform for mobile payments. This was PSD2-compliant two years ahead of time and natively built for an open and API-driven age. Now payment solutions can be developed mobile- and digital-first as opposed to an add-on to old legacy infrastructure.
This article originally appeared on perspectives.tieto.com
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