The impact of real time payments on consumers and their businesses
A short write-up of an interview of Inge van Dijk, director of Instant Payments, ING, with ‘Finextra’, discussing ‘The buzz of real time payments’.
At ING, we believe that real time payments will go beyond person-to-person and retail, eventually spreading to all markets and this has been triggered by the evolution we have seen in digital and mobile banking platforms. Customers already have the ability to make real time payments to other ING customers, so it is difficult to justify why this cannot be done between different banks. Customers are now able to pay for goods or services upon the point of receiving them, so why shouldn’t this be the case for retailers buying wholesale goods, or corporate transactions, which at present are either lengthy or costly processes? We see it as a logical evolution. The faster payments industry in the UK has made good progress and we will see the upper limit raised from £100,000 up to £200,000 and maybe £500,000 in the near future. It is already breaching the high payments area, which will ultimately change the nature of card use and high value payments.
In May, the yearly, international payments conference and exhibition EBAday was held in Amsterdam under the title ‘Payments 2020 – From Vision to Action’. The conference was attended by the entire payments community: banks, PSP’s, consultants… ING was one of the host sponsors. Managers and specialists of ING also played their part in many discussions on the future of payments. Read the different articles on ingcb.com.
Real-time payments implementation
While processes like SEPA have taken time to implement, we see this being a much quicker process. There is market demand and the EPPB have asked suppliers to provide a pan-European scheme. However, we need to remain in-tune with customer needs. 95% of transactions are domestic; this means that we need to build a system that caters to both national needs, which may vary from country to country and simultaneously create a European-wide system. Realistically, we want to open up real time payments to all markets in 3-4 years. For most people, it will depend on market demand and the appetite of the bank, but this is the strategy for ING.
One of the key challenges is that the banks are stuck with legacy IT systems that are not adapted to the modern customer. There is also a lack of talent; banks need to attract people that will invigorate and bring new creative thinking. Banks in general still suffer from low levels of customer trust, but conversely, 84%* of mobile users believe their bank app is the most trusted version. We believe that we can build on this momentum. Another challenge is speeding up the innovation process. ING has adopted a similar approach to Spotify, with a focus on agile scaling. Instead of placing emphasis on long term product launches, smaller improvements are released every four to six weeks. We then assess customer feedback through a number of channels and continue to make improvements. This way, the changes in place are more visible to our customers. At ING, we are looking at the new entrants to the technology market and learning from their success stories. Our strategy is a collaboration between the best of the old and the new. We remain open to inviting others to collaborate on future platforms and promoting an ethos of “co-invention”.
Also see the video on ‘Finextra’ of an interview with Pepijn Sigtermans, head of Treasury, ING, focussing on ‘Implementing intraday liquidity management’. He discusses the challenges presented to banks by the introduction of intraday liquidity, outlining three key areas:
- The need for change in bank’s payment behaviour
- Increased investment in infrastructure
- Monitoring how regulators implement intraday liquidity principles on a day to day basis.
‘Keeping up with the revolution in the payment industry’, by Inge van Dijk, director of Instant Payments, ING
‘Payments is all about customer experience’, by Mark Buitenhek, global head of Transaction Services, ING
‘Innovation and digitisation: the treasurer’s imperative’, by Mark Buitenhek, global head of Transaction Services and Dick Oskam, global head of Sales, Transaction Services, ING