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Interesting times in the world of payments

In all fifteen years that I have worked in the world of payments, I have never seen a more interesting period than the past few years. Just think about it: in the past, banks led major developments in the payment industry, which usually lasted for decades. ATMs, for example, have existed for more than half a century.

Nowadays, with tech trends appearing so quickly, it is almost impossible to imagine a technical development that will be embraced and used for half a century. Furthermore, new trends are not always initiated by banks anymore. Fin- and bigtechs have joined the battle for the customer, partly as a result of PSD2 and Open Banking. Besides that, new technological possibilities, changing customer behaviour and globalisation are pushing us into a new payment era.

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‘Why are there no European companies competing in the battle for global payment solutions?’

Europe is largely dependent on non-European systems, such as PayPal, for cross-border (card) payments. The reason for this is that there is still no European payment system for the whole continent, partly because European banks mainly focus on serving their national markets. In the development of new payment services, this must change, says Yves Mersch, member of the Executive Board of the European Central Bank (ECB). Mersch explains why it is important that Europe is not reliant on non-European payment providers and why he hopes that in the future there will be a global payment solution coming from the eurozone.

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Why banks are gradually embracing PSD2, fintechs and Instant Payments

Banks closely monitor how technological innovations are rapidly disrupting the payments landscape. The introduction of Instant Payments, competition from fintechs and the PSD2 regulations continue to put the business models of banks under extreme pressure. Liz Oakes, Associate Partner at McKinsey & Company, explains why it is good that banks, partly under pressure from the PSD2, are increasingly seeking to co-operate with FinTech companies. She also explains how companies are discovering the power of Instant Payments.

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‘Going digital is not the goal, it’s just a tool’

Mobile first has been the philosophy of BNP Paribas, one of the largest banks in the eurozone, for two years now. Not that strange, because the number of French customers that visit the bank only via their smartphone has risen explosively in the past four years: from 175.000 to 1.2 million. Out of a total of almost 6.5 million customers in France, 3.2 million are now interacting at least once a month with the bank digitally (via web or mobile). Marc Campi, Digital Marketing Director at BNP talks about their digital strategy for the coming year.

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‘The fragmented payment landscape leads to more complexity and security concerns for consumers’

Five years ago, visiting a physical banking branch for cash or advice was a given. In a short time, however, mobile payment solutions have largely replaced these visits. Not just banks, but also third parties have created new mobile payment solutions, often in the form of apps and digital wallets. The result: multiple wallets and apps operated by various types of domestic and international entities are now competing against each other as well as banks. Niklas Killström, Head of Daily Banking, Product Management and Development at the Finnish OP Financial Group, gives his personal vision on why the customer is challenged by a fragmented European payment landscape. Read more

What did early adopter Nordea learn about opening up customer data?

Nordea was the first bank in the Nordics that stepped into the new world of Open Banking. The 200-year-old Nordic bank – which is headquartered in Finland since this month and has approximately eleven million customers – has been offering third parties access to real customer data since December 2017, after several pilot activities earlier that year. The result was an enormous amount of interest from external developers. Liisa Kanniainen, Senior Strategic Advisor at Nordea, explains why Nordea took the lead in the Open Banking era, why PSD2-compliance is not the only reason for change and how she and Nordea see the banking future.

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Banks can save us from the online identity meltdown

This article was originally published on the The Paypers

We are increasingly going digital, yet the way we manage our online identity nowadays is largely based on old technology: passwords, rigid authentication procedures, security questions such as stating your mother’s maiden name or sending an image of your passport via e-mail.

It is no surprise that hackers are having the time of their lives as these outdated safety measures are no challenge to them to breach. Besides that, users are frustrated with endless lists of PIN numbers and passwords and merchants see full carts being abandoned because of ghastly checkout procedures.

This creates serious problems, both economically and systematically. That’s why we urgently need to change to way we secure our online lives: managing our online identities must become safer and more convenient.

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Four visions about the future of banks

Banks need to reinvent themselves now that the banking landscape is drastically changing. After all, fintech companies are continuously looking to attack profitable niches, developing their products from scratch using the latest technologies and an extreme focus on usability and fulfilling the wishes of the user. This differs from a lot of traditional banks that mainly focus on maintaining and integrating existing products into new channels.

In addition, current trends such as Open Banking, PSD2, Instant Payments and Digital Identity have a major impact on the traditional banks: the new legislations pave the way for new parties to enter the payments market and getting access to customers’ payment accounts. Furthermore the speed of payments is increasing, with receiving transactions going from one day to about ten seconds. These changes trigger the question what role banks will play in the future. Here are four visions about the future of banks, from members of both the financial establishment and the cutting edge. Read more

Large-scale exercise UNITAS in Frankfurt shows the importance of European collaboration in a crisis situation

Of course, every organisation aims to prevent a crisis from happening. But sometimes, an incident or crisis beyond our control, cannot be prevented. In that case organisations need to have a plan to continue business, or resume it, as soon as possible.

In order to improve business continuity and crisis communication at European level, the European Central Bank (ECB) organised a large-scale exercise at the end of June in Frankfurt, attended by the largest financial market infrastructures and their overseers from the euro area. Petra Steenbakker, senior policy officer at De Nederlandsche Bank (DNB), explains why business continuity management is so important, what the added value of European collaboration is and what conclusions she drew from the exercise in Frankfurt. Read more

Ready in time for Instant Payments by outsourcing the back-office processing engine

Doing it yourself, buying or outsourcing? These are the options for many banks when it comes to innovating their core processes, such as processing Instant Payments. In 2019, it must be possible to process these transactions real-time, but because these payments are made with a different scheme, they require an adaptation to the underlying payment infrastructure. “However, many banks have not yet adapted their payment infrastructure, which means they risk not being ready for the introduction of Instant Payments in time”, explains Erwin Vroege, expert at equensWorldline. “Outsourcing the back-office can help with this transition.”
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